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Credit Card Companies Are Influencing Your Award Travel Plans

March 30, 2018
3 min read
Credit Card Companies Are Influencing Your Award Travel Plans
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Don't know yet where you will go for vacation this year? Your credit card company might be the ones trying to influence your decision.

Fuerteventura Canary Islands, Spain
Beach at Fuerteventura. (Photo by @dominiks. via Twenty20)

In the interest of keeping consumers loyal to their brands, credit card companies increasingly turn to artificial intelligence software to influence how cardholders utilize their points.

Marketing to consumers based on past purchases is nothing new: If you've recently snuck a peek at that designer dress on Nordstrom's website, you're familiar with how quickly ads for the same dress crop up in your Facebook feed. And if you booked a plane ticket last week, you'll see ads for local hotels and rental cars everywhere.

Yet credit card processors are utilizing additional metrics to predict how consumers will behave.

Financial institutions have front-row seats to our spending habits, from how much we spend to where we spend it. American Express has long utilized intelligent algorithms to target individualized Amex Offers from specific merchants to entice cardholders to spend or redeem their rewards accordingly. And although we here at TPG frequently stress that the best redemption values for most rewards can be found booking travel, credit card companies convincingly persuade customers to redeem their points and miles for gift cards, magazine subscriptions and other miscellaneous offers.

Maritz Motivation Solutions, a marketing data company, recently partnered with HSBC to bolster the British bank's credit card rewards program. HSBC sent marketing emails to 75,000 customers using algorithms provided by Maritz Motivation Solutions. In an A/B test conducted by the bank, some of the customers were custom-targeted for a particular credit card reward category — travel, merchandise, gift cards or cash back — based on the company's AI-generated recommendations. Senior Director of Decision Sciences Jesse Wolfersberger said that around 70% of the targeted customers who redeemed credit card rewards selected the option recommended by the software.

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“It used to be, ‘We saw you shop at Apple, so we are going to send you ads for Apple.’ Now, you may not have spent a dollar at Apple previously, but because you spend at other retailers or fit the profile of an Apple customer we can target you,” Wolfersberger told the Associated Press.

“What we see is when people are more engaged with a rewards program they tend to spend more,” said Marcos Meneguzzi, head of cards at HSBC.

Currently, laws governing net neutrality ban Internet service providers from selling information regarding consumer searches and data use. But the pending dissolution of these laws on April 23 will have profound repercussions for consumers, as companies including credit card issuers and retailers gain even more valuable access to customer behaviors.

Once your wistful Google searches for "sunny beaches" are combined with powerful AI software and algorithms like Maritz's solutions, your next vacation may be far less spontaneous than you think.

Featured image by Getty Images

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