Rewards are given to customers by merchants for various reasons, including to encourage certain consumer behaviors and also to strengthen relationships between Banks and customers. Rewards can also be used to strengthen the relationships between merchants and customers, such as when a Bank offers a merchant-related reward such as a gift card, or when a merchant or affiliated Bank offers a reward for using a particular credit card with the merchant.
There is a recognized need in the financial services industry to attract and retain loyal customers. A loyal customer is one who uses a single Bank for all or a significant number of banking relationships and does so over an extended period of time. This need is particularly important to Banks in small and medium sized communities where regionally and nationally marketed financial services have attracted customers away from local institutions. This need is also important to Banks that compete in small and medium-sized communities to attract customers, and also to Banks that compete in highly competitive markets where customers are offered a wide variety of investment and other banking relationship options, some of which may individually be very enticing to existing customers of other banks.
Thus, incentive reward programs for rewarding customers, particularly repeat or ongoing customers, have become increasingly common in a variety of industries. Well known examples of the use of incentives to attract and reward repeated customer patronage are airline frequent flyer programs. In airline frequent flyer programs the customer is awarded points, often expressed in terms of “miles traveled” for each use of a particular airline or its partners or affiliates. Additional points or “miles” are awarded for use of ancillary services such as car and hotel room rentals. Other examples of customer incentive programs include the trading stamp programs once popular in the grocery retail trade.
The implementation of a customer incentive program for Bank customers has complexities not found in customer incentive plans in other industries. The relationships between the Bank and any customer may be quite numerous and complex, involving a number of different kinds of accounts and interactions. Most other incentive programs require tracking of only one customer factor such as miles traveled in a frequent flyer program or the total dollar volume of purchases in a grocery store trading stamp program.
There can exist a great deal of variation among Banks in the types of financial services offered and emphasized. In particular, different Banks may wish to establish different scoring systems for the various types of consumer-bank relationships and consumer behaviors, depending on which relationships and behaviors are found to be the most profitable by the Bank, Bank partners, and third parties who offer rewards to Bank customers. Further, each Bank may wish to establish a different award structure of incentives, depending upon that Bank's perception of the benefits of the program in relation to the costs of the incentives and the needs of its particular community.
Furthermore, for an incentive program to be fully effective as a tool for attracting and retaining long-term customers, it is desirable for the Bank's management to be able to monitor customer behaviors and the relationships between the Bank and its customers, as individuals and as groups. The Bank may thus be able to identify significant opportunities for marketing its financial services by evaluating customer behaviors and relationships and the appeal of those behaviors and relationships to customers.
To these ends, Banks have developed a wide variety of rewards programs to attract and retain customers. Typically, a reward program of a financial product such as a credit card will allow customers to earn rewards in a predetermined rewards system. There is typically one type of reward, a base reward, and one type of method of earning the reward. For instance, some Banks offer a 1% cash rebate each time a customer uses a platinum credit card issued by the Bank. Other incentive rewards programs may offer a reward in the form of reward currency, such as frequent flyer miles or points, which can be used to purchase other rewards or benefits.
Further, the universe of reward-earning behaviors for such rewards programs is limited. Rewards are typically earned by charging more transactions on a credit card account. Special rewards also may be earned by purchasing from a particular Bank partner (“Partner”). Finally, rewards can be earned by accomplishing certain tasks or exhibiting certain behaviors, such as by opening a bank account. However, prior art reward systems typically cannot differentiate transactions (or other reward-earning behaviors) beyond these limited criteria of dollar amount and merchant.
Thus, prior art rewards programs typically have limited reward-earning behaviors that earn limited rewards. While Banks have successfully encouraged cardmembers to use their credit cards by offering a rewards program associated with the card, Banks typically do not continually provide additional promotional rewards programs targeted to specific customers or groups, wherein rewards are earned through specific triggering behaviors. What is needed is a robust and efficient system of offering a plurality of promotional rewards programs to individual cardmembers or classes of cardmembers, wherein the rewards programs enable customers or customer groups to earn a variety of rewards by accomplishing a variety of behaviors and/or transactions. It is further desirable to have a rewards program system that is customizable across a wide variety of variables.