Are Co-Branded Travel Cards Rewarding Enough?
May 25 2016 - 9:18AM
Business Wire
Oliver Wyman Examines How to Win the Millennial
Wallet in Time for Summer Travel
Oliver Wyman examined how consumers use co-branded credit cards
as part of its annual Transport & Logistics Journal and found
that co-branded travel cards may not be rewarding enough.
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(Graphic: Business Wire)
Consumers like co-branded credit cards. In fact, 80 percent of
card holders believe co-branded cards offer as much or more value
than bank-issued rewards cards. But consumers also are willing to
switch when the grass appears greener: 40 percent change their
primary credit card at least every two years.
This leads to a critical question for airlines and hotels – how
do they persuade consumers to acquire their cobranded card, spend
with it, and not switch?
Half of consumers leave for better rewards. Even customers who
carry a monthly balance are more likely to switch because of
rewards rather than a lower interest rate (11 percent).
“To create offers that “stick” with consumers, hotels and
airlines need to carefully consider the needs, preferences, and
travel and purchasing behaviors of their target customers,” said
Jessica McLaughlin, a partner with Oliver Wyman. “Discounts on
in-flight meals and room service are popular among travelers, but
are becoming common. Rewards need to be highly personalized with
perceived exclusivity. Think flight simulator tours, suite upgrades
or private dinners with renowned chefs.”
The personalization trend can be most seen among Millennials,
the generation aged 18-34. In fact, this group favored options for
individual card design as the highest of any other age groups.
Today, only a third of credit card-carrying Millennials have a
cobranded travel card, compared to half of credit card users who
are their parents’ age. These tech-savvy consumers also value
different features and use credit cards in different ways than
older generations. For example:
- Millennials expect credit card payment
capabilities and other features to be wholly integrated with their
digital lives and rank these features significantly higher than
other age groups.
- Millennials are twice as likely to use
mobile wallet applications than the average cardholder and more
than three times as likely as Baby Boomers (52 percent vs 16
percent).
“Winning the wallets of this generation this summer and beyond
will require figuring out what rewards and experiences they most
value,” added McLaughlin. “The good news for travel companies is
that Millennials exhibit a passion for travel, spending a greater
share of their income on flights and hotels than any other age
segment.”
The co-branded credit card survey was conducted between December
2015 and January 2016 among 1,311 card holders in the US across
various demographics.
The Oliver Wyman Transport & Logistics Journal is one of the
firm’s longest-standing publications. This edition also includes
articles on the digitalization of the rail industry, the European
motor coach market, changes to the postal service worldwide,
Uber-trucking, aerospace innovation, among others.
Oliver Wyman
With offices in 50+ cities across 26 countries, Oliver Wyman is
a global leader in management consulting that combines deep
industry knowledge with specialized expertise in strategy,
operations, risk management, and organization transformation.
Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan
Companies [NYSE: MMC]. Follow Oliver Wyman on Twitter
@OliverWyman.
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version on businesswire.com: http://www.businesswire.com/news/home/20160525005882/en/
Media:Oliver WymanFrancine Minadeo,
212-345-6417francine.minadeo@oliverwyman.com
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