What’s a loyal customer worth? Something less than 20¢ according to an increasing number of US banks. That’s because banks have been discontinuing their debit card loyalty rewards programs right and left since the new federal debit fee regulations went into effect. The fee a bank can charge a retailer for a debit card transaction has dropped from an average of 44¢ to a maximum of 24¢, and that 20¢ delta has caused Well Fargo, TCF and now MBO Harris Bank all to discontinue their loyalty programs.
Most banks’ consumer strategies are focused on increasing their share of their customers’ financial services portfolio. (Wells Fargo’s “Eight is Great” is an example of this strategy). Additionally, consumer research has long indicated that when asked “Who is your bank?” consumers invariable cite the bank where they have their checking account (and debit card). It’s interesting then, that banks feel their existing customer relationships and the opportunity to expand them isn’t worth 20¢. Or is there something else at work here?
We see businesses of every ilk that are under stress make questionable decisions. When the focus is on bottom line survival, many organizations take a “no holds barred” approach to cost cutting and profit maximization, making big decisions and small ones, and usually for expediency’s sake. And there aren’t a lot of industries in more turmoil than banking is right now. But to jeopardize your customer base and all of the goodwill you’ve built over years for 20¢? Some might call it penny wise and pound foolish.
