I was speaking recently with a colleague, a well-respected member of the customer loyalty industry, who mentioned that the primary reason that customers choose one credit card offering over another are card enhancements: the customer loyalty benefits offered to card users. I found this very relevant on two fronts: first, as a loyalty marketer representing a company that provides customer loyalty program offerings such as Concierge service, as well as from the standpoint of a consumer in search of the best financial options for my family.
I got married nearly a year ago, and my husband and I have almost completed the arduous task of combining our finances. The last issue that we have to tackle is streamlining how we actually pay for things on a daily basis—an area where we differ. Other than large purchases, I have historically been a cash or debit-card girl—I have both a Visa card and a Master Card that I use for emergencies, online shopping and other large purchases, but otherwise prefer cash as my day-to-day method of payment. My husband, on the other hand, works in the credit card industry. No surprise, he is a big believer in the power of plastic. Although I have always shied away from using consumer credit on a daily basis, it only took two little words to convert me: rewards points. Yes, even though I have worked for nearly five years for a company that provides both benefits development and benefits such as Concierge service to most of the leading credit card issuers, it wasn’t until I stayed in a Ritz Carlton for free on New Year’s Eve (courtesy of airline miles) that I personally discovered just how awesome credit card benefits can be.
Shortly after we returned home from our free night at the Ritz, I started looking into the myriad of credit card offerings, and accompanying benefits. Luckily this research started before my bank completely phased out its debit card rewards offering, so I was able to redeem the points that my debit card usage had (unbeknownst to me) earned. I quickly sent off for a plethora of Starbucks and iTunes gift cards, and was able to continue my task in earnest, fully caffeinated and with musical accompaniment.
This is where my personal and professional lives began to diverge. I have read reviews of VIPdesk Concierge service on message boards and blogs geared towards frequent travelers, and decided to start there. I started at Flyer Talk, which led me to Frugal Travel Guy, Million Mile Secrets, and View from the Wing. I quickly got up-to-speed on not only the most popular credit card programs and their respective loyalty offerings, but also became acquainted with the practice of “churning” credit cards. Churning is signing up for a credit card when the card issuer offers a noteworthy sign-up bonus, such as a large number of free miles or room nights, and then cancelling the card after earning the sign-up bonus but before any annual fees are assessed. I read testimonials of people who had accrued millions of points and miles through churning, and became simultaneously enamored and saddened by the practice.
As a consumer, I love the idea of benefiting from simply making purchases I already plan to make. I have already earned coffee, music, hotel rooms, rental cars and plane tickets thanks to credit card rewards points—why not more? However I became saddened by the prospect of a devaluation of quality customer service and “personal touches” in favor of free stuff. Do we live in a world where free stuff trumps customer loyalty? Are all of the surveys I read about the importance of quality service and the quotes that I hear from satisfied VIPdesk customers who make their card decisions based on Concierge service just bunk? Will rewards points kill brand loyalty?
Luckily, the answer is no. Rewards points won’t kill brand loyalty—instead they do the opposite—they drive brand loyalty for many consumers. I recently read a blog post on One Mile at a Time that perfectly demonstrates exactly why rewards drive brand loyalty. The benefits available by signing up for (and regularly using) the new Hilton HHonors Reserve Visa Signature card are the final push that this blogger needed to transfer their allegiance to Hilton, and thus to Visa through use of this card vs one offered by another payment network. The blogger knows that Hilton is a reliable hotel brand, with luxury offerings such as the Waldorf-Astoria, and knows that there are some very cool Hilton properties around the world that they will be able to take advantage of more often, thanks to the benefits offered by this co-branded card. And, they know that they will be treated well once they get there.
However after all of my research and all of my readings, I didn’t have to look any further than my own better half to know that while card benefits can bring customers in the door, it is the brand itself that keeps them there. It turns out that I didn’t actually ask my husband how he feels about switching allegiances from the airline card that he has been using for years in order to earn more rewards points elsewhere. You see, he got this card to begin with because of a sign-up bonus, and stayed with it because of the great service that he receives not only from the airline, but from its partners as well.
Myself, I am currently taking a middle ground between the card churners of the world and my incredibly brand loyal husband. I decided to sign up for my first new credit card in I don’t know how many years (to give you an idea as to how long it has been, it was groundbreaking that I could choose the artwork on the card when I got it). I chose a card offering that not only offers me a fairly substantial sign-up bonus, but also offers me access to a VIPdesk Concierge. Seems like a win-win to me!