You may be watching debit card usage at your financial institution drop over the past few years. And it’s not just happening at your FI. Take a look at some statistics about consumer card usage in 2019:
- Fewer U.S. consumers use debit cards since 2014, and prefer credit card use over debit cards. Household general purpose card use was 62% in 2018, just off its 5-year high, while debit card use sank to a 5-year low of 52% that same year.
- Young adults, especially Gen Z and affluent consumers, are moving away from using debit cards. Overall Gen Z debit card use dropped 20% between 2012 to 2018, while affluent consumer use dropped from 53% to 48%.
- Fewer use debit cards for purchases even if they own them, especially young adults and seniors. Again, percentages have fallen across the board.
[Source: Mercator Advisory Group CustomerMonitor Survey, published January 2019]
That’s a gloomy outlook – but can FIs reverse the trend?
Change Cardholder Behavior Through Targeted Communications
Combining innovation, customer understanding and data-driven targeted campaigns, the opportunity to reach out to these underperforming customers can revitalize debit card utilization. While it is often a challenge to segment customers, determine the average behavior and set benchmarks for desired behaviors, the technology exists today for FIs to do just that.
By effectively engaging underperforming cardholders through the latest breakthroughs in data management, FIs can now segment those customers and develop an automated, all-encompassing targeted marketing strategy including branded messaging, deployment and campaign fulfillment. Armed with information on how customers are using, or not using, their debit cards, they can influence and drive key performance indicators such as card usage and engagement.
Regularly targeting underperforming cards is an essential step to fostering engagement and retention. With frequent campaigns, you will not only increase the immediacy of card engagement, but also influence card behavior on a sustainable basis. For example, a recent Debit Usage Campaign Saylent ran for a client targeted over 5,000 cardholders with low spend over a baseline month. Participants were asked to increase spending by being incented with gasoline gift cards; spending between $500-$750 would earn a $10 gas gift card, while spending more than $750 would be rewarded with a $20 gift card.
It didn’t just work – it exceeded all expectations.
On average, campaign targets grew from 5.68 transactions per month to 7.24 transactions in the campaign month. For those that qualified for the incentive, transactions rose from 6.64 in the baseline month to 24.13 transactions. Better yet, the residual effect was apparent long after the campaign was in market, with average transactions sitting at 9.62 (targeted) and 18.09 (qualified) a full year after the campaign’s launch.
Targeted and qualified cardholders increased spending from $106 and $131 per month to $201 and $961, respectively. A full year later, these cardholders maintained average spend of $287 and $591 monthly. Finally, interchange lift went from $1.86 to $10.22 for cardholders who qualified, steadying at $6.61/month one year later. Most importantly from the institution’s standpoint, the institution experienced a one-year return-on-investment of 233%.