OCTOBER 6, 2011
The “Rewards” of Keeping Debit Loyalty
Programs Post-Durbin
 REWARDS AND INCENTIVES WHAT’S NEXT?
Macro forces are changing the financial
services landscape on many levels
MACRO FORCES
INNOVATION MEGATRENDS
• Generation “Ready Access” – customers prefer
paying with “ready funds” (debit, prepaid, cash)
• Mobile Revolution – mobile technology is changing
consumer behavior and payment business models
REGULATION
• Blurring of Online and Offline – most consumers want
multi-channel experiences
• DDA Disintermediation – bank accounts are less critical
to many payments innovations
DEMOGRAPHICS
ECONOMY
• New Customer Information and Incentive Paradigms –
data is enhancing rewards, deals and customer
experience
• Open Platforms – customers expect interoperability
and plug & play solutions
The “Rewards” of Keeping Debit Loyalty Programs Post-Durbin
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A range of new players are getting involved
Retailers
Information
Mobile
Operators
Companies
Media/Digital
Content
Companies
Traditional FIs
& Processors
Alternative
Payment
Co’s
Handset
mfgs.
Social
Networks
Regulators
& Consumer
Advocates
Emerging Players
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Incenting and rewarding consumer
behavior is more important than ever

Attracting new customers

Retaining existing customers

Incenting profitable behavior
• Use of low cost channels (ATM, online, mobile)
• Electronic statements
• Direct deposit
• Card spend
• Savings
• Relationship deepening/product cross-sell
The “Rewards” of Keeping Debit Loyalty Programs Post-Durbin
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A range of interesting models
challenge traditional thinking
BEHAVIOR-BASED
PROGRAMS
MERCHANT-FUNDED
REWARDS
• Broad-based programs reward a set of desired behaviors
• Examples: PNC Points
• Rewards associated with spend at specific merchants that are funded in part or
in total by the merchant
• Examples: Wells Fargo Earn More Mall, BAC Add it Up, RewardsNOW ShoppingFLING
INSTANT POS
REDEMPTION
• Real-time ability to use accumulated rewards for purchases or benefits in the physical
world via “virtual gift cards” or other POS redemption options
• Examples: Carlson Marketing Instant Mobile Rewards
NEW CHANNELS &
FLEXIBLE REWARDS
• New ways to interact with customers and allow broader earning and redemption
options in the context of specific segments
• Examples: American Express Facebook Points App and iTunes App and redemption;
Best Buy/Citi Mobile App
The “Rewards” of Keeping Debit Loyalty Programs Post-Durbin
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How has loyalty been impacted?

As Illustrated, there a great number of significant environmental factors—
legislative, economic, behavioral, and technology-driven—that are impacting
what a loyalty program needs to look like in the future.

The underlying purpose of loyalty programs remains, and, in fact, is stronger than
ever—driving profitable customer behavior!!!!

Consumers expectations are high – What’s in it for me?
•
Consumers want value and flexibility, choice and options.
•
Consumers are also looking for control – instant rewards with long-term
incentives – delivered up digitally.
The “Rewards” of Keeping Debit Loyalty Programs Post-Durbin
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Loyalty more relevant than ever…to the consumer

In light of all these market forces and heightened consumer expectations, what
will successful “loyalty” programs look like in the near and longer term?

Ultimately the goal must be providing value in meaningful, targeted, relevant and
profitable ways:
•
Must address, in a targeted manner, the broader customer relationship and the
behaviors desired. (Earn side of the equation)
•
Must provide meaningful incentives to drive the desired behavior. (Burn side)
•
Must utilize all available channels to engage the customer-relevant in both
method and time.
•
Must be YOUR program—built for you and targeted to your goals, now and in
the future.
•
Must contribute to profitability.
The “Rewards” of Keeping Debit Loyalty Programs Post-Durbin
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The “Rewards” of Keeping Debit Loyalty Programs Post-Durbin
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Thank you!
For a free copy of today’s presentation email us at:
[email protected]
Questions • Discussion • Feedback
Steve VanFleet
President and CEO of
RewardsNOW
[email protected]
Margaret Weichert
Managing Director at
Market Platform Dynamics
Tim Kolk
Principal and Consultant
at TRK Advisors
[email protected]
[email protected]
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