When integrated into a loyalty program, co-branded credit cards have a significant impact on the program’s performance, particularly by changing member behavior.
The statistics presented in this article are drawn from our LoyalT study1, conducted by R3 Marketing and Adviso. We evaluated 86 loyalty programs and analyzed the impact of credit cards on the behavior of 10,000 Canadians, including 4,000 Quebecers.
Co-branded cards
Snapshot of the Canadian situation
Increasingly popular, co-branded credit cards come from the association of a bank – a card issuer – and a loyalty program. Those cards offer members many additional benefits:
- Faster accumulation of loyalty points
- Additional discounts and/or exclusive offers from partners
- VIP events and experiences
In the last 2 years, this trend has been used by the Moi (Metro), Triangle Rewards (Canadian Tire) and Scene+ (Cineplex) programs.
In 12 months, the Scene+ program shows a great performance: 12% of program members have already become Scotia Bank cardholders.
Interesting fact: Amazon has doubled its number of cardholders since 2020, increasing from 3.5% to 7%. This increase is closely linked to the increase in the total number of members.
Real impact
The LoyalT study compared the ratings of members who hold the program’s credit card with those who do not. The study results not only show that cardholders like this approach, but also that it has a considerable impact on the member retention and the program ability to lead to members changing their behaviour.
Looking only at responses from members who purchased the co-branded credit card, the programs saw increases of :
- 19% in overall performance (LoyalT score2)
- 17% on the behavioral index (increase in frequency of visits and concentration of purchases)3
- 41% on their perceived generosity4
If we were to solely consider their performance with their credit cards, many loyalty programs would see an improvement in their overall rating. Some would even be included in the top 10 of the best Canadian programs.
Cash back credit cards or credit cards with rewards
Discount or reward credit cards are offered by banking institutions and are not linked to a specific loyalty program. Like co-branded loyalty program credit cards, they promise additional benefits to their cardholders, such as:
- Discounts (point redemption) on multiple purchase categories
- Travel points or miles
- Discounts and one-time offers
- Exclusive events
- Rental car insurance
- Extended warranties
Cash back credit cards or credit cards with rewards are very popular: 1 of 2 (50.3%) Canadians hold one. This percentage rises to 63.4% among people with an income of $100,000+. We also see that the higher the income, the higher the detention and usage rate. The reasons are quite simple: wealthier Canadians tend to spend more and do not mind paying annual fees for these cards.
Contrary to popular belief, loyalty programs attract wealthier people. On average, they have 26% more programs and use them 28% more often than those with incomes below $60,000.
Learn more about Canadian members. See our article on Canadian statistics.
“Double-dipping”
Among all Canadian cardholders nearly 3 out of 4 (72.2%) use their credit card with rewards combined with their loyalty program to make purchases. This is what our experts call “double-dipping”. In other words, members earn points with a financial institution’s credit card at the same time they earn points with a corporation’s loyalty card.
Our Summ-it financial model allows you to evaluate the profitability of a credit card for your loyalty program. Contact us now.
Development of a new program
Improvement of an existing program
Best practices analysis
Marketing strategy and data