Category: Marketing

Differentiating Through Metal Cards in Developed Markets

Across the globe, the pandemic accelerated the development of new products and breakthrough services for physical and digital payment services, especially within emerging markets. But even in more established markets, the competition heated up, now offering consumers more payment choices than ever. As a result, financial institutions are now looking for ways to stand out and differentiate their offerings to existing customers, while attracting new customers.  

Payment Cards Stayed in the Hands of the Consumers

The pandemic had an undeniable influence on consumer payment preferences worldwide, but even with the rise of e-commerce and digital services in established markets, payment cards remained the most used point of sale payment method. 

In the U.S., payment cards accounted for 55% of all transactions last year, while payment cards transactions rose to 60% in Canada. Similarly in European countries, card payments accounted for 47% of all transactions last year and the number of payment cards issued increased by 6.5% to 609 million, representing around 1.8 payment cards per European inhabitant. There are 6 payment cards per individual in the U.S., the highest penetration globally, compared to similar mature card markets like Canada (5.5), the UK (3), Germany (3.2), Italy (2.2), and France (1.7).

The latest “Growth of Premium Metal Cards” report by Edgar, Dunn & Company showed a surprising 7X preference toward physical payment cards over digital wallets primarily in North America and Europe when transacting in person: 

  • U.S. (66% vs. 10%)
  • France (76% vs. 7%)
  • Canada (73% vs. 8%)
  • Poland (74% vs. 10%)
  • Italy (67% vs. 10%)
  • UK (65% vs. 11%)

Increasing Competition for Customers

Competition from fintechs has heated up and traditional financial institutions in established markets in North America and Europe look for ways to create stronger connections with customers. Financial institutions and fintechs are competing for young and wealthy consumers, who value quality and tend to be more selective and carry fewer and better products.

The research showed that financial institutions can better target sought-after young and wealthy customers by offering a premium metal payment card solution, which is seen as a sign of status and luxury around the world. According to the survey, metal cards were the card of choice (80%) for affluent consumers worldwide, if the benefits and rewards were equal to plastic options. Most wealthy customers worldwide (62%) also would be more willing to switch their bank for one offering a metal card. The preference for metal cards spiked to 77% among millennials (ages 25-34) across all the regions and customer awareness has grown 7%, providing a tremendous opportunity. 

Overall, younger (25-45) and wealthier respondents in North America and Europe showed higher awareness of the offering of metal cards from their banks and are more likely to make decisions based on this premium, luxury offering. As these mature markets continue to see a rise in new generations making purchasing decisions, there is an increased push for financial institutions to differentiate themselves, and metal cards are a great way to do so.

Here are the highlights from the survey on established markets:

North America:

  • United States: Nearly half (45%) of US consumers were aware of metal cards due to the abundance of metal card programs available. This creates a growing demand of 64% of respondents who would choose a metal card over a plastic card if all rewards and benefits were equal, an 8% increase from the previous study three years ago. A quarter of respondents would change banks for one offering a metal card and about half of the respondents (47%) would feel more positive about their banks because they offer metal cards.
  • Canada: Payment cards were the predominant payment method used by Canadian consumers both in-store and online. But because of its low population density, the awareness of metal cards was only 21%, but up 4% from the previous study. Half of Canadian respondents (51%) preferred a metal card over plastic and 33% of Canadians felt more positive about their banks for offering metal cards.

Europe: 

  • UK: Despite low awareness (34%) of metal cards, preference for metal cards increased 8% to more than half (56%) of UK consumers. This leads to a large growth opportunity in this region. 
  • France: Metal cards are not currently offered by many large traditional issuers in France, but awareness of metal cards grew 11% from three years ago. The desire for metal cards increased 6% to 61% of French respondents preferring a metal card over plastic. 
  • Germany: The percentage of respondents that would likely select a metal card slightly increased to over half (52%) with 36% associating metal cards with having an innovative design with exclusivity and luxury. 
  • Italy: The metal cards market is still under development with Italy being a traditionally cash-driven economy, but there is opportunity for growth. 68% of Italians would choose a metal card over plastic. Currently, metal cards offered in Italy are primarily targeted at high-net-worth individuals, adding a solid value of luxury and exclusivity. 
  • Poland: One of the key countries in Central and Eastern Europe that has the largest metal card growth potential of any country in Europe. It had the lowest awareness of metal cards at just 26%, which is up 8% from three years ago. Yet, it led all other European countries in its preference for metal cards (73%), as well as seeing banks that offer a metal card positively (63%). 

Charging Forward

The competition for consumer attention remains fierce. While banks and financial institutions can pursue various options to stand out in today’s market, many challenger fintechs are generating success with consumers by providing premium offerings such as metal payment cards. Challenger banks and traditional banks can excel above the competition by leaning into the consumer desire for luxury and exclusivity with innovative and new premium offerings.

A New Era of Premiumization

Consumer spending is being fueled by the financial means to fulfill the desire to indulge, according to recent studies. In the U.S. alone, the New York Times reported “excess savings” soared to $2.7 trillion since the outbreak of COVID. After over two years of spending on home offices, decorations and renovations, consumers are embracing luxury spending. Call it retail therapy or a case of YOLO (you only live once), but luxury goods are reporting blockbuster sales despite ongoing supply chain snares, surging inflation, and continued global uncertainty due to the pandemic and war. In fact, the Financial Times predicted luxury goods spending to hit record levels in 2022, surpassing pre-pandemic rates. 

Demand for Luxury

This is a key inflection point for financial institutions as the pent-up desire to spend more on luxury retail goods, travel and entertainment is expected to also carry into the payment cards people want in their wallets. Consumers have long valued premier brands and have demonstrated they will pay more for quality. While the early months of the pandemic upended spending patterns, it became clear by mid-2021 to today that luxury brands not only survived COVID, but thrived, posting strong sales and revenue. Growing alongside these luxury trends is the market for a premier luxury metal payment card.

For example, the American Express Rose Gold® metal payment card was so popular that it “crashed the USPS system.” With its stylish design and quality look and feel, cardholders clamoured for this premium metal payment card which combined durability and sophistication. The weight, appearance and distinctive “clank” on the counter when the metal card was presented marked a new era in the card industry and a growth opportunity that today is advancing around the globe as the attributes of the metal card align with the values and aspirations of consumers.

More Than a Card

Today, premium metal cards are part of a strong rewards program to target a specific consumer demographic, offering the ability for more banks, financial institutions and fintechs to take advantage of the differentiation of a premier metal card offering. The 2021 Metal Card Consumer Study conducted by Edgar, Dunn & Company showed that a metal card program can be a powerful tool in promoting a positive feeling about a bank, attracting new customers, and driving spending by keeping it at the top of the wallet. In fact, the survey showed that most consumers (70%) would select an offer which includes a metal payment card if all rewards and benefits were equal. This preference for metal payment cards increased 4% from three years ago, when the survey was last conducted. A metal card program aligns with consumer interests in luxury, premiumization and environmental sustainability.

As the race to top of wallet continues to get more crowded, financial institutions must differentiate themselves with consumers. This differentiation is what could allow them to capture a higher percentage of discretionary spending, build brand loyalty, and attract a younger demographic, who could be customers for a longer period of time if retained, and affluent customers who likely will be spending more and generating substantial revenue for banks.

While not every consumer yearns to go on a spending spree for high-end luxury goods, there is a solid desire for quality products. As consumers increasingly seek quality over quantity, the exciting opportunity for the payment card space is that the ongoing premiumization was not derailed by the pandemic, it simply shifted to investments in fewer and better products. Premiumization is no longer just about luxury and exclusivity –it is about relevance, aspiration and meaning. Consumers are not only looking for name and prestige, but also quality products and personal experiences.

Employee Spotlight: Coloring in the Tapestry of Customer Care and Community

CompoSecure has had to reimagine many of its processes and procedures to keep its employees safe, while keeping up with production goals and schedules during the pandemic. Project Managers are on the front line of customer care and are navigating this new normal. Meet Jennifer Ogrodnik, one of the Project Managers at CompoSecure.

It Starts Here

At CompoSecure, Project Managers (PMs) play a crucial role. They are the “interpreters” within the company, taking in the customers’ goals and aspirations for a metal card program then working with the design and production teams to determine timelines for samples and final product that work for everyone. Jennifer will tell you that for her and the other PMs, being the conduit between customer and the company is a role that requires trust. First, the customer puts their trust in CompoSecure and the PM to walk them through the design process and, ultimately, to deliver as expected and on time. But second, and equally important, is building trust between the PMs and the rest of the CompoSecure organization.

Awareness of metal payment cards has grown dramatically over the past ten years. Once only available to the super-elite cardholders, card issuers are now using metal cards to attract a broader audience who prefer metal cards as a personal differentiator. Card issuers see metal cards as a way to acquire new customers and increase customer loyalty. All of these factors are driving card issuer demand.

As an important connection to Sales, the PM team is responsible for understanding and getting to the core of customer needs and managing timelines. With new health and safety processes that have been put in place as a result of COVID, the role of the PM is even more critical. Setting realistic expectations to the customer, balancing and readjusting as priorities change, while providing world class service.

Getting Creative with the Creative Process

How do you establish trust in a new business relationship? Before March of this year, Jennifer would have told you about the face-to-face personal relationship she built with a new customer. She – and many other members of the CompoSecure team – flew thousands of miles, crossing state lines and time zones to get to know the customers and communicate CompoSecure’s understanding of their business goals. That in-person interaction was foundational to building trust.

Similarly, the design sessions between clients and PMs were also largely done in-person, where the look and feel of metal payment cards could best be shared. With the onset of COVID, CompoSecure had to get creative in how to continue the world class service they are known for. Virtual design sessions and other levels of prototype creation were developed to provide similar hands-on experiences clients had being onsite; a key step that customers need to make the buy decision.

It is always hard to adapt to new processes. Jennifer and the whole team are keenly aware of the pressures felt by the design and production teams and create ways to alleviate it.  Advanced planning is one way that they are accomplishing this. The teams come together much earlier in the process to discuss plans, pool information and collaborate. Jennifer believes that the challenges brought on by the pandemic have actually boosted creativity, especially on the planning process.

Another unexpected benefit came from CompoSecure’s focus on employee wellness. Before COVID, employees would socialize during the workday with activities like daily lunch time walks, meeting out at the picnic tables for lunch or break, holiday/celebration parties. They had to find other ways to connect. “We have cross-functional Zoom meetings as a way to check in with one another and reinforce connection during a time when everyone is apart,” said Jennifer. These bonds provide opportunities to recognize co-workers’ struggles and achievements. “When you have a feeling of accomplishment, everyone shares that with you.”

Strength from Within Strengthens Throughout

Jennifer has taken this collaboration from the office to her community in Somerset. Late one evening, she created a chalk tapestry in the courtyard of her living complex, leaving voids where others can color in the gaps, and left a box of chalk encouraging others to come together and create art. When she woke the next morning, she was overwhelmed at how people were touched by this simple act in the midst of the pandemic. It lifted the spirits of her neighbors and brought them together, when they were all feeling so isolated. Jennifer understands the importance of building connections – whether that is with her neighbors, local businesses she supports or her co-workers and clients.

Just as CompoSecure has continued to grow and thrive despite the challenges, Jennifer is certain the strong co-operation between its employees and customers will endure after the pandemic, “We got stronger during COVID, and we’ll keep that spirit alive after.”

Marketing & Customer Service During a Pandemic

We as marketers have faced many challenges over the past months. Where we would like to develop and implement cool and innovative ways to communicate with our audience, we have had to think very differently. In a sense, we have become responders ourselves. Businesses responding to disruption rely on communications to make sure critical partners, such as customers, vendors, employees and other stakeholders, know about changes being made. The messages being delivered need to strike the right balance between sharing relevant information, not divulging proprietary details and not overloading the recipients. In addition, strong and timely communication with customers demonstrates that we are in a “true partnership” versus a typical buyer and supplier relationship. Demonstrating and delivering your core values through communication to clients during a crisis can build a stronger foundation to grow the relationship over time.

Safety First

At CompoSecure, we made a deliberate shift in our internal and external communications to refocus on the safety of our employees, customers and community. The COVID-19 pandemic has taught us all that safety consists of much more than security guards and secure facilities, and a strong record on workplace safety in terms of accidents or lost-time. Safety at its core principle encompasses the health and well-being of our colleagues, customers and the community around us, which has never faced greater challenges in modern times. We have leveraged instant communication tools that deliver messaging across multiple channels (e.g., text, email, phone, video) to deliver updates to employees and customers on critical issues affecting employee health and safety and customer needs in real-time.

The CX (Customer Experience) Factor

The best companies are those that know and understand their customers. Especially now, while customers’ needs and expectations have changed so much and so quickly, we are paying attention to what those changes are.

Our Global Sales team has identified the top 3 challenges our customers and partners from around the world face as they consider launching a new metal card program during the COVID-19 crisis, and how we are addressing them

Challenge #1 – Seeing is Believing

The physical experience –being able to look, touch and feel the unique qualities of a metal card –together with professional interpretation, is critical to understanding the appeal and value of metal cards. The lack of face-to-face interaction makes this more difficult. In addition, creative and design decisions take longer than usual because our popular in-house design sessions are temporarily on hold.

To tackle this challenge, we have created digital relationships with our customers. We are able to keep moving due to simplified metal card samples, videos of a card in action and team video calls. These techniques are proving far more effective than sending traditional photos or PDF art files back and forth.

 

Challenge #2 – Timeline

Supply chain challenges have impacted production timelines for many businesses. For CompoSecure, the timeline impact stemmed largely from design development. To offset any delays, our team came up with innovative solutions that shortened the timeline by using simplified prototype samples. We developed front-only samples, which highlight the design and branding of the customer. This sample type can be turned around much faster and significantly speeds up the overall production schedule, while still providing the customer with a sample that addresses their needs.

Challenge #3 Forecasting Accuracy

Due to high unpredictability, the majority of businesses in today‘s climate are experiencing a big challenge in forecasting accuracy.  We had to adapt quickly and deliver new ways to accommodate last-minute changes in forecasted production quantities. For example, when one of our clients placed their launch order, they had to place an urgent follow-up order because the demand was more than 3X their forecasted quantities. We were better positioned to respond because we implemented shared weekly forecasts as a best practice with key clients that looked at current vault inventory volumes and observed changes in the acquisition, natural reissue and lost/stolen cards. This shared forecasting and outlook for the rest of the year were discussed by the client and CompoSecure teams every week to enable more nimble responses to changing demand.

Today and Tomorrow

Our most critical and challenging “marketing” task ahead will be navigating our business away from crisis communication to business-as-usual, whatever our business-as-usual eventually becomes, while maintaining the best practices highlighted above. Improved communication and data integration across the customer’s touchpoints, together with personalized and relevant content will enable us to be the most successful in delivering the optimized customer experience.