Multinational Financial Services Firm
Co-branded retail credit cards — such as Macy’s, Target, and others — let you earn store rewards and a discount when you checkout.
Our client could not understand why 1/3 of their customers used their card only once and never again, even if those customers could use these cards at any retailer.
We calculated that just 5% of this group — the One & Done customers — could unlock $400M in revenue potential just by using their card one more time.
Initially, our client focused on encouraging customers to use their cards outside of the retailer to achieve that revenue. I investigated customer appraisals of co-branded credit cards and identified strategies to improve engagement and reduce one-and-done behavior.
“I don't actively look for cards, but I got 25% off, ’OK, cool.’ Best Buy is convenient, too, for purchases in the store. That's when I use the card.”
— Participant Interview
Overcoming Behavioral Barriers
Realization:
Our client thought that they delivered attractive credit cards for use outside of the retailer.…But during my interviews I would hear, ‘discount card’…‘store card’
Observations + Context
Customers associated that card exclusively with that retailer. The card is simply a gateway to discounts. Cardholders didn’t acquire the card because of the extra credit line.
Pictured above is an example of the game-based simulation I developed. After building a wallet participants are brought to this game board. This board represents one of four seasons; at the end of the second season the intervention is tested.
Game-Based Simulations
Testing Interventions:
I helped develop an immersive game-based simulation and discovered why cardholders have a different view. These games are effective at isolating behaviors to understand their underlying influences.
Game Play:
This game is loosely based on the game, ‘Life;’ participants begin by building their wallets. A die is rolled, their pawn moves to a space, and a purchase decisions is triggered.. The first half of the game establishes a baseline of a participant’s purchase behavior; The midway point introduces an intervention.
Pictured above is an example of one of the interventions tested in our research. The strategy for this intervention is 'using the card inside of the store’ (i.e. internal category selection). Other strategies included: External shopping category selection, reward type selection, shopping event selection, smart shopper, peace of mind, comparison to general purpose credit cards, and reward tier selection.
Intervention Example
Card Offer Intervention:
In the intervention to the left, the strategy being tested was ‘using the card inside the store’ (internal category selection). 8 different versions of this offer were designed, with each distinct version satisfying a different strategic objective and leveraging a different principle to reduce ‘one-and-done’ behavior.
Measuring Intervention Efficacy:
We compared purchase behavior after the offer with the baseline purchase behavior.
Pictured above is an example of how a customer might organize the cards in her wallet — including frequency and context of use.
Customer Insights
Actionable Analysis:
Retail cards are not considered credit cards. They’re seen as discount cards to be used for a single purchase, at that retailer.. These features prompt card acquisition…but they don’t lead to consistent use.
Client’s Hypothesis Omits Mental Models:
We learned that customers who use cards frequently inside the store often graduate to using the card outside of the store. After this ‘in-store’ association has been established, customers see it as a credit card, and not simply a store card.
Recommended Solution:
Establish shopping intent first, then link card use and incentives back to intent at checkout.
Behavioral Principles Leveraged:
1. Align with the ‘store card’ mental account:
Create an exclusive account in the shopper’s mind for Macy’s; when they think Nike, they should think Macy’s.
2. Build a shopping commitment:
Customers stop using the card because they lack an intent to return to the store. The simple act of taking a position causes a natural tendency for that person to behave consistently.