Anyone who gets regular credit card offers in the mail knows that the competition in that market is steep. Banks and credit card companies are aggressively competing for wallet share. Sure, a rewards program might incentivize some customers to spend with one specific card. But that doesn’t mean that there aren’t two or three other cards that offer the same rewards system – or better.
In order to really become the dominant brand and the go-to card provider for every consumer, financial institutions can benefit from offering intelligent, mobile and localized offers that are exclusive to the card and relevant to the consumer’s lifestyle. In effect, that means building a more personal relationship with consumers and ensuring that the rewards are there exactly when and where they need them.
This goes to the most basic principle of direct marketing: build relationships by offering a personal experience. Today, mobile apps provide banks and credit card carriers with an unprecedented opportunity to directly offer consumers the rewards that work for them, at the right moment and in the right location. Here’s how.
The Card-Consumer Relationship
The traditional relationship between credit cards and consumers is simple. The consumer makes a purchase with the card. The rewards quickly stack up. Eventually, the consumer calls or goes online to redeem the rewards. But those offers aren’t necessarily relevant to a consumer’s needs, so there’s not as much as an incentive to go out of their way to spend more and build up points.
To create more relevant offers, banks and credit card companies have started to offer rewards through mobile applications. That can help consumers keep track of when they’ve earned enough points to cash in a reward. But even if a credit card carrier can send a mobile message to consumers about a new TV they could buy with 50,000 points, the app doesn’t offer consumers the easiest way to get that reward. Knowing that you could buy a TV with your points is a nice feature, but knowing where to buy that TV is just as important.
What if, instead of showing consumers that they were eligible for the reward on a smartphone, they would get a notification that they reached 50,000 points and could redeem those points for a TV at a Best Buy just one mile away?
Financial institutions might know when consumers are eligible for rewards, but they still don’t know enough about a consumer’s location. As mobile becomes the go-to payment platform for more people, location needs to be a number one priority.
Pushing, Pulling and Rewards
Direct marketing has always been about location first and foremost. If you don’t know where your customers are located, you’ll never know what’s most relevant to them. It’s sometimes difficult for banks and credit card companies to deliver on that personal touch, but, thanks to mobile applications, it’s becoming possible. An app that makes use of location intelligence can bring direct marketing to the next level.
There are two primary functions of a financial institution’s mobile rewards app when they’re empowered with location functionality: pushing and pulling. In the push model, banks and credit card companies send out relevant offers to consumers who have location services enabled on their phones. So if you’re passing a Starbucks, the app could send a push notification to your phone that offers five times the amount of points if you purchase a coffee there.
Likewise, maybe you’re shopping in a mall. Once you enter the mall, you might be near a Macy’s and your credit card companyr could offer you a $1 credit if you spend $10 or more at the store. In this way, apps can push relevant offers to consumers and become everyday tools that can help consumers shop smarter and save money.
On the other hand, consumers can also choose to “pull” offers from the app. That means accessing the app for nearby and relevant offers. So if you’re looking for restaurants, you could consult with your bank’s app to see if there are any rewards for eating at nearby establishments.
The capabilities of push and pull offers on mobile apps are dependent on powerful location intelligence technology. Consumers are far more likely to redeem rewards if they’re sent at a relevant time and for a business that’s right around the corner.
But financial institutions have to ensure that those offers really are right around the corner. Many mobile apps use geofencing technology that places a radius around the consumer’s location. A radius can detect nearby businesses… but it wouldn’t necessarily know whether the shop is a half-mile around the block or a half-mile on the other side of a busy highway.
An app that consistently delivers rewards notifications, but doesn’t take into account geography, traffic or buildings, will end up getting ignored by consumers. For example, a push notification about an offer for a Starbucks coffee is great – but not if the Starbucks is on the other side of a river.
Traditional geofencing technology relies on a radius to show locations to users, but, to really show consumers the most relevant locations where they can use their cards, the geofence has to be an irregular, dynamic shape that takes into account barriers, buildings, geography, walking and driving distances and traffic.
Without location intelligence, direct marketing on mobile devices is impossible, and banks and credit card companies have to rely on retail branches and call centers as direct touchpoints with customers. But, with location intelligence, financial institutions can build ongoing, individual relationships with customers that can turn a credit card into a proactive savings and discovery tool every time they’re out and about.
Join me in San Diego on Monday, October 27, for my special Fast Forward session, “Contextual Marketing 2014: The Power of Location Intelligence Data.”