As e number of credit card service provider expand by the day, the incentives given to lure new clients to their services have equally increased. In a world full of people and companies doing similar businesses, creativity and competition are the ultimate principles that can keep you in fair contention with your rivals in business. As a result, credit card service providers are constantly devising new methods to remain relevant in the face of serious competition. Among the several strategies introduced by most of the companies are the credit card reward schemes. These schemes involve the use of simple rewards given to the credit card holder whenever he/she carries out any transaction through the card.
How do these rewards work?
For starters, it is important to note that each time you make a purchase using a credit card, there is always a fee charged on your card. This fee is mostly shared between the credit card service provider and the financial institution overseeing the transaction. It is from these deductions that most of the companies make their profits. Many credit card service providers on feeling the difficulty in winning over more clients to the use of their credit cards decided to include the credit card holder in the share of the fees charged on his/her card.
It was therefore out of the need to stay ahead of the pack that some credit card companies decided to share the loot with the client if this would mean more clients subscribing to their services. As a result they devised different ways of giving the rewards with some giving cash backs, others bonuses and others even hardware materials. The decision to give any type of reward is made purely by the credit card service provider based on the information he gathers about the market and the perceived profit margins that one method would guarantee against the other.
How do they determine the right reward?
Each company has its specific area of specialization, credit card service providers also have their targeted clients and this is always reflected on the types of rewards and incentives they use when targeting new potential clients. Take the case of a credit card company that is trying to win over business executives who travel a lot, the most sensible catch would be to introduce mileage bonuses that would mature into free travel tickets and other relevant gifts that would attract such clients into their fold. It therefore calls for a keen observation of your client to know which type of reward would resonate better with them.