THE CO-BRAND CREDIT CARD MARKET – SINK OR SWIM

By Chris Vinnicombe, VP Financial Services at Acxiom

The co-brand credit card market is the result of the partnerships between many of the world’s largest credit card issuers and consumer goods businesses like airlines, hotels, and retailers. By leveraging existing technology investments in digital, data, and analytics, the co-brand credit card market has attracted affluent consumers over the years. Indeed, it has remained a powerful component of retail loyalty programmes and strategies that generate revenue not only for the issuer, but for retail partners as well.

 

The market today

Historically, rewards have been critical to retaining and attracting consumers. However, businesses are increasingly finding that this benefit alone is not enough. In today’s world of data, one-size-fits-all loyalty programmes show little customer intimacy, since they don’t pay attention to individual attitudes, behaviours, and expectations.

Co-branded credit cards have faced competitor pressure to sweeten the rewards pot to draw customer traffic and differentiate their card programmes. Above that when consumers around the world are used to relevant adverts, offers and suggestions, the market increasingly seems out of touch when the offers don’t hit the mark.

It is now time for credit card companies to take a hard look at their proposition to determine which offerings consumers still value and to create benefits that are digital first, easy to use and truly relevant to how they live.

 

Increasing cardholder engagement

Today, engagement has become a significant part of this challenge. Cardholder engagement is critical in the market since it measures who has an active relationship with their card, rather than those where it sits unused at the bottom of a draw.

One of the issues is that many cardholders feel they are of little interest to the card issuer after starting the relationship. When offerings remain the same and don’t reflect consumer lifestyle changes, it leads to a decline in spend and balance activity.

For example, if a person is consistently purchasing long-haul, luxury summer holidays on their card and receiving a reward of discounts on Christmas staycations it just won’t be claimed. Ultimately, if the user isn’t likely to claim a reward it defeats the whole point of user offerings in the first place and will lead to a decay in the relationship over time.

To change this dynamic, card issuers need to focus on becoming far more customer-centric, addressing pain points, fulfilling desires and engaging with the consumer as an individual. Whether they are frequent travellers, trend setters, have an affinity to luxury products, cash back collectors, etc. Keeping up with interests and offering tailored rewards will create a more personalised experiences for customers and increase loyalty.

 

Customer experience – reach for the skies

A key example of this is the airline sector. Co-branded credit cards play an important role for airlines and their card issuers, each of which benefit from credit card engagement and purchasing behaviour. The cards also play an integral role in frequent flyer programmes, helping drive flyer loyalty.

Nowadays, airline customer interactions can come through many channels like customer service centres, online travel agencies, websites, and more which can create a complex ecosystem of customer data. The co-brand card partners see significant transaction data that identifies travel activity and purchasing patterns that are strong triggers for airline marketing programmes. All these interactions generate crucial information on passenger needs and preferences that enable up-sell/cross-sell, pricing and preferred experiences (i.e. early boarding or flight update notifications).

 

Better together

For the co-brand credit card market to work, partners need to work together seamlessly. Sharing customer information is vital to the interwoven marketing capabilities needed to be successful.

It all starts with the data foundation. A shared space for data to be safe provides a privacy-compliant environment that allows marketers and partners to connect different types of data while protecting and governing its use. This is the bread and butter for people-based marketing that enables partners to engage consumers across today’s highly fragmented landscape of channels and devices.

These data safe havens provide the ability to ingest customer records from partners, as well as core campaign and engagement logs used where businesses can measure and analyse success. This data can also be enhanced by third-party sources (demographic data, propensity models) to enrich the view of the consumer and create new insights to support new audience creation for marketing programmes.

However, organising, managing, and deriving insights from large sets of consumer data is complicated. To overcome this, companies should rely on connectivity solutions that integrate data to provide a single view of the customer. These identity resolution services resolve first-, second-, and third-party data, exposure and transaction data to represent real people in a privacy-compliant way.

Having this omnichannel view of the consumer can then be utilised to support consumer targeting, personalisation, and measurement bettering the offering to the user and maintaining relevance in the customer’s wallet.

Ultimately, data is helping the co-brand credit card market to stay relevant to consumers today. It is no longer enough to offer one-size-fits-all rewards to card users as competition in the industry hots up. Increasing customer loyalty and engagement is name of the game and using data from across both partners is helping firms to be more competitive, responsive and personalised than ever to drive new business uptake while keeping existing customers coming back for more.

 

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