The Scoop on Co-Brand Credit Cards

A co-branded credit card is a card created when a brand like Starbucks partners with a bank and a credit card company to offer a financial product.The idea is that the power of a well known brand will resonate with consumers making customer acquisition easier. Should my company offer a financial product such as a co-branded credit card? The short answer is yes, but let me explain why.  I spent some time working in Disney’s Co-Brand Credit Card department, and I got to understand the inner workings of a co-brand credit card.  Understanding co-brand credit card programs and the value proposition that they provide to a company and to the consumer are important.  Here is why your company should offer a co-branded credit card:

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Value to Consumer

The math is simple.  When a customer signs up for a card they get some free stuff like a $200 statement credit after spending x dollars in the first three months.  Everyone likes free money!  Then on top of that many cards give the customer rewards like 1.5% cash back on all of their purchases.  The average person that spends $20,000 a year on a credit card they gets rewarded with $300.  More free money!  The free money that your customer gets will surely produce positive associations with your brand.  In addition, credit cards can offer introductory 0% finance periods, as well as, 0% finance offers for certain purchases.  If your customers need a helping hand you will be there for them.  Co-Brand credit cards provide value to your customer.

Value to Business

The contract negotiation between the bank of your choice, credit card brand, and your company determine how your company benefits from the deal.  There are many avenues to generate revenue in payments.  The interchange rate which is charged to companies when customers purchase using a credit card is one option.  Another option is profit share on the interest earned by the bank for statements that have revolving balances. Also, those cash back rewards that I mentioned earlier can be subsidized depending on how you work your deal.  Furthermore, the banks can offer you incentives for acquiring and retaining accounts.  Since you are working together with the bank and the card brand, marketing is a joint effort and can be a shared expense.  Lastly, you can pocket a percentage of everything that is spent by your cardholders. It’s a deal that is beneficial to all parties.  Just think about the brand awareness you will get from having your card flashed around everywhere your customers go.

Loyalty

A platform to reach your customers and a platform for your customers to engage with you.  There are regulations of course, but you now have the ability to reach your customers directly.  You can take advantage of this by providing your customers with delightful communications making them aware of all the cool things that are happening with your company.  The customer will be happy too.  They are getting special offers by being your cardholder and they get to flash around your brand every time they make a purchase.  They like you and you like them.

Work with DJR Jeeves Consulting and get your co-brand credit card in market today.

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