What’s in Your Wallet?

Last week when thinking about the disruption innovation causes to businesses, airlines came to mind first but are far from the only widespread pillar of our business and personal lives that end up reacting to change instead of necessarily knowing about it in advance. There’s another that those in our space use much more than they fly. They come in different sizes, shades, and colors, are used all over the world, and while they can’t cause any physical harm, they can lead to ruin if used in improperly. We’re talking of course about credit and credit cards, arguably the single most important players in ecosystem outside of the cpa networks. Every body has their favorite card or cards; even though, at their core, credit cards are a complete commodity, especially when looking at the establishments which accept all major cards. Any difference has nothing to do with their transactional capacity. Instead they come down to the emotional factors, ones that have you using one card over the other and defending it in conversations. Let’s face it. In our space, it’s not about APR and initial credit limits. Gaining your loyalty comes from how well they do three things – customer service, rewards, and ego.

Customer Service
As an industry, we spend a lot of money with credit cards. Think of the billions that now get charged to Google and other platforms that didn’t exist before. For us, credit cards aren’t just a helpful tool but a necessity. Cards issued by major banks and the major card issuers have 24-hour support. Only a handful of cards issued by regional banks don’t offer as robust support, although they usually outsource the customer service to a call center with shared operations to expand the coverage. Most people, though, only call their card service department a handful of times a year, and that experience – the level of personalization, security, and feeling that they are working on your behalf can lock in loyalty. For example, when trouble arises, we want to feel like someone on the other end of the phone cares about our success and will work as hard as we do, like it’s their money too.

Rewards
Almost every CPA Network currently has or has offered a rewards program. AzoogleAds has long had some of the more enticing programs, including their current promotions featuring a chance to earn your way to the Playboy Mansion and large cash prizes for performance on selected campaigns. While I haven’t quite seen a credit card that offers access to the Mansion, most have full flushed out loyalty programs which can include everything from early access to tickets to a year’s rental of an exotic car. The decision among most cards is whether to choose miles, points, or cash back. Mileage cards work well for those dedicated to a particular airline or airline group, and the economics work out a little better than using points. With points, each dollar accounts for one point. The standard ratio is a 1% return on spend up to an unlimited amount. Spend 10,000 get 10,000 points. Spend 1,000,000 get 1,000,000. As an aside, the number of people who could do the latter used to remain low as even many businesses didn’t accept credit cards for large transactions; instead of credit, it was more old fashioned loans or lines of credit. The advent of self-service platforms in online advertising has completely democratized the nature of big spending and had card companies rethinking their customer base.

With individuals now spending hundreds of thousands of dollar and in quite a few cases tens of millions of dollars, they have an over abundance of points. For them American Express tends to be the preferred card because of their robust rewards catalog. Their daily operations of using a card, something they would have to do anyway, all of a sudden means frequent getaways and other perks that now have no incremental cost. It would be economically more beneficial to get cash back, but any card offering greater than 1% cash back has restrictions, e.g., total amount of cash back available, limits to what earns cash back, etc. Discover card gives unlimited 1% cash back which parallels the 1% return on capital spent redemption value of points (100,000 points buys a product worth $100). Miles can be a little different. Take a ticket that costs $400 coast to coast, conservatively 4000 miles round trip. Free round trips using miles are around 40,000 miles domestic. That 40,000 miles to earn at our early ratio means a spend of ten trips (10 x 4000 miles) or 40,000 dollars. In other words, it’s just about a wash as paying with points would cost 40,000 points for a 400 ticket. Some cards will offer double miles up to a certain amount spent on travel, so for big spenders on media, it doesn’t matter as much. In the end, it will be a Coke / Pepsi preference with some people justifying miles, others points, or cash back. And when talking about a spend of 50,000 or less annually, the difference can actually matter – take the cash if greater than 1%. For the ballers in our space, it’s about something else.

Ego
There are two levels of customer service. All card members qualify for customer service, but not all get the treatment – service perks above and beyond the standard toll-free number, a dedicated number, concierge, verbal fluffer. Points are good. Lots of points are better, but in the end it’s about feeling like you’ve made it, verbal cues like a Rolex on the wrist. That one card engenders more of an emotional connection than others is simply amazing. It’s just like Coke and Pepsi. They taste different, but blindfold people, and it’s amazing how poorly they pick their supposed favorite. It’s technically the same here. People should pick the card with the best limit, but the cards rely on us wanting the more exclusive card or in Capital One’s case, the most personalized card, so that we use it above all others. For the average person, though, credit cards are really about access to credit – limits and aprs (on purchases and transfers). It’s for the person who truly needs the service, like the self-funded startup, the small to medium sized business with revenues and costs too close to another. It’s the company that needs employee cards and to track their spending easily. For the new elite, the media elite, credit cards are the symbol of success and we look at the other person’s card like adolescents admiring the kid that has the new car or the gorilla who turned silver back first.

The topic of cards matter for so many reasons, the least of which deals with their importance in our daily lives; instead it’s all about how a commoditized product achieves differentiation. When an affiliate can get the same offer from more than one place and when weekly payments (credit) don’t distinguish, it really is about engendering loyalty in less measurable, i.e., emotional ways.@