Innovating with Unique Credit Card Rewards Programs

June 2023

While offering credit card rewards may not be new, it has gradually evolved over the years to become an almost non-negotiable component of any successful business model. In fact, over 90% of businesses today offer the ability to earn rewards in one form or another, and more than 65% of consumers admit that an enticing rewards program has the potential to influence their spending behavior, states this PlumPOS article

As credit card usage increases due to post-pandemic behaviors such as increased spending, financing of day-to-day purchases, and decreased use of cash, consumers are looking closely at the benefits and rewards options of their credit cards.

For decades, businesses and financial institutions have been utilizing credit card rewards to maximize engagement and foster brand loyalty. According to the CFPB Consumer Credit Market Report, card issuers have increased expenses in rewards programs by 30% since 2015, reaching an average of $171 per account per year. This trend is driven by multiple reasons, including a higher competition of offers in the market and cardholders taking greater advantage of those rewards. It is also driven by the prevalence of high-cost high-rewards cards, with high sign-on bonuses, in the affluent market segment.

But what exactly makes a rewards program enticing in the first place? Businesses offering traditional, one-size-fits-all rewards may have a harder time attracting the modern consumer, whose interactions with brands across industries have become increasingly flexible, personalized, and driven by technology. Some of the most successful rewards credit cards find ways of making their rewards easy to navigate, as well as both valuable for and relevant to the consumer.

By gaining the ability to build and implement a rewards program that speaks to a brand’s unique products and mission as well as the customer’s individual needs and preferences, businesses have a much better chance of delivering the kind of personalized experiences that seem to be driving the purchasing behavior of modern consumers.

On that note, let’s take a closer look at just a few reasons innovation should be a top priority for businesses and financial institutions looking to launch a credit card rewards program in 2023.

Keeping Customers Engaged is Half the Battle

Whether you’re a small to medium-sized business or larger financial institution, ensuring customers engage with your products and/or services as often as possible is critical to building meaningful relationships and fostering brand loyalty. And while this has always been the case to a certain extent, it is particularly true today as technology becomes more and more embedded into the daily lives and purchasing habits of consumers.

Moreover, consumers have grown accustomed to both the personalization and ease-of-use associated with modern technology, and are looking for the same kind of intuitive, individualized experiences from financial products as they get from streaming services and social media platforms. Needless to say, these aren’t the kinds of experiences that can be delivered through more traditional credit card rewards, nor can businesses expect recurring engagement from customers who barely understand, let alone actually utilize, their outdated rewards and loyalty programs.

This is where the power of innovation comes in: By building a customized rewards program that either automatically adjusts to a consumer’s individual spending habits, or allows them to choose, modify and track their own rewards based on spending categories, financial institutions and other businesses can deliver personalized experiences while empowering their customers to take a more active role in their rewards journey.

With Customized Rewards, Every Purchase Becomes an Actionable Insight

Beyond simply maximizing engagement, customized rewards can provide businesses with numerous valuable insights and analytical tools that help them better understand their customers’ behaviors and preferences.

Whether it’s based on the individual spending categories chosen by the consumers themselves, or automatic modifications to rewards based on frequent transactions, customization significantly enhances a business’s ability to track purchases and improve their capacity to create more personalized experiences over time. In addition to boosting the effectiveness of targeted marketing campaigns and outreach efforts, the wealth of data generated through customized rewards can also help to identify and react to trends across customer segments, including the reception and performance of specific products or marketing strategies.

Customization Allows Rewards to be an Extension of Brand Values & Culture

In addition to improving customer experiences, customized rewards can present businesses with the unique opportunity to better communicate their brand values and culture, and even to create real-life positive impacts as a result.

For example, a business might choose to reward spending on healthy foods or wellness products, allowing customers to earn additional cash back while making better overall lifestyle choices. Rewards programs are starting to incentivize spending on inflation-affected goods and services like fuel and groceries, while decreasing value on nonessentials like travel. For instance, Mastercard has partnered with fintech Bilt to offer cash back for rent payments. And, Rocket Mortgage has a credit card program with rewards tied to everyday spending that gives the consumer a head-start on earning money towards a mortgage down payment.

The best part is that the potential to innovate is virtually limitless, as are the positive impacts that a business can create as a result of a thoughtful and focused rewards program. It’s simply a matter of identifying those causes that most accurately reflect your business or institution’s core values, and then building a customized rewards structure that helps to both communicate and realize your brand’s mission.

What will your unique credit card rewards program offer?

Whether it’s to promote a cause that highlights your brand’s values or to create the kind of personalized experiences that the modern consumer has come to expect, innovation and customization should be considered an absolute must for businesses and financial institutions looking to launch a credit card rewards program in 2023. And while this might seem like a complex undertaking, the good news is that if you’ve got the vision, Deserve has the tools and experience to make it a reality. Reach out to us for a conversation or demo!


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