HSBC is evaluating options to improve its credit card rewards program in Hong Kong. The current program offers standard benefits with low communication, but competitors now offer differentiated benefits with high communication. Option 1 would increase communication for the standard program. Option 2 would offer differentiated benefits with low communication. Option 3 would offer differentiated benefits with high communication, which could increase costs and market share the most. A multi-attribute analysis will evaluate the options based on costs, customer perception, market share, attractiveness, and awareness to determine the best approach.

1. HSBC Credit Card
Reward Program
6 April 2010
AsliMarceloPaolaTed

2. Summary
1
Company
profile
&
mission
2
HSBC
4
P’s
3
Credit
Card
Market
in
Honk
Kong
4
Situa@on
audit
–
Rewards
program
5
SWOT
Louisa
6
Problem/Decision
statement
7
Alterna@ves
8
Cri@cal
issues
9
Analysis
&
Mul@-­‐ARribute
Chart
10
Recommenda@ons
2

3. Company Profile
1865: Named after Hong Kong & Shangai Banking Corporation
Limited was established.
1993: Headquarter in London.
1998: `Your world of finance services.`
2001: `The World’s local bank.`
2005: More than 9,800 offices in 77 countries
Europe, the Asia-Pacific, the Americas, the Middle-
East and Africa.
3

4. Company Mission
5
core
business
principles:
 outstanding
customer
service
 effec:ve
and
efficient
opera:ons
 strong
capital
and
liquidity
 economical
lending
policy
 technological
infrastructure
and
service
packages
4

5. HSBC 4Ps..
Products Place
• Generic
cards
• Retail
stores
• Co-­‐
branded
affinity
• Restaurants
cards
• Shopping
stores
• Private
label
cards.
• E-­‐
commerce
channels
Price Promotions
• Classic
• Credit
card,
• Gold
• Loans,
• Premier
• Insurance
&
Investment
promo:ons
and
• Pla:nium
• Services
5

6. Credit Card Market in Hong Kong
• Usage of credit card growing rapidly.
• 1998 – 2003:
 umber of transaction
N 112%
 alue of transaction
V 68%
• Wider acceptance of credit cards in retail outlets.
Reasons
• The ability to do low-value transacations.
• The growth in e-commerce.
6

7. Situation audit – Rewards program
Early years
1995-1996
• First point-based loyalty programs
1997-1998 introduced.
• ardholders earned bonus points and used
C
them to redeem against a selection of
1999-2001 items from the catalogue.
2002-2005
7

8. Situation audit – Rewards program
The Downturn
1995-1996
• Redemption items went out stock because
1997-1998 of supply issues.
• Products become outdated.
• Long waiting periods for redemptions.
1999-2001 • Competitors began offering cash vouchers.
2002-2005
8

9. Situation audit – Rewards program
Recovery
1995-1996
• Began expanding its market share and
1997-1998 usage rate of campaigns.
• New catalogues were issued.
• Customer’s perception improved
1999-2001
2002-2005
9

10. Situation audit – Rewards program
Best-in-Town
1995-1996
• Cash multiplier
1997-1998 • Rewards multiplier
• Point share within friends and family.
• Special of the month items (%40
1999-2001 discounts)
• In 2003, online redemption service was
launched.
2002-2005 • The ability to pay income taxes with HSBC
credit cards.
10

11. SWOT
Strength
Weakness
• Profitable
from
issue
• Huge
costs
involved
Credit
Card
• Record
profits
ending
• Awareness
to
the
• Complexity
usability
customer
of
the
program
• Partnership
with
Hong
Kong
merchants
• Interna:onal
Finance
• China
Market
11

12. SWOT
Opportuni:es
Threats
• Gaining
a
larger
share
• Direct
cash-­‐rebate
of
receivables
and
instant
• Be
aware
of
the
cost
redemp:on
systems
• Revolvers
segment
• Commodi:za:on
of
rewards
programs
• Email
viruses
12

13. Problem/Decision statement
How
HSBC
sustain
its
leadership
in
terms
of
market
share
and
customers
percep1ons,
increase
the
balance
of
revolvers
and
did
not
significantly
raise
costs
13

14. Alternatives
Communica@on
of
the
program
+
benefits
low
high
differen:ated
Benefits
of
the
program
Op@on
2
Op@on
3
Low
communica:on
High
communica:on
+
+
Differen:ated
benefits
Differen:ated
benefits
Status
quo
Op@on
1
standard
Low
communica:on
High
communica:on
+
+
Standard
benefits
Standard
benefits
14

15. Critical issues
 verall
costs
O
 ustomer
percep@on
C
brand  arket
share
M
 Rrac@veness
A
 wareness
A
rewards program
15

16. Critical issues
Cri@cal
Issues
Influencers
Weight
• Communica:on
expenses
Overall
costs
• Larger
number
of
redemp:on
items
25%
• Bigger
rewards
for
a
given
level
of
spending
BRAND
• Communica:on
efforts:
posi:oning,
campaigns,
etc
Customer
percep@on
12.5%
• Benefits
offered
from
the
program
• Communica:on
efforts
and
benefits
offered
from
Market
share
12.5%
the
program
focusing
in
“revolver”
segment
• Direct
cash
rebates
or
instant
cash
back
• Broad
selec:on
of
rewards
REWARDS
PROGRAM
ARrac@veness
25%
• Easy
to
understand
• Differen:a:ons
and
improvements
• Media
and
non-­‐media
efforts
to
communicate
the
Awareness
25%
rewards
program
and
its
benefits
16

17. Analysis
Status
quo
Op@on
1
Op@on
2
Op@on
3
Low
communica:on
High
communica:on
Low
communica:on
High
communica:on
+
+
+
+
Standard
benefits
Standard
benefits
Differen:ated
benefits
Differen:ated
benefits
 ow
overall
costs
L  igh
costs
related
H  igh
costs
related
H  igh
overall
costs
H
to
communica:on
to
new
benefits
 ood
customer
G  igher
customer
H
percep:on
 ood
customer
G  ood
customer
G percep:on
percep:on
percep:on
 eadership,
but
L  eadership
and
L
stable
market
share
 eadership,
but
L  eadership,
but
L increasing
market
stable
market
share
stable
market
share
share
 egular
R
a[rac:veness
of
the
 egular
R  ifferen:ated
D  ifferen:ated
D
rewards
program
a[rac:veness
of
the
a[rac:veness
of
the
a[rac:veness
of
the
rewards
program
rewards
program
rewards
program
 egular
awareness
of
R
rewards
program
 igher
awareness
of
H  egular
awareness
of
R  igher
awareness
of
H
rewards
program
rewards
program
rewards
program
17

18. Analysis
Status
quo
Op@on
1
Op@on
2
Op@on
3
Low
communica:on
High
communica:on
Low
communica:on
High
communica:on
+
+
+
+
Standard
benefits
Standard
benefits
Differen:ated
benefits
Differen:ated
benefits
 ow
overall
costs
L  igh
costs
related
H “EVEN
 igh
costs
related
H  igh
overall
costs
H
to
communica:on
to
new
benefits
 ood
customer
G
CONSIDERING
 igher
customer
H
percep:on
THAT
OUR
 ood
customer
G  ood
customer
G percep:on
REWARDS
percep:on
percep:on
“I
WANT
TO
BE
“OK,
SINCE
WE
 eadership,
but
L “I
DON’T
WANT
PROGRAM
DIFFERENT
And
 eadership
a ND
L
ARE
THE
LEADERS
stable
market
share
 eadership,
but
L TO
BE
STANDARD,
 eadership,
but
L increasing
market
PROVIDE
stable
market
share
stable
market
share
THAT
Eshare
VERYBODY
LET’S
KEEP
BUT
I
ALSO
CAN’T
 egular
R STANDARD
KNOWS
ABOUT
EVERYTHING
The
a[rac:veness
of
t HE
 egular
R SPEND
A
LOT
OF
 ifferen:ated
D
BENEFITS,
LET’S
ME.
ifferen:ated
E
D
 SHOW
M
rewards
T
IS…”
WAY
I program
a[rac:veness
of
the
MONEY…”
a[rac:veness
of
the
a[rac:veness
of
the
AT
LEAST
MAKE
rewards
program
rewards
program
THE
MONEY!!!”
rewards
program
 egular
awareness
of
R THE
CONSUMERS
rewards
program
 KNOW
MORE
of
Higher
awareness
 egular
awareness
of
R  igher
awareness
of
H
rewards
program
rewards
program
rewards
program
ABOUT
IT…”
18

19. Multi-Attribute Chart
Cri@cal
Issues
Weight
Status
quo
Op@on
1
Op@on
2
Op@on
3
Overall
costs
25%
1.0
0.5
1.25
0.25
Customer
percep@on
12.5%
0.6
0.5
0.75
0.625
Market
share
12.5%
0.5
0.5
0.5
0.625
ARrac@veness
25%
0.75
0.75
0.5
1.25
Awareness
25%
0.75
1.25
0.75
1.25
Total
3.5
3.5
3.75
4.0
19

20. Recommendations
Increase
the
budget
related
to
the
rewards
programs
Reduce
costs
in
the
future
20

21. Recommendations
 Surveys
 Provide
a
mix
of
redemp:on
catalogues
+
instant
redemp:on
program
 CSD
21

22. Recommendations
 Online
plaorm
for
the
rewards
program
 Online
catalogues
 Extend
the
validity
of
points
for
5
years
 Iden:fy
the
“revolvers”
in
the
customers
database
22

23. Thanks!!!
AsliMarceloPaolaTed