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Creating Value and Changing Behavior through Relevant Protection

by cbsi™

 

Engaged by a client to assist in developing a product or service to change cardholder purchasing behavior, cbsi™ began the initiative by conducting an analysis of the client’s transaction data to develop a frequency and profitability model.  Based upon its findings, cbsi™ developed valuable account benefits directly related to specific transaction categories provided when the cardholder used a credit or debit product to process the transaction. Return on investment and improved revenue could be realized by the client through additional interchange revenue and overall increased account activity.

The launch feature was the Cellular Telephone Protection Program. This program provides cardholders with a valuable account benefit that will encourage them to use their card to pay their monthly cell phone bill.

Specifically regarding the Cellular Telephone Protection Program, please note:

Sample Financial Summary:

  1. $1,260.00 = average annual cell phone expense charged to the card ($105 per month)
  2. $23.94 = approximate annual revenue to issuer at 1.9% interchange
  3. $0.48 = approximate annual cost per eligible account for cell phone insurance, which is 3.8 basis points of the $1200 transaction (typically the target for a rewards program is 25 basis point).

Other items to note:

  • Revenue earned from interest and fees on additional revolving balances, as well as revenue developed from the additional usage and retention linked to the Monthly Recurring Charge of the wireless bill, is in addition to the above
  • In market results have demonstrated ROI of 10:1
  • Win-Win as cardholders receive a valuable benefit at no cost courtesy of their bankcard and issuer earns significant incremental interchange revenue