Abstract
Credit card rewards programs have become a commonplace and expected benefit for credit cardholders. Sixty to seventy percent of credit cards now offer rewards, more than double the number from five years ago.
As a result, card issuers and their co-branding affiliates have been steadily upping the ante with enhanced rewards promotions. Mintel notes several emerging trends, including:
- Making rewards programs more flexible
- Offering double or even triple points so rewards can accumulate faster
- Creating merchant-specific rewards cards and increased co-branding
- Allowing consumers to choose or customize their own rewards
- Offering "experiential" rewards
One challenge that continues to face the industry is that many consumers do not redeem their rewards, lessening the retention value of these programs. This report examines some of the latest developments and innovations in credit card rewards programs, including identifying new venues and opportunities for marketing and promotion. Mintel offers insight into how credit card issuers and other financial companies may be able to capture consumer loyalty more effectively. It is clear that there is no "one-size-fits-all" solution. Mintel believes that future opportunities will be heavily influenced by companies' ability to target consumers with customized offers that make rewards easier to earn and redeem.
Table of Contents
- Scope and Themes
- What you need to know
- Scope of this report
- Abbreviations and terms
- Abbreviations
- Terms
- Executive Summary
- Industry snapshot
- Current marketing trends
- Competitive landscape
- Targeted marketing
- Marketing to males and females
- Marketing to specific age groups
- Marketing to specific income groups
- Mintel' s consumer survey--rewards programs
- Consumers and rewards redemption
- Tracking rewards
- Direct mail acquisition vs. email
- Consumers and contactless
- What' s ahead
- Online and mobile payments
- Other groups
- Market Drivers
- The credit card consumer
- Statistical overview
- Tightening economy impacting payment behavior
- Amount paid off each month
- Figure 1: Credit card payment behaviors, 2006
- Credit cards and the family budget
- Impact of health/medical expenses
- The credit card and merchants
- Merchants challenging interchange fees, alternatives to major cards
- Alternatives with lower interchange fees
- Credit card rewards programs
- Figure 2: Rewards types, by issuer, as a percentage of all acquisition
mailings offering rewards, January-March 2007
- Figure 3: Credit cards rewards offers, by income--percentage of mail
volume for issuers rewards acquisition mailings, January-April 2007
- No card required--new developments
- Growth of debit rewards--challenge to credit cards
- Figure 4: Users of debit reward cards, by age, 2006
- Different generations want different rewards
- Figure 5: Frequency of application for credit card (s), by age, February
2006
- Figure 6: Credit cards rewards offers, by age--percentage of mail volume
for issuers rewards acquisition mailings, January-April 2007
- Figure 7: Examples of Credit card rewards offerings, by age, June 2007
- Cards for teens and young adults
- Increasing influence of the "Affluent"
- Traits of the super-wealthy
- Merchants increasing rewards for best customers
- Loyalty programs saturating the market
- Figure 8: Frequency of application for credit card (s), by income,
February 2006
- Preferred rewards vary
- Challenges for rewards programs
- Rewards not being redeemed
- Spending and saving
- Rewards offers not especially relevant to consumers
- Consumers more instrumental in driving rewards
- Figure 10: Preferred rewards, 2004
- Figure 11: Preferred rewards for redeeming airline programs points, 2004
- Preference for discounts
- Figure 12: Loyalty program membership, by age, 2004
- Rewards programs encouraging behaviors
- Card usage
- Increasing usage of cards for small payments
- Figure 13: Fast food purchases by credit card, 2000-06
- Encouraging consumers to transact online
- Figure 14: Percentage of Internet households paying bills online, 2002-07
- Figure 15: Online households and online banking households, 2004-10
- Rewards for online bill paying
- Competitive Landscape
- Recent trends
- Cashback reward kings
- Figure 16: Key cashback rewards programs, by issuer, 2007
- "Multi" opportunities to earn rewards
- Rewarding debit with miles
- Flexible rewards
- "Green" rewards + healthcare
- Mortgage rewards
- Specialty shopper rewards
- Socially conscious and affinity rewards
- "Coalition" or savings rewards
- Cards and rewards for the unbanked
- Contactless cards and benefits
- Cards for business
- Recent trends
- Priorities for small business owners
- New offerings
- Advertising and Promotion
- Direct mail
- Preferred method of responding to direct mail
- Figure 17: Preferred ways of responding to direct mail, 2003 and 2007
- Segmented advertising
- Television
- Examples of television advertising
- Figure 18: American Express television advertisement, 2007
- Figure 19: American Express television advertisement, 2007
- Figure 20: American Express television advertisement, 2007
- Figure 21: Capital One television advertisement, 2007
- Figure 22: Capital One television advertisement, 2007
- Figure 23: Chase television advertisement, 2007
- Figure 24: Chase television advertisement, 2007
- Figure 25: Visa television advertisement, 2007
- Figure 26: MasterCard television advertisement, 2007
- Figure 27: Best Western hotels television advertisement, 2007
- Figure 28: Hyatt Hotels television advertisement, 2007
- Figure 29: Hyatt Hotels television advertisement, 2007
- Figure 30: Crown Plaza television advertisement, 2007
- Figure 31: Orbitz television advertisement, 2007
- Interactive TV and email
- Email
- Examples of email marketing solicitations
- Figure 32: Examples of subject lines ("teasers") for both acquisition
and retention email s, January-June 2007
- Figure 33: Email users as percentage of Internet users and total U.S.
population, 2003-10
- Comperemedia SPAM scores
- Figure 34: SPAM scores for rewards acquisition emails for major card
types--percentage of total emails,
- Obstacles to marketing via email
- The Consumer
- Credit card usage
- Figure 35: Has used a credit card in the last three months, by gender,
June 2007
- Figure 36: Has used a credit card in the last three months, by age, June
2007
- Figure 37: Has used a credit card in the last three months, by income,
June 2007
- Type of card used most frequently
- Figure 38: Type of credit card used most frequently, by gender, June 2007
- Figure 39: Type of credit card used most frequently, by age, june 2007
- Figure 40: Type of credit card used most frequently, by income, June 2007
- What would increase usage?
- Figure 41: Factors most likely to increase credit card usage, June 2005
- Figure 42: Factors most likely to increase credit card usage, by gender
and age, June 2007
- Figure 43: Factors most likely to increase credit card usage, by income,
June 2007
- Figure 44: Factors most likely to increase credit card usage, by type of
card used most frequently, June 2007
- Figure 45: Factors most likely to increase usage, by race/ethnicity,
June 2007
- Loyalty and concerns
- Figure 46: Factors most likely to have a negative impact on credit card
usage, by gender, June 2007
- Figure 47: Factors most likely to have a negative impact on credit card
usage, by age, June 2007
- Figure 48: Factors most likely to have a negative impact on credit card
usage, by age, June 2007
- Figure 49: Factors most likely to have a negative impact on credit card
usage, by gender, June 2007
- Incidence of reward redemption
- Figure 50: Number of times rewards have been redeemed, by gender and
age, June 2007
- Figure 51: Number of times rewards have been redeemed, by income, June
2007
- Figure 52: Number of times rewards have been redeemed, by type of card,
June 2007
- Difficulty in redeeming rewards
- Figure 53: Difficulty in redeeming rewards, by gender and age, June 2007
- Figure 54: Difficulty in redeeming rewards, by income, June 2007
- Figure 55: Difficulty in redeeming rewards, by type of card, June 2007
- Tracking rewards
- Figure 56: Accounting for rewards miles/points earned, by gender and
age, June 2007
- Figure 57: Accounting for rewards miles/points earned, by income, June
2007
- Figure 58: Accounting for rewards miles/points earned, by type of card,
June 2007
- Likely impact of added communication on increasing redemption
- Figure 59: Likelihood of redeeming rewards if updates are sent, by
gender and age, June 2007
- Figure 60: Likelihood of redeeming rewards if updates are sent, by
income, June 2007
- Figure 61: Likelihood of redeeming rewards if updates are sent, by type
of card, June 2007
- Would updates on reward status increase card usage?
- Figure 62: Likelihood of increasing usage if rewards updates are sent,
by gender and age, June 2007
- Figure 63: Likelihood of increasing usage if rewards updates are sent,
by income, June 2007
- Figure 64: Likelihood of increasing usage if rewards updates are sent,
by card type, June 2007
- Likelihood of responding to email ads for credit cards
- Figure 68: Likelihood of response to an email advertisement offering
rewards, by race/ethnicity, June 2007
- Concerns about responding to email solicitations for credit cards
- Figure 69: Concerns about responding to email solicitations for credit
cards, by gender, June 2007
- Figure 70: Concerns about responding to email solicitations for credit
cards, by age, June 2007
- Figure 71: Concerns about responding to email solicitations for credit
cards, by income, June 2007
- Figure 72: Concerns about responding to email solicitations for credit
cards, by card held, June 2007
- Figure 73: Concerns about responding to email solicitations for credit
cards, by race/ethnicity, June 2007
- Likelihood of opening email and direct mail received from own credit card
companies
- Figure 74: Likelihood of opening email and direct mail received from
respondents' own credit card companies, by gender, June 2007
- Figure 75: Likelihood of opening email and direct mail received from
respondents' own credit card companies, by age, June 2007
- Figure 76: Likelihood of opening email and direct mail received from
respondents' own credit card companies, by income, June 2007
- Figure 77: Likelihood of opening email and direct mail received from
respondents' own credit card companies, by primary card used, June 2007
- Figure 78: Likelihood of opening email and direct mail received from
respondents' own credit card companies, by race/ethnicity, June 2007
- Making payments using contactless technology
- Overall interest in making payments using contactless technology
- Figure 79: Interest in contactless technology, by gender and age, 2006
and 2007
- Figure 80: Interest in contactless technology, by income and
race/ethnicity, June 2007
- Interest in mobile payments
- Figure 81: Interest in contactless technology using a cell phone, by
gender and age, June 2007
- Figure 82: Interest in contactless technology using a cell phone, by
income and race/ethnicity, June 2007
- Concerns about mobile payments
- Figure 83: Mobile contactless technology using a cell phone--concerns
about usage, by gender and age, June 2007
- Figure 84: Mobile contactless technology using a cell phone--concerns
about usage, by income, June 2007
- Figure 85: Mobile contactless technology using a cell phone--concerns
about usage, by race/ethnicity, June 2007
- Interest in contactless technology if additional rewards were offered
- Figure 86: Mobile contactless technology using cell phone--willingness
to use if additional reward points/miles were offered, by gender and age,
June 2007
- Figure 87: Mobile contactless technology using cell phone--willingness
to use if additional reward points/miles were offered, by income, June 2007
- Figure 88: Mobile contactless technology using cell phone--willingness
to use if additional reward points/miles were offered, by race/ethnicity,
June 2007
- Future Trends
- Internet banks
- Mobile banking
- Testing the waters with phone payments
- Small businesses continue as growth area
- Seeking individuality in cards
- Payment alternatives for the "unbanked"
- Figure 89: Usage of specific credit cards among consumers without bank
accounts, 2006
- Potential in marketing to Hispanics
- Women in business good candidates for credit card rewards
- Appendix: Advertising and Promotion
- Figure 90: American Express Delta SkyMiles direct mail advertisement, Q4
2006
- Figure 91: Chase direct mail advertisement, Q4 2006
- Figure 92: Citibank direct mail advertisement, 2006
- Figure 93: LL Bean Visa direct mail advertisement, 2006
- Figure 94: Discover email advertisement, 2006
- Figure 95: Citibank direct mail advertisement
- Figure 96: Discover card direct mail advertisement, 2006
- Figure 97: Citi AAdvantage direct mail advertisement
- New product offers -- Q1 2007
- Figure 98: HSBC "Totally Me" campaign direct mail advertisement, 2007
- Figure 99: Washington Mutual "Real Rewards" Direct mail advertisement,
2007
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