A new report from PYMNTS Intelligence highlights that only 17% of card issuers have successfully reached high customer lifetime value (CLTV) by strategically sequencing their capabilities rather than simply adding features. The study, conducted in collaboration with Visa DPS, analyzed data from nearly 1,000 banks, fintechs, and credit unions, revealing that the path to high CLTV is a deliberate process built on understanding customer behavior. This involves a four-stage approach: removing friction, building trust, creating habitual usage, and finally, monetizing intelligently. Each stage is designed to progressively shift customer behavior, ultimately leading to a more engaged and loyal customer base.
The report emphasizes that customer trust is foundational; issuers must ensure their products are perceived as safe and reliable before customers will integrate them into their financial routines. Once trust is established, issuers can embed their cards into daily financial activities, transforming them from secondary options into primary spending tools. This 'structural stickiness' is deemed more effective than traditional loyalty incentives, as it fosters a deeper relationship between the issuer and the customer.
Moreover, high-CLTV issuers leverage data analytics to cross-sell relevant products intelligently, avoiding costly incentives that attract transient users. The report indicates that these issuers can generate over $2,500 in lifetime value per cardholder, significantly outperforming their peers. The findings suggest that the sequence of capability deployment is as critical as the capabilities themselves, underscoring the need for a thoughtful approach to customer engagement in the competitive financial landscape.
The report emphasizes that customer trust is foundational; issuers must ensure their products are perceived as safe and reliable before customers will integrate them into their financial routines. Once trust is established, issuers can embed their cards into daily financial activities, transforming them from secondary options into primary spending tools. This 'structural stickiness' is deemed more effective than traditional loyalty incentives, as it fosters a deeper relationship between the issuer and the customer.
Moreover, high-CLTV issuers leverage data analytics to cross-sell relevant products intelligently, avoiding costly incentives that attract transient users. The report indicates that these issuers can generate over $2,500 in lifetime value per cardholder, significantly outperforming their peers. The findings suggest that the sequence of capability deployment is as critical as the capabilities themselves, underscoring the need for a thoughtful approach to customer engagement in the competitive financial landscape.
Source: PYMNTS
