Large retail and travel brands sell their products and services to consumers in many different credit segments. Most of those brands’ co-branded credit card offerings, however, are limited to prime consumers.
Saying “no” to non-prime customers who apply for co-brand cards (and are ultimately declined) makes it harder for retail and travel brands to build relationships, and sales, with those customers — even if their credit improves.
“People want to be part of your loyalty structure while you're relevant to them,” says Rolando De Gracia, Chief Commercial Officer of Concora Credit. “When someone raises their hand and says that your brand is important enough to them that they are interested in your credit card and loyalty structure, and then they get declined, the chances are low that they'll try again. Memories are long.”
Brands can say “yes” to more customers with a multi-card approach that includes a non-prime co-brand card offering. And embracing a multi-card approach doesn’t undermine a prime card’s potential for success. In fact, a non-prime co-brand card offering complements a prime co-brand card by giving credit-building consumers an avenue for graduating into a better program.
The value of a graduation pathway
Offering a non-prime co-brand product enables brands to get more customers into their reward or loyalty programs early in the customer lifecycle journey. It also minimizes the risk of those customers having negative brand experiences.
Offering a prime card for non-prime cardholders to transition into then helps brands grow their relationships with those customers over time. As cardholders demonstrate responsible use, for example, they unlock prime co-brand offers — but stay within the loyalty program.
“About 30% of non-prime customers on Concora Credit partners’ cards improve their credit score enough to become eligible for prime cards within 6 to 12 months,” says De Gracia. “We can graduate them from a brand’s starter card into one of the brand’s champion products very easily.”
Steps to a well-structured multi-card approach
Many large brands already segment their customer base by recommending different products or offers to different groups of customers. Offering multiple co-brand cards is a smart extension of that effort — and the smartest multi-card approaches are built on strong partnerships, meaningful progression opportunities, and actionable messaging.
1. Cohesive partnership among primary and secondary lenders and brands
Because they serve different consumer groups, the primary and secondary lenders that issue co-brand cards aren’t competing with each other — making it possible for them to share data and communicate with each other regarding when customers are eligible to graduate. Brands should look to work with primary and secondary lenders with strong track records of partnering on co-brand credit card programs in the retail and/or travel industries.
2. Program progression that makes sense
The retail or travel brand behind a multi-card co-brand strategy is usually the system of record for the loyalty program, so brands must design their programs in ways that make graduating to a prime card meaningfully beneficial to customers. It’s important for earned rewards to carry over from one card to another, for example, and for reward-generating opportunities to accelerate with use of a prime card.
3. Recognition to accompany opportunity
Communicating moments of progression opportunity to customers in an actionable way will make them more likely to take advantage of their chance to graduate card programs. Brands should collaborate with their primary and secondary lenders to ensure that the (better) value proposition of the prime program comes through clearly in customer-facing messages.
Start customer relationships early. Grow them with greater loyalty-benefit potential.
Brands need to grow their existing customer relationships, and provide access to more customers, in order to drive loyalty and grow sales. Offering more segments of customers more and better reward-earning potential is key — and takes a multi-card approach to co-brand credit.
“Customers can have very long relationships with brands,” says De Gracia. “That’s why it’s so valuable to a brand to get a customer into a starter product and graduate them, rather than just say ‘no’ today — which is really a terrible brand experience.”
Brands that limit themselves to offering only prime co-brand programs are risking losing customer relationships, and are holding themselves back from growing loyalty among a broad group of consumers. Serving more customers who are interested in reward-driving loyalty credit card benefits is possible with the right co-brand issuer partner.
To learn more about driving loyalty and sales throughout the customer lifecycle with non-prime co-brand credit, click here.
