Virgin Credit Cards Have Enjoyed Case Study

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It is important to remember that the credit card's promotional strategies must work within the context of the overall brand strategy for Virgin.

Overall, the strategy thus far has been highly successful. The company's strategy going forward should build on the work that has already been done, but recognize the shift in dynamic both in the industry and in terms of Virgin's own position within the industry. These three recommendations facilitate that, while enhancing the perception of value that the customers have with respect to Virgin.

Q2. Loyalty schemes in general are fading from prominence in the industry, and few of them offer much value to the customer. At present, it is difficult to determine the effectiveness of the loyalty scheme at Virgin Money simply because the credit cards have barely left the launch phase. Certainly people are attracted to the cards, but the next couple of years will see if they remain with Virgin or switch to a competing card. On the surface, however, Virgin's loyalty plan looks weak

The primary value driver for a credit card is the interest rate. Loyalty programs offer 0.69%, which on the average balance of $2,820 amounts to $17.76 per year back to the customer.

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Not only is this an insignificant amount but it pales in comparison to the difference that a 2-3% change in interest rates offer, which would be $56.40 at 2%. Switching cards yields six months interest free, which on a 12% card would be worth $169.20. The loyalty program as presently constituted has little hope of convincing customers to remain with Virgin, unless the perceived value of the program can be increased to a level where it makes the customer think twice about switching.

For Virgin, the cost of revamping the loyalty scheme to increase its effectiveness would be lower than the cost of offering lower rates. Therefore the company should focus the loyalty program on highly visible discounts that have genuine perceived value to the A 1% discount on a compact disc is worth $0.15-$0.20. A 1.2% discount on airplane tickets is worth for example $12 on a $1,000 flight. The difference in value to the customer is easier to perceive, yet structured properly the cost to Virgin would change little.

With loyalty schemes fading from relevance due to their lack of perceived value, the best move for Virgin is to enhance the perceived value, if only to avoid having to compete.....

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"Virgin Credit Cards Have Enjoyed" (2009, May 07) Retrieved July 1, 2025, from
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"Virgin Credit Cards Have Enjoyed" 07 May 2009. Web.1 July. 2025. <
https://www.aceyourpaper.com/essays/virgin-credit-cards-enjoyed-22095>

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"Virgin Credit Cards Have Enjoyed", 07 May 2009, Accessed.1 July. 2025,
https://www.aceyourpaper.com/essays/virgin-credit-cards-enjoyed-22095
   

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