Private-label credit cards build loyalty Article Number : 4514

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Date	5/28/2009 9:24:09 AM
Written By	LGM & Associates Technical Flooring Services
View this article at:	//floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=4514
Abstract	Private-label credit cards are viewed as far more than pieces of plastic at many independent retail outlets across the country. Rather, they are another opportunity for the kind of quality bonding with shoppers that can become a...
Article	Private-label credit cards are viewed as far more than pieces of plastic at many independent retail outlets across the country. Rather, they are another opportunity for the kind of quality bonding with shoppers that can become a cornerstone of a dealer’s strategy, particularly in a tough economy. When a customer signs up for a card, she becomes an advocate of the brand, retail experts say. She also spends more. One major apparel retailer noted that the average dollar amount of a purchase made with its private-label credit card is 36% higher than one made by cash or check. Such purchases also are 30% higher than transactions made with other bank credit cards. In today’s tricky retail climate, shoring up the spend of shoppers who are still hitting the stores can be crucial. One particular retailer noted that over a quarterly period, average unit sales increased 7.5%, offsetting a 6.5% decline in traffic. Loyal customers are going to continue to shop when times are tough if they enjoy spending time in a store. “Client commitment, matched with keen focus on a program, can net significant success,” said Melisa Miller, senior vice president and chief client officer for retail services at Alliance Data. The Dallas-based issuer of private-label card programs has nearly 92 million cardholders generating more than $7.5 billion in credit sales annually. Private-label credit cards can be “a great place to start understanding how you can cultivate more loyalty with the customers,” said Kelly Hlavinka, who directs consulting, publishing, education and research projects for Colloquy, Alliance Data’s Milford, Ohio-based loyalty consulting arm. Loyalty marketing continues to be a very vibrant space, she says, and “in many ways the new battleground is going to be in the retail sector.” Young adults are one of the demographic groups offering strong opportunities for growth, she said, adding that the affluent consumer segment has become somewhat oversaturated in terms of loyalty marketing. Citing an Info Shop report, a recent Colloquy publication states that the private-label credit card market is projected to grow 56% between 1998 and 2010. “That growth will continue to rely on retailers’ ability to leverage the PLCC as a loyalty-marketing tool,” it says. Keep it fresh The private-label landscape is becoming more crowded, but the key to standing out is ensuring that marketing, messages and offers remain fresh and relevant. Monthly credit card statements also present an opportunity to strike a chord with customers. Alliance Data’s analytics team can help retail clients examine a shopper’s recent purchase behavior and gauge what they are most likely to be in the market next. Messages that go out with the statement can be selected accordingly. Advice for fellow retailers contemplating a private-label credit card program? Don’t do it if you think you have to. If you put half an effort into it, a credit card program won’t have the desired effect for a retailer. Among Alliance Data’s clients, the ones who might be considered “home runs” are those who have the highest degree of senior-level buy-in. Of course, with all that retailers must deal with today, there are plenty of distractions. “We try to help our clients stay focused,” Miller said. That effort can come in the form of joint marketing plans and “credit ambassadors” who keep associates up to date on the credit card program.