[Dave Birch] The new V.I.P. (Virgin Important Person) had ads with the tag line “It’s not the size of your V.I.P.-ness, it’s how you use it”. It has a great gimmick: it uses the Visible Results GraphiCard(TM). Customers join the scheme in-store and receive their card on the spot. Points earned on every transaction at Virgin Megastores are instantly displayed on the face of the card, along with their new points balance and the points required to reach the next reward level. (Why you can’t just print these on the receipt, as Aneace has often suggested, I’m not sure.) Rewards include special discounts and entertainment incentives – such as backstage passes, concert tickets, and instant prizes, the usual kind of loyalty stuff.

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I wonder if this sort of gimmick will spread to bank cards? Some TowerGroup (part of MasterCard) research found that although credit cards remain the most profitable payment product for banks, an overall decline in bank cards is signalling the need for banks to evolve their rewards strategies.. In 2005, general-purpose cards produced 75% of the bank card industry’s sales volume, but the customer response rate to solicitation fell to only 0.3%, the lowest rate so far. This meant, obviously, that the cost of acquiring new customers has gone up yet again. Would a credit card that displayed your balance after every purchase change this? It could be marketed under the banner of social responsibility, as it would be reminding consumers of how much they owed each time they used it.

Banks are presumably thinking about where to go with loyalty, and banks cards might well be a convenient platform. In the last couple of weeks, I’ve sat through two presentations about payment card-based loyalty schemes (one scheme-based multi-retailer and one bank-based) and they seemed pretty good but not earth-shattering (but then I’m probably not in the target market). But it did make me wonder about where this is going, because the supposed next big thing loyalty is ‘local loyalty’ because people feel compelled to support local businesses, producers, artists and community initiatives. Is there some way for banks to appear to be supporting local initiatives in some way? Payments are pretty global aren’t they, but if national currencies were to be augmented by some form of locally-based currencies….

In the short term, displaying things on cards might be fun. In the long run, since cards will be replaced by mobile phones and other devices, I’m not sure it’s a particularly disruptive kind of technology!

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