Connecting with Cardholders Using Social Media

As part of the revolution taking place online, credit card issuers are beginning to connect with cardholders via social media. The overwhelming popularity of social networks such as Facebook and MySpace has caused issuers to brainstorm on how to turn these goldmines to their advantage. Issuers have established Facebook pages and are using Twitter to expand their reach. These popular tools are playing an increasingly important role in the marketing and communication mix. The ability to interact with current and potential customers is a major benefit of social media. And understanding the consumer viewpoint and experience is essential for optimizing social media as part of marketing and communication strategies.

SYNERGISTICS Research Corp. in Atlanta examined the impact of social media on the credit card marketplace as part of its recent project, Exploring the Changing Credit Card Market. The project featured 1,000 Internet interviews with consumers age 18 or older. Cardholders were questioned about their overall use of social media channels and also the extent to which they have handled a credit card customer service issue through social media. In addition, cardholders were asked the reasons for becoming a fan, friend or follower of a card brand or organization.

Usage of Social Media

Overall, one-quarter of cardholders indicate that they have become a fan, friend or follower of a credit card brand or issuer. More than one-fifth have become a friend of a card brand or organization through Facebook, while about one in twenty each have done so via LinkdedIn, MySpace and Twitter. Cardholders were also questioned regarding the extent to which cardholders have handled a credit card customer service issue via a social network. Overall, less than one-tenth of cardholders say they have done so, with Facebook being more widely indicated. Any other social network site is mentioned by even fewer.

These findings clearly indicate that use of social networks by credit card holders is in its early stages. Few report using these networks for customer service purposes, which is believed to be a major reason for using these interactive channels. While current usage is narrow, the potential exists for issuers to expand their online strategies for customer outreach and brand exposure.

Who Are the Early Adopters?

It is worthwhile to examine the profile of those who have become a friend, fan or follower of a credit card issuer or organization. Results reveal that the average age of these cardholders is 40, which is slightly younger than all other Internet consumers who report an average age of 46. When comparing household income, there are no significant differences between the early adopters and all other Internet households. Average household income is $62,000.

Important differences do exist with respect to card usage patterns, which indicate that these early adopters are an extremely important segment for credit card issuers. Early adopters use their credit cards an average of 22 times per month, while usage averages 13 times per month for all other Internet households. This segment is oriented toward credit card reward programs, with many agreeing that they use their credit cards more often because they earn rewards, get cash back or receive special services.

Early adopters are more likely than their counterparts to have affinity, reward and premium credit cards. In addition, they are more likely to pay a fee and be willing to pay fees for cards that offer the features that they consider attractive. Card issuers have an opportunity to enhance their relationships by cross-selling other financial products and services. Early adopters express interest in obtaining a variety of financial products and services from their card issuer.

All in all, these early adopters are a credit card issuer’s dream. They are an extremely attractive market in terms of age and household income. Their monthly usage of credit cards is strong, and they are willing to pay fees. Rewards are important to this segment and further help to explain why this segment is attracted to social media.

It’s All About the Deal

Why did these early adopters become a fan, friend or follower of a credit card brand or organization? The largest number, one-third, said it was to be aware of any special promotions or deals. One in six report they did so to learn about the experiences of others with the brand or institution. A similar number did so because they identify with the brand or want to share their experiences with others. The motivations for becoming a fan, friend or follower are deal or reward oriented. Cardholders are attracted to social media primarily for reasons of self-interest such as to take advantage of special offers or promotions, rather than because they like the brand, issuer or card.

Strategic Implications

Card issuers should continue to expand their online strategies for customer outreach and brand exposure. In using social networks, issuers will need to respect the social nature of the media and focus outgoing messages on discounts and promotions that are creative and will encourage cardholders to become fans, friends and followers. Rewards and coupons will be essential elements. These sites can also be used to encourage cardholders to visit traditional websites.

Usage of social media sites by cardholders for customer service purposes is likely to expand as more and more cardholders become involved with social networks. Tweets or Facebook messages for customer service purposes will become as important as those in the branch or through call centers. A number of credit card organizations are actively monitoring sites for customer service purposes. All card issuers, regardless of their current involvement, will need to step up the level and scope of activities.

Social media is new and exciting, offering card issuers endless opportunities. At the current time, cardholder’s use of social media is just emerging. With more and more exposure, usage will grow and cardholders will come to see it as an expectation. Card issuers have another contact point for connecting and reaching out to cardholders and will need to integrate social media into marketing and communication programs.

About the Author

Since 1981, Genie Driskill has directed studies at Synergistics on numerous topics in the small business and consumer financial services industry. She is responsible for all stages of a project including topic selection and definition, development of proposal and marketing materials, questionnaire development, survey analysis, industry executive interviews and strategic assessment.