MANAGEME

NT
INFORMATIO
N SYSTEM
ASSIGNMEN
T
Analysis of
Credit Card
Promotion
Policy
SUBMITTED BY:
GROUP NO. 3

INTRODUCTION
Loyalty and incentive programs have become 'must-haves' due to
the associated performance metrics for businesses that
implement them, and the fact that consumers have come to
expect a loyalty offering or savings opportunity from the
businesses that they engage with. By rewarding them for staying
loyal to your business, you give them a good reason to come back
to yours every single time.
The Internet and mobile technology have enabled continuous
customer engagement, which allows a business to become a
greater part of its customers' everyday lives. The ability to
strengthen these customer relationships is what makes loyalty
programs such an attractive retention tactic for businesses.
As consumers get more and better information regarding how to
compare various products and companies, it is critical to compete
on price and value. Loyalty programs provide an opportunity to
learn the preferences of customers and design communication
strategies that will resonate with them.
Credit card companies try to retain their existing customers
through loyalty programs. Offers provide the opportunity to
purchase items such as magazines, watch, exclusive merchant
funded discounts etc.

PROBLEM STATEMENT
Credit card companies try to retain their customers through
loyalty programs but the challenge is predicting the loss of the
customer. They dont take any step to retain the customer whose
credit card usage is decreasing. Companies should take
appropriate steps before customer switch to competitors
company.

METHOD OF STUDY

A company can look into the future and take appropriate action
before customers switch to competitor companies. In this case,
one can build a predictive model employing three predictors: age,
gender and personal financial situations. The combination of
these predictors creates a predictive model, which works to find
patterns and associations. This predictive model can be applied to
customers who are start using their cards less frequently.
Predictive analytics would classify these less frequent users
differently than the regular users. It would then find the pattern of
card usage for this group and predict a probable outcome. The
predictive model could identify patterns between card usage;
changes in ones personal financial situation; and the lower APR
offered by competitors. In this situation, the predictive analytics
model can help the company to identify who are those unsatisfied
customers. As a result, companys can respond in a timely
manner to keep those clients loyal by offering them attractive
promotional services to sway them away from switching to a
competitor.
SAMPLE DATA

Income
Range

Gender

Age

30-40 K

Male

45

decrease

30-40 K

Female

40

increase

41-50 K

Male

42

decrease

30-40 K

Male

43

increase

50-60 K

Female

38

increase

80-90 K

Female

55

decrease

30-40 K

Male

35

increase

41-50 K

Male

37

decrease

Frequency

70-80 K

Male

43

decrease

50-60 K

Female

41

increase

41-50 K

Female

43

increase

41-50 K

Male

42

increase

20-30 K

Female

22

increase

30-40 K

Male

44

decrease

41-50 K

Female

43

increase

CALCULATION:

DECISION TREE:

age
<=43 >43
Gender

Decision: decrease

Female Male
Decision: increase Income
>40k

<=40k

Decision: decrease Decision: increase

ANALYSIS
The decision tree shows the decrease in the frequency of usage of
credit card is primarily in two factors Males greater than 43years
and Males less than 43 years with an income greater than
INR40,000.
Factor 1: Males greater than 43 years of age
Reasons:
Lower familiarity with electronic payment technology
Lack of motivation to change behavior/attitude towards
technology
Greater household savings mentality
Literature suggests that household owners are less likely to
use credit cards, which has been shown in the data collected
Married couples are also less likely to use credit card

Factor 2: Males less than 43 years of age with incomes greater

than INR40,000
Reasons:

Fear of bankruptcy, conservative approach

Dissatisfaction with reward schemes
Dissatisfaction with service provider
More planned bulk purchases are made
Transactional fees is a deterrent to the usage

The above categorical reasons behind the decline in the

frequency of usage lead to a customer to seek other service
providers, which in turn results in loss of customers and by

extension, loss of revenues to the current service provider. Loss of

customers on account of the services and rewards provided have
not been analyzed by Credit card companies and the report shows
that this is a pressing issue that must be analyzed and correction
action is to be taken in order to reach each of their strategic
goals.

RECOMMENDATIONS
1. Net Promoters Scores
Focused Group Interviews
Try and explore the main reasons for declining purchase
Try and convert the detractors into promoters
Increase word of mouth which will help in building
loyalty
Indulge in engagement activities
2. Advertisement Campaign
Promote your services using the proper channels for
different people
3. Promotional Schemes
Reward Programs can be initiated for the people who
are not using the CC frequently
4. Personalization and Customization
Clubbing customers on the basis of usage pattern and
buying behavior can help in creating schemes
Data mining techniques can be used to extract relevant
information
5. Enhanced IT infrastructure- Reliability
People with Age>43 are mainly not using CC because of
the security and reliability issues
Develop the infrastructure which is more based on
enhanced IT infrastructure