Credit card mailings are up dramatically from this time a year ago, due in large part to credit card offers promoting rewards programs, according to Mintel Comperemedia. And credit card issuers are working hard to retain existing customers and attract new ones.
About 1.2 billion offers for new credit cards were received by U.S. consumers in the third quarter of 2010, compared to just 391 million in the same period a year ago, according to the Chicago-based company. Issuers continue to focus on credit-worthy consumers, and as a result, eight in 10 offers are for rewards cards promoting points, miles or cash-back to consumers, up from six in 10 offers in 2008.
Competition is heating up in the payments industry, despite ongoing uncertainty surrounding the economy and a new regulatory environment, says Andrew Davidson, senior vice president at Mintel Comperemedia. With credit card rewards programs being widely used by consumers, it is more important than ever to gain a competitive advantage in the intensifying battle for share of wallet, he says.
In 2011, Davidson predicts even more aggressive messaging. One example he cited is what American Express has been doing to promote its SimplyCash business card. The company assertively compares it to Chase's Ink product and the Discover business card.
Consumer attitudes have shifted and continue to evolve as the economy continues to recover. While new regulations are putting a squeeze on industry profits, consumers still expect a rewards program to be compelling, targeted and redeemable.
"Consumers are doggedly persistent when it comes to comparing credit card offers, and will use the rewards program with the best cash-back rate or highest points return per dollar," Davidson says.
According to a Mintel Oxygen report on loyalty marketing, 24% of consumers actively compare credit card offers in order to compare reward programs. Consumers have become more frugal, saving more and spending less on their cards. In this environment, offers promoting cash back on purchases have become increasingly popular.
Cash-back credit card offers accounted for 41% of all rewards offers in Q3 2010, compared to 28% a year ago. Furthermore, issuers are acknowledging consumers' change in spending and are now focusing on rewards that offer better returns on "everyday items." Forty-five percent of offers mentioned the word "groceries" somewhere in the mailing text in 2010, up from just 20% in 2008.
"Creative reward strategies will win new customers, but there will always be the threat from the next great rewards innovation," Davidson says. "Therefore, issuers need to seek new ways to leverage rewards programs to seek loyal customers post acquisition."