Question

Topic: Customer Behavior

Reducing Dormancy In Credit Cards

Posted by mothicy on 6/6/2010 at 10:51 PM ET 250 Points
Most credit card customers who are dormant will not receive any points of communication from the bank, e.g. no statements, no direct mailers etc. But most banks have the same objective which is to re-activate the dormant customers.

We all know that probably 60% of dormant customers are probably those who do not use the bank's credit card as principal cards. Recently, the government has imposed a tax fee on credit cardholders that they need to pay $60 for the next cards they own excluding the principal cards.

We see many customers cancelling their cards due to this. Many other banks are experiencing the same thing. Which brought to various promotions and waivers for the tax fee.

In order for us to retain and reactivate our dormant customers, what kind of promotion can a bank do? Giving reward points and minimum amount of cash backs (capped at $50) is not going to make any of those dormant customers move. Need something that is good enough for these customers to make the first swipe!
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RESPONSES

  • Posted by Peter (henna gaijin) on 6/7/2010 at 1:12 AM Accepted
    If most of your card holders are still using credit cards, just not yours - you may want to survey these dormant card holders and determine why they choose to use the other card and not yours. Perhaps you will find a trend, such as other cards give better rewards or have lower interest rates.
  • Posted on 6/8/2010 at 3:54 PM Accepted
    The answer lies in understanding your cardholders at a deeper level. Either there's something fundamentally different between active card users and inactive users, or there's something different about your card compared to whatever card they are using as their primary card, or both. (Or maybe they've just sworn off credit cards altogether.)

    Until you know that answer, it doesn't make sense to throw promotion ideas on the table ... for you or for your cardholders.

    If you need help designing the research, feel free to contact me offline, using the email address in my profile.
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