How to Incentivize Card Use with a Benefit Strategy

How to Incentivize Card Use with a Benefit Strategy

Every brand that puts their logo on a card aspires to have it used as much as possible. We explain the basics of building a card benefit strategy to incentivize the use of your card.

It seems like your business could benefit from launching a card issuing program to speed your payments flow and generate some revenue in the process? Have you already launched a card and need to know how to get people to use it? Well, launching a card issuing program is just a part of the challenge, every card program manager aspires to create a product that is considered the top-of-wallet in its intended use with the goal of maximizing its profitability. One way to ensure that is by designing a benefit strategy that incentivizes users to regularly use their cards. In this blog post, we will outline everything you need to know, do, and calculate to build a benefit strategy that promotes your card program and drives results.

Step 1: Define Your Goals

Before designing a benefit strategy, it's crucial to define your goals. What do you want to achieve with your reward program? Do you want to increase user retention, attract new customers, or increase transaction volume? Defining your goals will help you tailor your benefit strategy to meet your specific needs.

Why is it important to define your goals?

Defining your goals is important for several reasons:

  • It helps you focus on what's important and avoid wasting resources on unnecessary benefits.
  • It gives you a clear idea of what you want to achieve and how to measure success.
  • It helps you tailor your benefit strategy to meet the needs of your customers and achieve your business objectives.

Example of a goal:

Let's say your goal is to increase transaction volume. One way to achieve this is by offering a higher percentage of cashback for users who make a certain number of transactions per month. By doing this, you're incentivizing users to use their cards more frequently, ultimately increasing transaction volume.

Step 2: Know Your Customers

Next, it's essential to understand your customers' needs and preferences. What types of benefits are they looking for? Do they prefer discounts, cashback, or exclusive access to events? Conducting surveys and analyzing transaction data can help you gain valuable insights into your customers' preferences.

How to know your customers' needs and preferences?

Here are some ways to get to know your customers' needs and preferences:

  • Conduct surveys: You can ask your customers what types of benefits they would like to receive and how valuable they would find them.
  • Analyze transaction data: You can look at your customers' transaction history to see what types of purchases they make most frequently and what benefits would be most valuable to them.
  • Look at competitors: You can see what types of benefits your competitors are offering and how they're being received by customers.

Example of customer preferences:

Let's say your customers are frequent travelers. In this case, offering exclusive access to airport lounges or discounts on travel-related expenses could be a compelling benefit that encourages them to use their cards more frequently.

Step 3: Determine Your Budget

Once you have defined your goals and know your customers, it's time to determine your budget. How much can you afford to spend on rewards and benefits? Keep in mind that the benefits you offer should be compelling enough to incentivize users without breaking the bank.

How to determine your budget?

Here are some factors to consider when determining your budget:

  • Revenue: Consider how much revenue your card program generates and how much you can allocate towards benefits.
  • Competitors: Look at what your competitors are offering and how much they're spending on benefits.
  • ROI: Consider the return on investment of your benefit strategy and how much you can afford to spend while still achieving your business objectives.

Example of budget allocation:

Let's say your card program generates $10,000 in revenue per month, and you want to allocate 10% of that towards benefits. In this case, your monthly budget for benefits would be $1,000.

For card programs that are just starting and don't generate enough revenue to cover benefit programs, a good strategy is to offer sign-up bonuses and referral rewards. By offering a bonus for users who sign up and a reward for users who refer new customers, you can attract new users and grow your program. As your program grows and generates more revenue, you can gradually increase the benefits you offer. It's important to keep your benefit strategy aligned with your budget and business objectives to ensure long-term profitability.

Step 4: Design Your Benefit Strategy

With your goals, customers, and budget in mind, it's time to design your benefit strategy. Consider offering tiered benefits based on transaction volume or frequency. Users who make a certain number of transactions per month could receive a higher percentage of cashback or exclusive access to events. Sign-up bonuses or referral rewards can also attract new customers.

How to design your benefit strategy?

Here are some tips for designing your benefit strategy:

  • Tiered benefits: Offer higher benefits for users who make more transactions or spend more money.
  • Sign-up bonuses: Offer a bonus for users who sign up for your card program.
  • Referral rewards: Offer a reward for users who refer new customers to your card program.

Example of a tiered benefit strategy:

Let's say you want to encourage users to make more transactions. In this case, you could offer the following tiered benefits:

Number of transactions per month Cashback percentage
0-10 0%
11-20 0.25%
21-30 0.5%
31+ 0.75%

Step 5: Calculate ROI

Finally, it's crucial to calculate the return on investment (ROI) of your benefit strategy. Are the benefits you offer driving the desired results? Are users increasing their transaction volume or becoming more loyal to your card program? Continuously analyzing and adjusting your benefit strategy will help ensure you are getting the most out of your investment.

How to calculate ROI?

Here's how to calculate the ROI of your benefit strategy:

  • Calculate the cost of benefits: Add up the cost of all the benefits you offer.
  • Calculate the revenue increase: Calculate how much your revenue has increased since implementing your benefit strategy.
  • Calculate the ROI: Divide the revenue increase by the cost of benefits to get the ROI.

Example of ROI calculation:

Let's say you spent $1,000 on benefits and your revenue increased by $2,000 since implementing your benefit strategy. In this case, your ROI would be 2 ($2,000 revenue increase / $1,000 cost of benefits).

In conclusion, a well-designed benefit strategy can be a powerful tool to promote your card program. By partnering with PayCaddy, you can access expert guidance and comprehensive card issuing solutions that will help you achieve your goals. So, what are you waiting for? Start designing your benefit strategy today, and watch your card program's profitability soar!

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