April 11, 2015
Point of View Editorial
Executive Chairman Co-Brand Conference
CEO and Managing Partner, The Mallett Group
Are retail co-brands relevant?
Over the past 10 years we have seen a shifting environment for cards that have been brought to market. The omnipresent travel cobrands in air and hospitality continue to create an aspirational goal for those frequent travelers and frequent buyers. These cards are the largest partner of any travel company; the purchase of their loyalty currency by issuers can run into the billions of dollars per year.
Additionally many bank issuer cards have an attached loyalty scheme that supports customers’ travel desires through earn and conversion to either their desired FFP or direct redemption for tickets, and of course merchandise. We have seen the big issuers expanding their reach into the consumer base with large bonus promotions to drive spend and share of wallet. Soon we will see the launch of a “coalition” program here in the US. Coalition programs have never succeeded here as they have in Canada, the UK, and other geographies. We will watch with interest.
Also, in the past few years we have seen a sizable decrease in pure affinity cards. These portfolios have grown smaller, and sponsoring institutions have struggled to retain their base. Not to be forgotten is the formidable size of the customer base that enjoys pure cash rebates of 1-2% for spend. The cash-back segment is huge and tailored to the needs of this population.
So where does this leave retail co-brands? In this highly competitive environment, affected by all of the above, retailers position themselves directly to their customer base to drive spend to their stores by offering promotions, discounts and other benefits that a truly loyal shopper appreciates. However, keeping these programs and the portfolios healthy, relevant and compelling is an increasing challenge. One needs to think outside the box to target, engage and reward so that retailers enjoy the same ROI as other types of cards in market.
At the stand-alone Co-brand Event hosted by AI Connect on May 27/28 in Chicago, retailers will learn about emerging engagement strategies from cutting edge companies, will be exposed to the competition and will hear directly from issuers, networks and industry consultants on new ways to harness “Interaction to Transaction”, the theme of the conference. Come join us!