Citibank links card rewards to Facebook
Citibank brought its credit and check card rewards program to Facebook on Tuesday hoping to expand user interest by allowing customers to pool points among their social network friends.
“We want to be the world’s best digital bank,” said Ralph Andretta, head of loyalty programs at Citibank. “If you look at our competitors, we can all get you on an airplane, we can all get you a gift card, we can all get you merchandise, but what we’ve done here is give you an opportunity to do something different with your points.”
The company launched an application that allows customers to pool points on Facebook and redeem them for bigger rewards, such as flights and televisions. The bank already has been doing this through its website, but believes Facebook is the best way to motivate customers.
“We found no better place to do that than on Facebook,” Mr. Andretta said. “Our customers spend a lot of time online on Facebook. So we thought it was a perfect way to reach our card members on their terms.”
Rewards programs for credit and checking cards have become extremely competitive in recent years.
“There is such a proliferation of rewards cards now that there is often competition among issuers just to be the one card in the customer’s wallet that gets used,” said Greg McBride, senior financial analyst at Bankrate.com. “Consumers might have two or three different rewards cards. So issuers are continually competing with each other, even among their existing customers, to be the card that’s used first.”
Citibank’s new rewards program tries to set itself apart with a “collective nature” that encourages “point sharing,” Mr. McBride said. The goal is to wrestle more existing customer “engagement” away from other banks and also draw in new customers.
“The value of our program is not just our rewards, but how you can redeem those rewards,” Mr. Andretta said.
Banks pay a cost to give customers credit and checking cards. So having customers who never use their accounts is expensive.
“The whole idea of rewards programs is they want customers to use the cards,” Mr. McBride said. “It’s similar to the ‘no loitering’ signs in front of shopping centers. They want you to do one of two things - come in the store and buy something, or get lost.”
For consumers, the new program will make redeeming points for high-end items much simpler. Instead of giving up because it seems impossible to store up enough points for a big reward, they now can put them to good use. “It removes the frustration of having too few points,” Mr. Andretta said.
This could mean fewer “stagnant points” that customers don’t use, Mr. McBride explained. “Somebody that has accumulated some but not enough for a meaningful redemption may opt to pool those with someone else,” he added.
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