Banking Review

Capturing wallet share

Customers in the market for a new credit card have a shopping list
of pricing and quality features they want to tick off with ease and speed

BY GREG WADDELL

Michael is in the market for a credit card. When it comes to credit cards, he is not necessarily loyal to his primary banking provider. As he does some quick research, he has a shopping list of features he wants met. This list includes pricing and quality features. To win Michael’s business, the card provider needs to achieve several things:

• Be on Michael’s consideration set;
• Provide the features of price and quality that Michael values; and
• Articulate those features more effectively than the competition.

Key findings of a recent payment cards study support these points, flagging that card providers that think they can increase share-of-wallet or stymie defection to hold and grow market share based on loyalty alone, need to review their thinking.

A recent payment card study by research group FOREBRAND covered reward cards, low or no annual fee cards, low rate cards and debit cards, with more than 6,000 consumer responses. The study provides marketers and management with consumer based insights at four critical levels:
Value drivers: A detailed hierarchy of features the customers value for each card type.

Customer experience vs. non-customer perception.

Best Brands Index: A ranking of what customers consider to be the best brands in each category; and

Value Map: A guide to which brands are likely to win or lose market share or remain static, based on consumer intention.

Pricing ain’t everything
While card customers are concerned about price (interest rates, fees and charges, etc), they are equally interested in non-price features that include the sub-categories of performance and reputation, and the attributes that underpin these.

Example 1: Rewards card customers consider that paying an annual fee is a reasonable part of using this product. However, they measure any costs against quality features, such as “It is easy to earn points” and “I can easily redeem my points”. The FOREBRAND study found that a challenge for many of the rewards card providers was to more successfully communicate their non-price features to prospective customers to better aid customer acquisition.

Example 2: In the Low Rate category, respondents to the study considered a low interest rate charge to be a hygiene factor. The Study found that there were indications that this category’s growth would not be driven on interest rates, but rather it would be driven primarily by quality features.

Respondents to the study indicated that features such as a fast application process and suitable credit limits were among the features they rated as important.

Perception equals reality
Communicating effectively with non-customers as well as customers was vital. The FOREBRAND Best Brands Index for low rate cards found Bendigo Bank punched above its weight in this product category. It performed well, but could it perform better on the Best Brands Index?

Example 3: Bendigo Bank’s low rate card was ranked by study respondents as the “top provider of overall value for money”. While the card was the most price competitive at the time of the study, it ranked second on quality features. It’s important to note Bendigo Bank’s customers had a very high satisfaction with their experience of dealing with the bank. This was contrasted by non-customers whose perception of possible future interaction with the bank did not score as well. If Bendigo Bank could close the gap between non-customer perception vs. customer experience, indications were that it could improve on acquisition in this category and therefore on the Index. Understanding what non-customers are seeking and communicating the Bendigo Bank experience more effectively may serve this bank well.

Show me the money
The FOREBRAND study found card providers who generated positive expectation among non-customers and delivered a positive experience were well positioned to acquire new business and retain existing customers.

Taking that one step further, the card providers who appeared to have taken the time to understand the customer, Michael, and the features he valued in terms of price (interest free days, annual fees, etc.) and the quality features he valued (including subsets of performance and reputation), and framed effective communications around these features were better positioned to win market share.

Greg Waddell is business development manager at brand research group FOREBRAND