Wednesday, April 19, 2017

Credit Cards and Promotions (Part 1)

Promotion at Lazada.co.id

Banks issued credit cards to customers when...
  • the customer applies for the card and
  • the bank decides that the customer is eligible to get the card
When the card is handed over to the customer, beside the physical card, the bank also gives the customer a certain credit limit. When credit limit is given to the customer, the bank will ensure that the customer was able to get credit according to the limit (there are resources allocated to enable this). However, as it is a credit line, the customer has the freedom to use it as is needed or even not using it at all. Then, to induce usage, the bank offers various programs to the customer, including those with partnership with others (as in the example above - from Lazada Indonesia).

As the competition to get customer's wallet share is getting tighter, banks are trying to expand their wallet share by luring the customer through a series of programs / deals.
  • The Best Deals
Customer is getting smarter in choosing the best deal for themselves. As banks pursue better deals, the marketing cost is skyrocketing, cost ratio is getting higher and there are growing concerns that the cost may eat up the revenue. The road to "offer the best deal" is rough.

As the hype is getting higher, customer is often blinded by one or two tagline offered to them and overlooks the whole proposition. Banks are offering various services to the customer, not only that one deal. Often what makes it a good deal is because of the combination between the deal and the other services like 0% installment, reward point, mileage, etc.
  • The Impulse Deals
Deals are a two-way arrangement, sometimes it's the bank who approach the partner to set up deals to be offered to the customers, some other times it's the other way around. In the case the second one happens, when the partner approaches the bank, it is possible that other competitors are already onboard. Then, the bank tends to jump in as well.

Promotion at Blibli.com for Pre-Order Galaxy S8/S8+

As more of this deal happens, the whole campaign becomes more like a sporadic campaign. Although from customer relevancy point of view, the program is relevant to the customer, however the program may not relevant to positioning of the bank in the targetted segment. In the case this happens, this can also be considered as costly for the bank, but beneficial to the customer.