The psychology of rewards should have financial institutions rethinking "value" and how it affects their marketing budgets, especially in the context of the current pandemic. In previous years, "value" meant consumers attaining something meaningful for what they give to a business. But now with the current public health crisis, consumer needs have shifted dramatically, and "value" should be financial institutions helping their customers achieve their budgetary goals.
Even when things return to normal, financial institutions will need to think differently about how they provide value. These companies should consider factors like easing consumer stress, offering more options for convenience, and putting money back into cardholder's wallets when it's needed most. The key is identifying benefits that add value without demanding customers to jump through hoops.
With the ongoing pandemic, 80% of people are redeeming rewards back in cash rather than using their miles or points elsewhere. Credit card companies are recognizing this shift in consumer behavior and have started giving out more money as a result since travel and dining out have been more difficult throughout the lockdowns
Most financial institutions, neobanks, and digital payment platforms currently provide ways for people to get cash back, either through a purchase or upon signing up for certain services. Whether attached directly to specific card usage or generally available through brand loyalty programs, offering financial incentives, particularly those putting money right back in spenders’ pockets, speaks volumes about how much you value your customer's business.
Every financial services company issuing card wants to be top of wallet and have highly engaged cardholders. However, the winners in this fintech marketplace will be those that provide the right offer to the right person at the right time while finding the right way to celebrate savings with their cardholders.
A great way for them to do this is by implementing cash back into their offering while making the customer experience as frictionless as possible. Companies shouldn’t have a customer journey that's more than one step because when customers sign up for your loyalty/rewards program, the savings should be automatic. Once the customer experiences the ease and delight of automatic cash back, your card will be their payment method of choice.
When it comes to rewards, the psychology of what people want is powerful. Financial Institutions and brands have a great opportunity to reward their loyal customers by keeping them engaged with cash back in their pockets.