Most Consumers Aren't Aware of Their Credit Cards' Ancillary Benefits. How Does This Impact Card Acquisition and Usage?

Most Consumers Aren't Aware of Their Credit Cards' Ancillary Benefits. How Does This Impact Card Acquisition and Usage?

Most Consumers Aren't Aware of Their Credit Cards' Ancillary Benefits. How Does This Impact Card Acquisition and Usage?

Jonathan O'Connor

Jonathan O'Connor

Jonathan O’Connor translates data into compelling stories as a part of the payment insights team at Auriemma Consulting Group, a boutique management firm specializing in the payments and lending space.

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With the rewards war in full swing, the sustainability of some credit card benefits has come into question, causing financial institutions to think critically about what they offer. And while consumers often want benefits whether they've used them or not — a product of the 'more-is-more' mentality — some ancillary benefits have a greater impact than others. While upfront rewards, like cashback for purchases, are most influential in card acquisition and usage, new research indicates that complementary ancillary benefits can increase a card's overall value ― as long as customers are aware of the benefits offered.

Auriemma Consulting Group's recent Cardbeat report identified the most and least important card acquisition drivers, highlighted the benefits that most impact usage, and revealed a general lack of consumer awareness for ancillary benefits. The study discovered that while card benefits may play a key role in acquisition, there is an untapped opportunity to more greatly influence card usage.

Pragmatic card benefits matter up front

Cardbeat evaluated 15 benefits to determine the most and least influential factors when applying for a credit card. Glitzy benefits — contactless pay, VIP experiences, cards made from heavier metals — may pique a credit cardholder's interest, but they are ranked as least important when applying for a new credit card. Pragmatic factors, like no annual fee, rewards that never expire and ID theft protection, on the other hand, hold the highest importance.

It's certainly a worthwhile effort for issuers to scrutinize their cards' less important, non-essential benefits, especially if they are costly to maintain. But while some benefits may be less important to consumers overall, they could be of importance to a certain customer segment, particularly within the corporate travel space. Benefits that aren't desired by the target demographic, or influencing the intended cardholder behavior, should be replaced by those that have a greater impact on acquisition, spend, satisfaction and retention.

It's crucial to find a balance between benefits that cardholders find important at acquisition and those that sweeten the deal throughout the cardholder life cycle in a meaningful way. While the most important benefits could be considered 'must haves' to a card program, less important benefits are still nice to have.

Heavy Metal? Think Again. When It Comes to Their Cards, Consumers Want Essentials

Rewards drive usage, but ancillary benefits can add value

Once a cardholder is past the acquisition phase, card benefits present an untapped opportunity to further drive usage. We looked at 37 benefits in this study – including general, experiential, monetary, protection and travel – and they revealed varying degrees of impact on cardholders. But some of this may be due to a lack of awareness about the benefits in question.

As an example, 65 percent of respondents said losing access to VIP experiences would have little to no impact on their card usage; 63 percent say the same for airport lounge access; and 61 percent for vacation package discounts. On the other hand, benefits like free hemming or basic alterations, free shipping, companion travel tickets and flight upgrades would most commonly have a large impact on usage if removed, according to more than one-third of those surveyed.

Overall, rewards earned for spending on a card, like cashback or points, and redemption options are the key drivers to usage. Additional ancillary benefits can fortify a card's value but currently don't move the needle much in terms of usage – and that’s largely due to lack of awareness. Promoting ancillary benefits is one tactic issuers can utilize to better capitalize on their cards' value to consumers.

Most consumers don't know card benefits

According to Auriemma's research, up to 55 percent of rewards cardholders didn't know if a card offered one of the benefits tested. So, while some practical benefits (such as ID theft protection) may influence card acquisition, the lack of benefit awareness limits the card's overall value potential and hinders the impact on usage, especially for those who don't know they have them.

Those in-the-know could save hundreds, and potentially thousands, of dollars by taking advantage of card benefits, like car rental liability, flight upgrades or vacation package discounts. Yet, the reality is that consumers don't always have the occasion to use most ancillary benefits regularly. So, when the occasion arises, only the most vigilant will know to take advantage. For these reasons, ancillary benefits can easily drift from a consumer's consciousness. Reinforcing their benefit will be key to unlocking the potential usage gains they can provide.

Reminders of a card's worth

Issuers should reinforce key rewards categories and card benefits valued by cardholders, especially those with the greatest likelihood to increase spend and loyalty, such as accelerated points earned on spend categories, waived fees on ancillary benefits, statement credits and no blackout dates for using points. By communicating timely reminders in a way that demonstrates how a specific card feature can enhance a cardholder's experience, issuers can capitalize on the acquisition, usage and retention gains that its program benefits can provide.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by Jonathan

Jonathan O’Connor

Jonathan O’Connor translates data into compelling stories as a part of the payment insights team at Auriemma Consulting Group, a boutique management firm specializing in the payments and lending space.

On the payment insights team, Jonathan creates reports, based on consumer research, that analyze market-shaping forces such as emerging technologies, changing behaviors and attitudes, and new market entrants. He also co-authors Auriemma's Twitter account (@auriemma_group), where followers get the latest findings from the company's studies.

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