By Mike Biamonte, Chief Innovation Officer, Affinity Solutions
I logged into my bank’s mobile app today and happened to notice a few card-linked offers right there on the first page, just below my (seemingly stagnant) account balance: discounts on a home ice-bath appliance, a fragrance web site, international fashion boots and a diet program.
I suppose I could lose a few pounds, but none of those things really appealed to me. In fact, a small part of me felt just a little bit abused: these are clearly ads – disguised as discounts – sitting right there next to my personal finance information.
As a consumer, I think I understand why they’re there; [sigh] I guess ads just end up everywhere, eventually. However, as a purveyor of cardholder engagement programs, it’s clear to me that banks, especially, need to be careful at this particular crossroads.
On the one hand, there’s the allure of easy ad revenue – accessible at very low cost since those mobile banking pages are going to load with or without ads on them. (These ads can also encourage customers to spend on a specific card.) On the other, there’s the trusted bank brand and the imperative to deliver truly valuable, personalized and relevant experiences that foster customer loyalty. This delicate balancing act demands a sophisticated approach.
I would’ve felt very different if the four discounts I saw up top were for Sweeetwater.com, Home Depot, and Advance Auto Parts. These are things I actually buy.
Redefining Cardholder Engagement with Affinity Solutions
According to a 2023 Bain study, 70% of consumers are interested in having their banking data used to receive personalized offers. Another study from McKinsey, offers that “customers who are satisfied with their banking experiences say they will purchase more of that bank’s products. And satisfied customers are six times more likely to say they’ll remain with a bank than dissatisfied customers are.”
Keeping customers satisfied requires a deep understanding of who they are, how they spend and where they buy, to deliver personalized, relevant offers – before they ask for them.
Firehose strategies and “set it and forget it” tactics aren’t effective. Targeting analytics that use “proxy data” (clicks, context, demographics, digital footprints, third-party data, etc.) can be misleading, resulting in sunken costs and wasted efforts. Consumers increasingly demand more from their banks – more integration across channels, more personalization and more customization (i.e. more customer value).
To truly and effectively reach (and keep!) customers, banks should focus on building meaningful relationships with them. These relationships are cultivated with insights into actual spending trends. Who better than a card issuer to collect, manage and leverage this data? Alas, many financial institutions aren’t great at this. (Maybe that’s good – they should be focusing on keeping my money safe!) However, they’re missing opportunities to make cardholders happy; to improve retention and spending, to create good experiences and – yes – to earn some ad revenue in the process.
Back to the Roots of Cardholder Offer Programs
Card-linked offer programs have been around for a long time; Affinity Solutions pioneered the concept in the early 2000s. They were originally intended as a strategic tool to enhance customer engagement and foster customer loyalty to specific banks and payment cards. Incentivize the customer to use their bank-issued cards and revenue will follow: increased transaction volume leads to interchange and interest income and associated fees; happier customers are stickier and offer greater lifetime value. The fact that merchants were footing the incentive value and interchange was an added bonus.
Over the years, however, the “added bonus” began to take center stage. CLOs evolved (devolved?) into a pure advertising play. The merchants’ desire to attract only new customers, and their clout as paying advertisers, began to drive some sophisticated use of the underlying transaction data. That’s good, but, unfortunately, the sole goal of this analysis and targeting was to maximize the retailer’s ROI (e.g. “avoid customers already shopping with me”). The original goal – “incentivize the user to use this particular card” – fell by the wayside. Even those small, hungry merchants (the less-known brands looking for lots of exposure) aren’t focused on the user’s needs, taking more of a “just give it to everyone” approach. This is how I probably ended up with the ice bath appliance offer. Who’s looking out for the cardholder?
So even as transaction-based analytics are being used more often, modern CLO programs still often fall short of turning those insights into the outcomes that matter to the bank: cardholder engagement, and measurable increases in overall spend and loyalty.
It’s time for a better, more effective approach to building long-term customer engagement, satisfaction, and ultimately, increasing the share of wallet: harnessing the power of transaction data through advanced, comprehensive datasets and insights delivered through innovative technology.
Affinity Solutions – Optimization is Personalized Media and Balance.
As a pioneer in consumer purchase insights and technology, Affinity Solutions doesn’t just help banks navigate this complex terrain; we reshape it. We offer an expansive, privacy-centric, view of consumer behavior that spans the U.S. and U.K. — capturing the nuances across all brands and sectors to drive growth and customer retention.
Why Affinity Solutions?
1. A Legacy of Expertise
As an early pioneer in merchant-funded offers and a current leader in consumer purchase insights, Affinity Solutions has been at the forefront of enhancing cardholder engagement: helping banks better utilize their customer data while upholding the highest standards of privacy and security. Our understanding of the banking sector, coupled with our expertise in data analytics, marketing and fulfillment, allows us to deliver a balanced approach that creates true value for our bank partners.
2. Insights Over Intrusion
Affinity Solutions believes true value comes from actionable insights and curated relevancy, not intrusive media delivery. We analyze actual spending trends and behaviors to uncover patterns that reveal opportunities for enhanced engagement. Our analytical tools allow us to accurately model “off us” spend to identify unique opportunities for further personalization and customization (and therefore wallet share growth) without compromising customer privacy.
With Affinity Solutions, you can:
- Personalize incentives for brand-new or inactive cardholders (who have no transaction history.)
- Activate new customers and increase lifetime value by instilling spend habits with your card.
- Target and re-engage inactive customers by bringing your card top of mind and top of wallet.
- Unlock headroom for low-actives by capturing spend from their other cards.
- Win back attritors and reverse declining spend behaviors before they completely churn.
- Wake up the cardholders whose unused card has been collecting dust in a desk drawer.
3. Value-Driven Engagement
By unlocking your consumer purchase data and effectively personalizing your media use, Affinity Solutions can deliver cardholder offers that drive real value. Whether it’s exclusive rewards, tailored promotions, or early access to new products, our offers are designed to increase card usage and deepen customer loyalty.
Our engagement with participating merchants also goes far beyond delivering advertising ROI. By creating a full suite of insights and marketing products that help merchants extract value from the data, we create deeper relationships and can source meaningful funds to offset the cost of incentive campaigns optimized to service your goals, not retailers or merchants.
A couple of examples:
- We helped a major bank identify a segment of customers who were heavy spenders on travel on other cards. By offering exclusive travel category rewards, the bank significantly increased card usage and customer satisfaction among this group.
- For a top 10 national bank card issuer, we created a predictive model to identify likely attritors. Selecting from an array of offers we personalized a small selection for each individual and increased the offer value using funds from Affinity Solutions’ expanded data products suite. The result? A +12% lift in the percentage of cards active and a +$85 incremental spend per card/month.
With Affinity Solutions, your cardholder incentives do what they were originally intended to: build more meaningful relationships and spending with your customers without sacrificing the ad revenue you expect from your media program.
Our personalization and intelligent media delivery can also extend to offers for cross-selling your own financial products.
- Cross-sell other relevant bank products with meaningful incentives.
- Offer up to 40% cash bonuses to grab attention.
- Discover which spend categories mean the most to different groups of your customers.
- Create customized offers that resonate and foster greater loyalty.
4. Commitment to Privacy and Security
Affinity Solutions is proud to be a privacy and security-first organization. We understand that trust is a cornerstone of the bank/consumer relationship and never compromise on privacy or security. We integrate datasets using advanced cleanroom technology to minimize risk and protect consumer privacy.
Conclusion: A Trusted Path Forward
Balancing the goals of realizing ad revenue and delivering personalized, relevant experiences that foster customer loyalty is not easy. But Affinity Solutions has built its foundation on providing the right insights and tools to achieve this goal.
Leveraging the data-driven approach of Affinity Solutions’ FI Commerce Media platform empowers banks to enhance customer engagement with relevant, personalized offers that resonate with individual customers; drive revenue by increasing card usage and transaction volume through targeted promotions and fulfillment; and foster loyalty by cultivating stronger relationships with customers by providing value-driven experiences. All while protecting privacy with responsible and secure handling of data and without abandoning your ad revenue stream.
