The new buzzword for the marketing gurus at card issuers may be commitment, if Visa USA researchers have their way. According to a June report from Visa, a committed cardholder will use your card for most or all of her spending. The tough part is convincing the cardholder to be committed to your card.
"Committed cardholders tend to be top of wallet," says Tracy Hampton, senior vice president of Visa Research Services. "Uncommitted means the card is not used or it's at the bottom of the consumer's wallet."
Hampton took the lead on Visa's Credit Card Commitment Research 2004 report that included a mail survey of over 4,000 Visa cardholders last November.
The survey found what many marketing strategists already knew--credit cards generate little commitment from consumers, falling below such items as car insurance, potato chips and household cleansers. Indeed, cards claimed the ignominious distinction of being tied with toilet bowl cleaners with only one in five consumers saying they are committed to a specific brand.
There are several reasons for this, says Hampton. Many consumers already have a slew of cards in their wallets, it is easy to get a no-annual-fee card by responding to a mail solicitation, and there is no penalty for holding onto a card that gathers dust in a drawer, she says.
But building commitment can pay off, Visa found. A cardholder will use the card she is committed to for over 75% of her monthly credit card spending, and about 75% of her monthly credit card transactions, according to the San Francisco-based association.
Visa advises issuers that want to build commitment to use messages to cardholders that emphasize security features, stress the speed and convenience of paying with plastic, and teach users how credit can be a useful tool for managing household finances.
Visa found that consumers most likely to be committed to a card "skew to older males," says Hampton. Nothing wrong with that, mind you, but issuers need to strengthen commitment among younger women, she suggests.
That might be done by offering a card loyalty program with rewards that offer some combination of lowering stress and saving time, enhancing the fun of the shopping experience, and boosting family entertainment, she says.
Getting a cardholder into a rewards program increases commitment, and spend. The consumer working towards a reward will use it for an everyday purchase at the grocer, in addition to the traditional large purchase of a couch or television, Visa found.
"Rewards and loyalty play a significant role in getting cardholders to be active users of cards," says Hampton. "Air miles are at the top in encouraging use. These are the more profitable customers."
Other commitment-building strategies include increasing the cardholder's credit limit, and convincing the consumer to use the card for recurring payments.
Authoritative analysis and perspective for every segment of the payments industry
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