In the midst of holiday preparations, you might have missed the Cards and Loyalty Payment Conference held in New York on December 2.  I was able to attend in my capacity as North American Contributing Editor of the Wise Marketer and filed this report with the WiseMarketer.

Source Media’s second annual ‘Cards and Payments’ loyalty conference was held in New York earlier this month, addressing the theme of ‘the intersection of cost management and rewards programme repositioning’, as detailed here by The Wise Marketer’s contributing editor, Bill Hanifin.

The proceedings began with Rob Rosenblatt of Chase Card Services, who presented an overview of Chases’ new flagship rewards programme, ‘Ultimate Rewards’, which is offered on Chase Freedom as well as the new Chase Sapphire and Chase Ink (small business) products. Launched earlier in 2009, Ultimate Rewards was built as a unified platform that would help drive customer engagement while improving operating efficiency and also strengthening the brand.

An expert panel debated cost-per-point reduction strategies, with experts from SunTrust Banks, Merrill Lynch, Wyndham Hotels and US Bank explaining a variety of techniques that can be used to lower cost-per-point while keeping programme members engaged with the brand. The panel concluded that forming strategic partnerships with providers, using redemption targeting campaigns, and fine tuning programme rules should all lead to positive results even in a tough economy.

Crista Dewire and John Kryczka of PriceWaterhouseCoopers offered an in-depth discussion of loyalty programme liability management, outlining the actuarial methods used to project redemption rates and help programme operators manage liability. They pointed out that, while no conclusions have yet been reached on the treatment of loyalty liability within Generally Accepted Accounting Principles (GAAP), another body – the International Financial Reporting Standards (IFRIC) – has issued guidelines for currency management that are quite restrictive and could potentially impact the future of the loyalty industry.

Indeed, loyalty operators in Singapore, New Zealand, and Australia have already felt the effects of the IFRIC standards as they must now account for points on a “fair value” basis rather than actual internal cost. In addition, the guidelines mean that companies must account separately for the award portion of each sales transaction. The end result of these guidelines is to defer revenue and increase point cost, squeezing margins for loyalty marketers. It was concluded that loyalty software suppliers will also feel the impact of these guidelines because they will need to track every point issued with a time/date stamp, and be able to process redeemed points on a FIFO (first-in-first-out) basis.

Geri Green of Barclaycard US shared a number of loyalty strategies that should not be forgotten in tough economic times, including the principles of transparency, consistency, value, messaging, and trust. Rick Ferguson of Colloquy and Andrew Pyper of Saks Fifth Avenue presented a case study showing how retailers can use store charge cards as points-earning accelerators for programme members.

US Bank senior vice president Bob Daly explained how the bank reacted to the merger of Delta and Northwest Airlines by launching ‘Flexperks’ – a travel rewards programme designed to retain its portfolio of cardholders from the Northwest Worldperks programme that was being closed down. Daly noted how the bank had included benefits specifically to help cardholders with unbundled air travel, such as offering an ‘allowance’ with a redeemed ticket to help pay for baggage and seat selection charges. He also mentioned that employee training in the call centre had been a subtle but important key to the success of the programme.

The event ended with a discussion of the proliferation of debit card rewards programmes. According to research from First Annapolis Consulting, 53% of the top 100 debit card issuers already have debit rewards programmes, although there is a contrast in penetration by bank size (90% of the top 20 issuers offer debit rewards, while only 35% of the remaining 80 issuers do so).

The structure of debit rewards is also evolving along a line that begins with generic rewards (e.g. points or cash-back) and heads toward cobranded rewards (e.g. with airlines) and relationship rewards. It seems clear that US debit card issuers are anticipating the continued growth of debit card transaction growth and sales volume, and are crafting increasingly sophisticated rewards programmes to help drive consumer engagement, card usage, and to gather deposits.

This article is copyright 2009 TheWiseMarketer.com

In the midst of holiday preparations, you might have missed the Cards and Loyalty Payment Conference held in New York on December 2.  I was able to attend in my capacity as North American Contributing Editor of the Wise Marketer and filed this report with the WiseMarketer.

Source Media’s second annual ‘Cards and Payments’ loyalty conference was held in New York earlier this month, addressing the theme of ‘the intersection of cost management and rewards programme repositioning’, as detailed here by The Wise Marketer’s contributing editor, Bill Hanifin.

The proceedings began with Rob Rosenblatt of Chase Card Services, who presented an overview of Chases’ new flagship rewards programme, ‘Ultimate Rewards’, which is offered on Chase Freedom as well as the new Chase Sapphire and Chase Ink (small business) products. Launched earlier in 2009, Ultimate Rewards was built as a unified platform that would help drive customer engagement while improving operating efficiency and also strengthening the brand.

An expert panel debated cost-per-point reduction strategies, with experts from SunTrust Banks, Merrill Lynch, Wyndham Hotels and US Bank explaining a variety of techniques that can be used to lower cost-per-point while keeping programme members engaged with the brand. The panel concluded that forming strategic partnerships with providers, using redemption targeting campaigns, and fine tuning programme rules should all lead to positive results even in a tough economy.

Crista Dewire and John Kryczka of PriceWaterhouseCoopers offered an in-depth discussion of loyalty programme liability management, outlining the actuarial methods used to project redemption rates and help programme operators manage liability. They pointed out that, while no conclusions have yet been reached on the treatment of loyalty liability within Generally Accepted Accounting Principles (GAAP), another body – the International Financial Reporting Standards (IFRIC) – has issued guidelines for currency management that are quite restrictive and could potentially impact the future of the loyalty industry.

Indeed, loyalty operators in Singapore, New Zealand, and Australia have already felt the effects of the IFRIC standards as they must now account for points on a “fair value” basis rather than actual internal cost. In addition, the guidelines mean that companies must account separately for the award portion of each sales transaction. The end result of these guidelines is to defer revenue and increase point cost, squeezing margins for loyalty marketers. It was concluded that loyalty software suppliers will also feel the impact of these guidelines because they will need to track every point issued with a time/date stamp, and be able to process redeemed points on a FIFO (first-in-first-out) basis.

Geri Green of Barclaycard US shared a number of loyalty strategies that should not be forgotten in tough economic times, including the principles of transparency, consistency, value, messaging, and trust. Rick Ferguson of Colloquy and Andrew Pyper of Saks Fifth Avenue presented a case study showing how retailers can use store charge cards as points-earning accelerators for programme members.

US Bank senior vice president Bob Daly explained how the bank reacted to the merger of Delta and Northwest Airlines by launching ‘Flexperks’ – a travel rewards programme designed to retain its portfolio of cardholders from the Northwest Worldperks programme that was being closed down. Daly noted how the bank had included benefits specifically to help cardholders with unbundled air travel, such as offering an ‘allowance’ with a redeemed ticket to help pay for baggage and seat selection charges. He also mentioned that employee training in the call centre had been a subtle but important key to the success of the programme.

The event ended with a discussion of the proliferation of debit card rewards programmes. According to research from First Annapolis Consulting, 53% of the top 100 debit card issuers already have debit rewards programmes, although there is a contrast in penetration by bank size (90% of the top 20 issuers offer debit rewards, while only 35% of the remaining 80 issuers do so).

The structure of debit rewards is also evolving along a line that begins with generic rewards (e.g. points or cash-back) and heads toward cobranded rewards (e.g. with airlines) and relationship rewards. It seems clear that US debit card issuers are anticipating the continued growth of debit card transaction growth and sales volume, and are crafting increasingly sophisticated rewards programmes to help drive consumer engagement, card usage, and to gather deposits.

This article is copyright 2009 TheWiseMarketer.com

The 21st Annual Card Forum took place last week in Marco Island, Florida. The conference synopsis which follows was originally published at www.TheWiseMarketer.com as filed by Bill Hanifin, North American Contributing Editor.

Register here for a free subscription to the Wise Marketer

The 21st Annual Card Forum and Expo has recently been held in Florida and, while the banking and card markets in the US might be reeling, the quality of presentations and attendees was superb.

Bill Hanifin, Managing Director of Hanifin Loyalty, reports that according to Bruce Kerr of Loyalty One USA and Laurence Booth of Amex Bank of Canada, the loyalty market in Canada is “holistically engaged”, with some nine in ten Canadian households actively engaged in a loyalty programme (the US figure is one in three). In order to break through the clutter, Amex has worked with Air Miles Canada to revamp and relaunch its Platinum Credit Card in 2008, breaking through the traditional co-brand model, with gratifying results.

According to Jim McCarthy, Head of North American Financial Institution Sales, Visa, payment cards are making inroads into cash and cheque payments which, in the US, have seen their share of annual Personal Consumption Expenditure fall from 61% to 47% over a few years. Consumers increasingly shop on value, are in control of their commercial relationships, and are tending toward more judicious use of credit cards.

According to McCarthy, the debit card will be the key product going forward for most issuers. He reaffirmed that rewards and loyalty programmes are here to stay and that providing value and control while encouraging responsible choices will contribute to overall card loyalty. McCarthy quoted a Wells Fargo study among university students which revealed that, as the result of a financial literacy campaign, late fees in the test group dropped 42%, overdraft charges were down 40%, and past due accounts declined 55%, while card volume spend increased by 22%. The results clearly indicate that banks offering solid financial guidance can separate themselves from the competition.

A panel of ‘Retail Loyalty Leaders’ including Best Buy, Macy’s and Saks Fifth Avenue, moderated by Colloquy’s Rick Ferguson, focused on the importance of loyal customers in a downturn, Aubyn Thomas of Macy’s said that loyal customers continued to shop during the downturn and fellow panelists agreed that it was their most loyal clients who saved the day when the economy worsened. As a result, none of the retailers were willing to reduce investment in their frequent shopping programmes. Instead, they recommended that better use of transactional and customer data would drive efficiency in communications and reduce programme operating costs. Saks has encouraged associates to work harder at building relationships with clients and to use the CRM tools already deployed.

At the best of times, there are challenges in predicting customer behaviour in any market, but the stakes are raised to do so accurately in a down market. According to Lightspeed Research’s Joel Stanton, to successfully understand and predict customer behaviour, a robust, holistic view of the customer is required and that simply focusing on one relationship or one product is not enough.

This article is copyright 2009 TheWiseMarketer.com

The 21st Annual Card Forum took place last week in Marco Island, Florida. The conference synopsis which follows was originally published at www.TheWiseMarketer.com as filed by Bill Hanifin, North American Contributing Editor.

Register here for a free subscription to the Wise Marketer

The 21st Annual Card Forum and Expo has recently been held in Florida and, while the banking and card markets in the US might be reeling, the quality of presentations and attendees was superb.

Bill Hanifin, Managing Director of Hanifin Loyalty, reports that according to Bruce Kerr of Loyalty One USA and Laurence Booth of Amex Bank of Canada, the loyalty market in Canada is “holistically engaged”, with some nine in ten Canadian households actively engaged in a loyalty programme (the US figure is one in three). In order to break through the clutter, Amex has worked with Air Miles Canada to revamp and relaunch its Platinum Credit Card in 2008, breaking through the traditional co-brand model, with gratifying results.

According to Jim McCarthy, Head of North American Financial Institution Sales, Visa, payment cards are making inroads into cash and cheque payments which, in the US, have seen their share of annual Personal Consumption Expenditure fall from 61% to 47% over a few years. Consumers increasingly shop on value, are in control of their commercial relationships, and are tending toward more judicious use of credit cards.

According to McCarthy, the debit card will be the key product going forward for most issuers. He reaffirmed that rewards and loyalty programmes are here to stay and that providing value and control while encouraging responsible choices will contribute to overall card loyalty. McCarthy quoted a Wells Fargo study among university students which revealed that, as the result of a financial literacy campaign, late fees in the test group dropped 42%, overdraft charges were down 40%, and past due accounts declined 55%, while card volume spend increased by 22%. The results clearly indicate that banks offering solid financial guidance can separate themselves from the competition.

A panel of ‘Retail Loyalty Leaders’ including Best Buy, Macy’s and Saks Fifth Avenue, moderated by Colloquy’s Rick Ferguson, focused on the importance of loyal customers in a downturn, Aubyn Thomas of Macy’s said that loyal customers continued to shop during the downturn and fellow panelists agreed that it was their most loyal clients who saved the day when the economy worsened. As a result, none of the retailers were willing to reduce investment in their frequent shopping programmes. Instead, they recommended that better use of transactional and customer data would drive efficiency in communications and reduce programme operating costs. Saks has encouraged associates to work harder at building relationships with clients and to use the CRM tools already deployed.

At the best of times, there are challenges in predicting customer behaviour in any market, but the stakes are raised to do so accurately in a down market. According to Lightspeed Research’s Joel Stanton, to successfully understand and predict customer behaviour, a robust, holistic view of the customer is required and that simply focusing on one relationship or one product is not enough.

This article is copyright 2009 TheWiseMarketer.com