Debit Rewards Programs

Lana Chandler
January 9, 2012 | COMMENTS

“Debit rewards programs are an effective way to increase card acquisition and also increase card activation and usage,” maintains Bruce A. Clapp, president of MarketMatch in Englewood, Ohio. “The best program is one that uses ‘soft benefits’ the financial institution offers—rate reductions, rate increases, fee waivers, etc.—along with ‘hard benefits’ like merchandise, travel or gift cards.”

Rewards programs have ebbed and flowed in their vitality and promise. Ranging from points to free travel and everything in between, rewards programs have been successful in promoting card awareness and increasing the portfolio size and activity levels. An effective rewards program, says Clapp, includes these key components:

• Easy to understand
• “Do this and get this” structure
• Reasonable equation of activity to rewards
• Staff use and promotion
• Constant promotion to the card base

Selecting a Program

“Most rewards programs utilize third parties, as it is a ‘plug and play’ integration and can be launched easily in 45 to 60 days,” says Clapp. When designing or shopping for a rewards program, Clapp cites these considerations:

• Cost of the rewards
• Expected breakage rate (percentage of used points versus unused) of points/rewards and redemption rates
• Program promotion costs
• Set-up fees
• Ease of reporting
• Ease of redemption

Promoting Your Program

When promoting a rewards program, Clapp recommends:

• Constant communication to the debit card portfolio
• Ensure staff uses the card and are part of the program
• Target heavy users first for early adoption
• Be multi-dimensional in your communications—direct mail, e-mail, social media, POS, etc.
• Issue card protector sleeves with new cards and have them abundantly available for replacement

If you don’t offer rewards, can you still be successful at promoting debit cards?

“Rewards programs are not the only way to increase penetration and usage,” points out Clapp. “Some institutions have opted to purposely not offer a rewards program based upon cost or perceptions that the funds used for the rewards are better invested by adding instant issue or other access features.”

This story appeared in Branch Manager’s Letter at www.branchmanagersletter.com and is reprinted with permission. Contact publisher Lana J. Chandler at 304-343-0206 or Lana@BranchManagersLetter.com.