The rewards programme can be a winner or loser for card issuers. In Japan, card issuers have had to reduce their redemption rates for their card reward programmes to shore up sagging profits following the lowered interest rate cap that resulted from the revision of the money lending business law.
Under the revised scheme, Sumitomo Mitsui cardholders will need 5,000 points to qualify for a round trip ticket to any destination in Japan. Previously only 1,500 points were needed. JCB and OMC Card will stop awarding points to customers who use their credit cards to top up their Edy prepaid cards.
Citibank, on the other hand, has taken a different approach, and has announced the pan-regional launch of its online rewards portal, www.CitiRewards.com, incorporating an enhanced rewards offering. The website has been rolled out in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Australia. Other markets around Asia-Pacific will follow suit.
“As the leader in innovation for retail banking in Asia, Citibank is pleased to introduce the industry’s most novel and creative customer rewards website,” said Surath Chatterjee, Citibank’s Asia-Pacific regional head of card products. “Other rewards programmes today are commoditised and generic, with identical items being offered through similar processes. At Citibank, our goal is to make our cardholders feel truly rewarded. We believe the CitiRewards redemption process should be fun, engaging and exciting, not tedious.”
Wide geographic spread
Chatterjee highlighted that, geographically, Citi is the most widely spread financial institution, present across 36 to 38 markets. In eight of the 12 Asian markets in which it operates, the bank is a dominant issuer.
Sanjay Kao, card business director of Citibank Indonesia, said: “People now want a quick shopping experience to get what they want and customers are telling us that rewards are boring. Thus we need to make it a lot more exciting and a lot more relevant. CitiRewards.com is a shift in how customers are involved, and motivates customers to use the card a lot more.”
Across the region, card issuers are going beyond card numbers into card usage to increase the profitability of their portfolio. Campaigns to generate higher card spending include promoting instalment payment plans with partner retailers at zero percent interest; offering tailored reward programmes based on target demographics and giveaways based on transaction size or frequency; and automatically crediting cashback refunds to the card.
New approach to redemption
Citibank’s move to revamp its rewards redemption process is a step away from existing programmes in the market. “What we are offering through CitiRewards.com is not new; it is a more efficient way to reach out to customers,” Chatterjee said. He pointed out that cost savings are not the main driver and the bank does not plan to change the existing points redemption ratio with the roll-out of the website.
At the CitiRewards website launch in Malaysia, Vipin Agrawal, business director for cards and personal loans at Citibank Berhad, said that the CitiRewards website was the widest-ranging card rewards programme in Asia-Pacific, with almost 3,000 rewards available for redemption. In Malaysia, 60 merchants are involved and 300 rewards items are being offered to its cardmembers for 2008.
Agrawal told reporters at the launch that Citibank Online has close to 350,000 registered users in Malaysia but online redemption transactions amounted to only 20 percent of that number. He is aiming to double customers’ online redemption transactions to 40 percent in the next 18 to24 months.
Market-leading Citibank Malaysia has rolled out a number of rewards-focused campaigns to increase card usage. Stay for Sure gives away free hotel stays to cardholders who make a minimum spend of MYR8,000 ($2,425) in three months.
With the success of Stay for Sure, Agrawal extended the programme to Fly for Sure, guaranteeing free flights for a minimum spend of MYR50 in a single transaction ten times a month for three consecutive months. Cardholders get to fly on a budget airline to popular holiday destinations nearby such as Langkawi and Phuket.
Focusing on transaction frequency, the bank’s Everyone’s a Winner campaign rewards cardholders at 12 times the amount spent by charging a minimum of MYR50 in a single transaction eight times a month. Previously, the points multiplier was eight times the amount spent.
Depending on the amount spent and frequency of use, cardholders can qualify for a points multiplier of up to 75 times.
In a previous interview with CI, Agrawal noted: “Feedback from our customers based on the previous campaign indicated that a large number of them would participate in a campaign that offers guaranteed rewards instead of contests. With this programme, we are not only encouraging customers to consolidate all their purchases on Citibank credit cards but we are also rewarding existing loyal customers.”
At the launch of the programme, Agrawal commented: “People may carry several credit cards in their wallets. But with Citibank’s focus on loyalty and usage, the incidence of use of a Citibank credit card is certainly higher than that of others. From an industry-wide perspective, Citibank also tends to give higher credit lines to customers. With attractive usage promotions and merchant offers, we will continue to make the Citibank credit card the primary card in customer’s wallet.”
The bank has plans to add to the programme by offering different sites for premium customers but, at the moment, Chatterjee is focused on rolling out the programme across the region. Singapore will remain a test-bed for the bank’s pilot launches due to its relatively developed consumer market and multi-racial mix that provides a good initial insight into the consumer behaviour across the region.
“Innovations that succeed in Singapore translate into bigger innovations in other markets,” said Chatterjee.