Co-Brand Credit Cards from the Loyalty Lens

Aug 13, 2023

Kobie recently weighed in with Loyalty 360 on the topic of co-brand cards.

As brands look to differentiate and enhance their customer loyalty programs, private-label credit cards (PLCC) are an attractive strategy to build strong connections with program members. The customer insights leveraged on both the brand and partner sides offer a treasure trove of customer behavior data to form more personalized communications, offerings, and a deeper value proposition. Seeking the right match for a co-brand credit card is critical to achieving program success.

Kobie’s Sr. Manager of Strategic Consulting, Drew Slater, provided insights on the following:

1. What key factors should a brand consider when evaluating the potential benefits and challenges of launching a co-brand or private label credit card as part of its customer loyalty strategy?

When evaluating co-brand credit cards, first ask; “how does this card integrate with my brand’s macro-level loyalty strategy?”

Determine if the card intends to serve as the loyalty program entirely or if it enhances an existing program. No matter the goal of a co-brand card, to successfully launch it, the value proposition and benefits need to be clear to the future cardholders while considering impacts to the customer journey.

To identify potential challenges or friction points, understand the journey and where/how the card fits in. For example, if an MTL program is in place and the co-brand card is intended to deepen existing cardholder loyalty, the customer must have a seamless experience with attainable benefits to derive value.

If launching a new program that is solely the co-brand card, consider the desired journey from the start and whether the card lowers or increases barriers to entry for your program.


2. What are some successful examples of brands integrating credit cards into their customer loyalty strategy, and what were the key elements that contributed to their success?

Amtrak’s recent co-brand card launch is a great example of well-executed strategy that drives value for Amtrak Guest Rewards members. As the clear next step in the loyalty journey and brand relationship, the card’s value proposition is easy to understand with incentivized LTOs (limited time offers) throughout the year.

The cardholder benefits are attainable in that they allow members to earn tier status quicker, providing instant value with food and beverage rebates, lounge passes, companion coupons and class upgrades upon card approval. The card considers the continuation of the member journey, offering the same benefits annually, and appealing to the different or evolving needs of members by offering a fee and no-feed card to lower barriers to entry.

2. What strategies can a brand employ to effectively promote and market its credit card offering(s) to its existing customer base and attract new customers?

Consumers are always evolving. Their needs are always changing. To not fall behind, brands need to constantly test acquisition offers and engagement strategies throughout the year. Mixing in different offers that include various hard and soft benefits is incredibly important. Is a lower point total as effective as a larger one? Do consumers value certain soft benefits more than certain hard benefits? Answering both questions can not only optimize a brand’s card promotions, but it also helps control program costs for the brand.  

It is also crucial for brands to annually establish a co-brand learning Agenda that aligns with their overarching loyalty strategy. This ensures that the test and learn efforts contribute to the predetermined objectives.

3. How can a brand leverage customer data and insights from a credit card offering(s) to enhance its overall customer loyalty strategy and drive personalized experiences?

Data is paramount in the business landscape. When a brand gains access to its cardholders’ spending data, it becomes a game-changer. This data not only benefits the card program but also has a significant impact on the brand’s MTL program. It provides valuable insights into where members are spending and where they are not. Are they solely making purchases with the brand (a classic co-brand behavior), or are they also spending elsewhere, particularly in top-of-wallet categories?

Answers to these questions enable brands to gauge the level of engagement their cardholders have with the brand. If cardholders exclusively spend with the brand, it indicates a strong brand engagement. However, if they are spending with the brand but also talking advantage of the value proposition for purchases elsewhere, it demonstrates clear engagement with the card program as well.

Brands can also see how much money their cardholders are spending with competitors. This knowledge serves as an indicator of the potential to redirect some of that expenditure towards their brand. Lastly, by analyzing spending data, a brand can personalize its messages, promotions, and even its overall program structure to make it more tailored to its cardholders’ preferences and behaviors.