Credit cards and soap are both classified as commodities, but from a marketing perspective the similarities don’t extend much beyond that.
Soap is largely about the very expensive game of buying recognition and differentiation through brand advertising, product positioning and distribution. So in that space, the TUP Model applies: Volume can be influenced by the trial rate, user rate and package rate (Volume = Trial rate x User rate x Package rate).
In contrast, credit card marketing provides opportunities for information-based messaging and mass customization. At Creative Solutions, we’ve developed a model that helps steer card marketing initiatives—just as the TUP model does for soap and other packaged goods. We call it the Card Profit Equations model.
The top-line drivers of profit include Gross Yield, Funding Costs, Losses and Operating Expenses. There are numerous sub equations and drivers which can all be influenced through insights, offers, customer treatments and messaging.
At the network level, brands like Visa, MasterCard, American Express and Discover employ marketing strategies similar to those in the packaged goods space. Because for networks, it’s all about creating brand recognition and consumer preference, positioning against competing brands and cash by focusing on points of differentiation and competitive advantage.
Visa and MasterCard operate almost like franchising companies, where it’s up to each outlet or distributor to employ strategies and tactics that sustain a profitable business model. In the cards space, that translates to individual card issuers. Marketing drivers at this level include customer origination, activation, utilization, retention and payment management.
Breaking down the drivers and what drives the drivers can be a key to customer relationship management and business profitability. Speed and frictionless payments in all points of marketing and product management (i.e. the Amazon model) should be the aspiration.
This promotes impulse buying on your card versus someone else’s. This should be reinforced by maximizing Wallet Peak, which is analogous to creative packaging. You can drive wallet share through technology integration, creative card designs and universal add-on features that promote consolidation of use.
As the high-level Profit Equation is utilized to create and execute business rules to drive customer treatments, champion and challenger strategies should be developed with appropriate control cells established. The marketing and product mixes can be fully deployed to drive specific tactics. Elements of the profit equation and corresponding tactics can be prioritized by ease of implementation and contribution.
This highly-effective methodology for card marketing can have many more dimensions than a basic TUP model. For more information, or to see how this adaptable model can help focus and optimize your own credit card marketing, call us at 302-543-8533 or email us today!