Accenture Banking Blog

Customer experience excellence, for all intents and purposes, has shifted from a nice-to-have to the primary value proposition. Customer experience is the new brand. Often, the better it is, the higher the brand value. In fact, consumers who score a brand higher on customer experience are up to three times as likely to spend more on that brand.1 With real business value at stake, there’s a clear case for payments players to get the customer experience right.

Low-hanging fruit…not so sweet

A superior customer experience is nuanced, not monolithic. As I’ve mentioned before, it reflects the 4Rs—recognize me regardless of my entry point and device, remember my history of interactions, recommend relevant products and services, and reward me for my loyalty. Mastering all four is a herculean task, even for market leaders. It takes strategic vision and the will to change. It also takes the combination of being more digital, more real-time, more personalized and more integrated while leveraging customer 360-degree advanced analytics capabilities that credit card issuers have yet to achieve at scale.

Rewards are a different story. They are the low-hanging fruit of customer experience transformation. For over a decade, credit card issuers have been locked in an arms race of escalating points, deals and cash-back percentages. This no-holds-barred battle has fueled consumers’ insatiable appetite for rewards. Accenture analysis shows that consumer spending on rewards cards tripled between 2007 and 2017, accounting for 100 percent of the growth in credit volume during that period.2

But has rewards fever locked-in consumer loyalty to card issuers? Has it fueled a differentiated customer experience? No. Rewards are now a mandatory minimum. A zero-sum game. The market is so saturated that card issuers are not competing to deliver choice, convenience, control and value to consumers. They are in a race to nowhere for differentiation in a highly commoditized market—an expensive and diminishing-return investment. And with downward pressure on interchange fees, the economics of the traditional rewards model are not sustainable.

Instead of focusing on rewards, card issuers should focus on rewarding. This is a profound shift from a transactional strategy to a relational one.

From a noun to a verb

This is why it’s time to break the mold and create the next generation of rewards that can have a meaningful impact on customer experience. Of course, consumers will continue to demand rewards. This will not change, especially in the era of “I want it now” digital immediacy and consumer-centricity. But rewards do not have to be rooted in traditional “spend and get” dynamics to intrigue and entice consumers, improve the customer experience and differentiate card issuers.

Instead of focusing on rewards, card issuers should focus on rewarding. This is a profound shift from a transactional strategy to a relational one. It is a shift from “rewards” based on points, rotating categories and coupons to “rewarding” with experiences, exclusivity, access, convenience and ease of redemption. It is about knowing consumers beyond the transaction—who they are, how they live, what they value.

Start rewarding now

This pivot is uncharted territory for most card issuers. Yet it is the only escape from the endless loop of rewards one-upmanship that squeezes profitability and stifles brand differentiation, and ultimately, brand value.

Focus on these fundamentals to create the next generation of rewards:

  • Understand people. Target card-linked offers to a true segment of one. This is going beyond traditional demographic segmentation to understand consumers at a psychographic level. It is about knowing not just what purchases they make, but why they make them. So the Lady Gaga super fan who has just purchased a ticket to “A Star is Born” can earn rewards toward music downloads, concert tickets and even a backstage pass.
  • Curate exclusivity. Recognize loyal customers with rewards that are individual, not indiscriminate. These are highly specialized, outside-the-box offers that the competition cannot easily replicate. Think tennis lessons from John McEnroe. Dinner at the chef’s table at a Michelin three-star restaurant. Or deep discounts at a Caribbean resort. Developing exclusive rewards opportunities will require ecosystem relationships with partners across sectors.
  • Deliver now. Ensure that consumers can redeem their personalized rewards immediately at the point of sale. Do not test their patience—or their loyalty—with offers that force consumers to pick categories for the future…and wait. Remember, according to Accenture’s 2017 North America Consumer Payments Pulse Survey, 76 percent of consumers say that they want to redeem deals that are tied to their card when swiping at the point of sale.3
  • Eliminate friction. Streamline rewards redemption so consumers are rewarded without having to do work for it. Airlines are doing this now, allowing consumers to pay with points at many terminals. There’s also a trend toward card-linked offers that do not require consumers to collect receipts or coupons. One app offers immediate rewards as well as the opportunity to move collected cash-back savings to a bank account or make a charitable donation.

Always cool, never creepy

As with all of the 4Rs of customer experience, data insight is critical to rewarding. Fortunately, consumers are willing to share their data. Our pulse survey suggests that about half can be incented to share their personal information to get more relevant rewards.4  A word of warning. Consumer permission is a very fine line. It will be critical to balance relevancy, timeliness and privacy to deliver rewards that are always cool, but never creepy. As points and cash back give way to experiences and exclusivity, we can expect to see rewards take on new life in payments.

Watch for my next blog, which will wrap up this series on retail payments market shifts with a focus on security.


1Accenture, AFRESH Index Retail Study, 2018
2Accenture estimates and analysis, Q1 spending, Argus Information & Advisory Services, LLC –
3Accenture, “Driving the Future of Payments: 10 Mega Trends” 2017

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