New Lightspeed Research Report Shows Mixed Impact of Quarterly Credit Card Rewards Promotions Across Major Issuers

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Quarterly Bonuses Increase Overall Customer Satisfaction, but Higher Earning Caps Have Limited Impact on Card Usage

The newest trend in credit card rewards -- offering customers double, triple, or even five-times as many rewards for certain types of spending -- are most effective in everyday categories where people are most likely to be shopping anyway, according to a new research study by Lightspeed Research’s Financial Services Group.

The new 36-page report analyzes bonus category spending in 2010 and 2011 based on actual credit card purchase behavior drawn from Lightspeed Research's Behavioral Tracking Panel. It measures the impact of promotions, both on the number of accounts being used for purchases during the promotions and on customer satisfaction.

Category-specific promotions that offer from double to as much as five times cash back or points for spending in specific retail categories became a trend in credit card rewards over the past two years as issuers began cutting back on the standard earn rate on many rewards cards. As of late 2011, all top card issuers have tested at least one of these promotions.

Most issuers have promoted everyday categories like grocery, gas, and restaurant. And these, along with home improvement purchases, have typically been the most effective in driving up the percent of accounts being used for purchases in the category during the promotion. Quarterly promotions targeting bigger-ticket purchases made less often -- department stores and travel, for example -- are not as consistently effective, based on Lightspeed Research tracking data.

Bank of America, Discover, and Citi have seen a notable increase in the percent of accounts with purchases in promoted categories, most often for everyday purchases. Despite offering some of the highest caps on potential cash-back bonus earnings, Chase was less likely than Bank of America or Discover to see increases of 5 percentage points or more in the number of accounts with purchases in a promoted category. But like its competitors, Chase did see slight increases in the percent of accounts with purchases, particularly when promoting everyday spending categories.

Customer Satisfaction Increases
Quarterly bonus promotions also increase customer satisfaction with rewards cards. Fully two-thirds of cardholders who get offers for category-specific bonus rewards are very satisfied with their credit card, compared to just under half (48 percent) of those who don't receive these offers. Half of Discover customers say getting bonuses for spending in certain categories is one of the reasons they are satisfied with their cards.

To learn more about this study, contact Dave Gordon, SVP, Business Development at (617) 431-5359 or email.

About This Study
The data source for this research brief is the Financial Services Group’s Behavioral Tracking Panel.

About Lightspeed Research Financial Services Group
The Financial Services Group at Lightspeed Research is focused on helping retail financial services companies and other industry stakeholders make informed business decisions through custom survey research and tracking studies, competitive intelligence reports, and partnership strategy development. By gathering actual statement-level data through its proprietary Behavioral Tracking Panel, the Financial Services Group provides a “full wallet” view of U.S. consumer spending.

About Kantar
Kantar is one of the world’s largest insight, information and consultancy groups. By uniting the diverse talents of its 13 specialist companies, the group aims to become the pre-eminent provider of compelling and inspirational insights for the global business community. Kantar works across 100 countries and across the whole spectrum of research and consultancy disciplines, enabling the group to offer clients business insights at each and every point of the consumer cycle. The group’s services are employed by over half of the Fortune Top 500 companies.
For further information, please visit us at http://www.kantar.com

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David Gordon
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