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Citigroup Inc. has reduced overall customer attrition by about 50% since the 2004 introduction of ThankYou Rewards, which provides customers points for each credit and debit transaction they conduct. Nancy Gordon, executive vice president of Citi's ThankYou Rewards, told attendees Monday at SourceMedia's ATM, Debit & Prepaid Forum in Chandler, Ariz., that recent Citi data show that cardholders that belong to its rewards program spend more and help the bank earn higher interchange revenues than customers who have not signed up. "It took time to build the program, and this is the first year we had behavioral data to show that the program is really working," Gordon said. Citi customers can earn points using Citi products and services or when using the services of partners, such as Expedia. They can redeem the points for travel, merchandise and customizable rewards. Citi was one of the first banks to offer a rewards program across its entire organization, but Gordon said competition is exploding now as competitors add rewards for both debit and credit cards. The economic downturn also is putting pressure on the funding of card rewards, Gordon said. "Procurement (of rewards) is the most challenging aspect of the program, ... and we would be kidding ourselves if we said all the accounting and regulatory changes affecting our industry recently won't impact our funding model for rewards." While rewards programs are growing, consumers also report some frustration with the proliferation of programs. The average household belongs to 12 loyalty programs and is active in five, Gordon said. But 68% of financial-services customers said they would not switch providers because of the rewards programs they are already in. "Consumers are fatigued by rewards programs. ... To succeed we have to make them simple and easy." SourceMedia publishes CardLine.
