Are 100,000 Point Offers Coming Back?

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I attended the Randy Petersen Executive Travel Conference on Friday, and I was especially looking forward to the session, The Plastic Fantastic, with senior executives from our favorite credit card companies.

And boy was it good!  They talked about credit card sign-up bonuses, about how well blogs analyze credit cards, about how 30,000 point to 50,000 point cards are the current standard, and how one executive even admitted to having 2 identical airline credit cards from his bank!

Credit Card Panel

The Plastic Fantasic Panel

The panel consisted of:

  • Sonali Chakravorti (Vice President, Membership Benefits for American Express)
  • Bob Daly (Senior Vice President, US Bank)
  • David Gold (General Manger, Partnership, Chase Card Services),
  • Matthew Massaua (Senior Director US Card, Barclaycard)
  • Shane Holdaway (Managing Vice President of US Cards, Capital One)

Randy Petersen moderated the session and did a wonderful job getting the executives to spill the beans by interjecting humor and hiding his probing questions behind friendly banter.

Question:  What keeps you up at night?  Is it your customers or the competition?

This was among the first questions, and the panel may have been warming up, but the answers had the usual corporate non-speak about “bringing your ‘A’ game,” “value propositions” and “amazing customer experience.

But I found it extremely interesting that ALL 5 speakers said that they focus on their customers and don’t think of the competition.

Surely this can’t be true, because the panel members are smart business people working for successful companies, so they have to be thinking of the competition.  There are multiple companies competing for the same business, so a shrewd business person will closely study the competition.  But I suspect that no one wants to admit – especially in front of their peers – that they are kept awake at night by the competition.

I suppose it is similar to how many businesses want to talk about offensive strategy, but no one admits to having (or needing) a defensive strategy.

Question:  Is it part of your strategy to read and study how bloggers analyze credit cards?

All the credit card executives agreed that bloggers are good at analyzing their credit cards and that some provide very in-depth analysis of credit cards.

Sonali from American Express said that bloggers provide trusted information from their readers.  David Gold from Chase noted that there were no bloggers 5 years ago and that bloggers provide a service to their readers.  But he also noted that most of Chase’s customers don’t read blogs regularly, so blogs impact a small (but fast growing) segment.

Bob from US Bank also remarked that bloggers provide service, though he noted that some are more analytical and that some are more like stream of consciousness (which I interpreted to mean long, rambling blog posts).

And Shane from Capital One exclaimed “[Blogs are] huge, Randy!” He admitted that Capital One reads the blogs every day and noted that there is an “upward trend in customer acquisition” from blogs (translation: more folks are signing up for credit cards on blogs).

I suspect that he was NOT referring to miles and points blogs because Capital One doesn’t really have a lot of good travel cards (besides the Venture card which gets 2% cash back on travel and the Spark card which gets 2% cash back on everything).  But Capital One cards are mentioned a lot on personal finance blogs because they don’t charge foreign transaction fees on ALL their cards and because they have a wide range of no-annual fee credit cards as well.

The next series of questions had Randy ask Shane from Capital One a question and then Shane asked the person next to him a question and so on.

Question (Randy to Shane from Capital One):  What is the next big thing in credit cards?

Shane said that the vast access to data and the ability to present unique offers was the next big thing.  And that vast amounts of data mean that we (banks) know more about what you (consumer) care about and can tailor offers to you.

This isn’t particularly surprising to me because banks have always had vasts amount of data – data from customer applications, approvals, age, sex, address, zip code, purchase data, etc.  And Capital One has a reputation for being very data oriented in their approach to credit card marketing.

Question (Matt from Barclays to David from Chase):  How do you balance a proprietary currency [like Chase Ultimate Rewards] with partner currency [like United miles or Hyatt points]?

David’s response was very illuminating.  He mentioned that size matters at Chase and that they want to give everyone a choice with different cards.  And if folks want a second card, Chase would rather the person have a Chase card (as a second card) instead of a card from another bank.

His response is very consistent with the growth in Chase’s credit card business over the years.  Chase is very focused on growing their credit card business and have been very successful at it.  Chase is the #1 Visa card issuer in the world!

And Chase is okay with folks having multiple Chase cards.  The problem for travel buffs is that Chase issues many credit cards for different airlines and hotels, so it is impossible to have all the good Chase travel cards at the same time.

Question (David from Chase to Sonali from AMEX): I know that that AMEX focuses on high-end consumers, so how does AMEX Bluebird and Wal-Mart fit into that strategy?

This was a good question because AMEX customers spend the highest (on average) among all credit/charge card issuers.  AMEX customers are wealthy (and I’m pretty sure that they are also older).  On the other hand, Wal-Mart caters to customers with more modest incomes or those who want to save as much money as possible.

Sonali replied that Bluebird is a way for AMEX to be more inclusive and expand their outlook and signals a shift in AMEX’s strategy (translation:  try to get new, younger & less wealthy customers to balance out their existing wealthy, but elderly customers).

AMEX’s annual report and SEC filings acknowledges that 85% of Bluebird consumers are new to AMEX and over 50% are under the age of 35.

But Sonali ended by saying that affluent consumers will always be central to AMEX.

Randy (to all participants):  Is there going to be a [credit card] revolution or evolution?

Everyone agreed that in the short term there wouldn’t be a revolution in the credit card industry.  But Bob from US Bank said that he couldn’t talk about his patent which will catch the industry off guard in ~24 months.

I don’t know if this is typical marketing showmanship or if the patent will really revolutionize the industry.  Having worked in marketing, I’ll go with the first option, but would love to be wrong!

I also interpret this to mean that you also shouldn’t expect a 150,000 mile offer in the near future!

Randy (to all participants):  What’s the next big thing?

Most of the participants said that using mobile phone technology to provide offers to customers on-the-go or developing powerful mobile phone apps would be the next big thing.

But my favorite response was from David at Chase who said that the last real revolution with credit cards was when airlines and hotels made it possible to earn miles and points from credit cards.  He noted that using your phone to get offers or check your credit card balance is hardly a revolution.  And he mentioned that you can expect plastic credit cards to be in your wallet (or purse) for at least 10 more years.

I couldn’t agree more because consumers expect to be able to check their card balances on-line or to get offers on the phone, so it is hardly the next “big thing.”  And I also agree that plastic credit cards will be around a lot longer.  Your phone isn’t going to replace your credit cards anytime soon.

It’s kinda like how the paperless office (where computers and electronics are supposed to eliminate the use of paper) never arrives or how during the dot-com boom folks thought that internet grocery businesses (with free home delivery) would put traditional brick-and-mortar grocery stores out of business.  Ha!

Sonali from AMEX mentioned that connecting buyers and sellers would be the next big thing and that AMEX had the technology to do it.

She didn’t expand on this, but I suspect she was referring to AMEX’s closed loop system (where the bank which issues the credit card and the merchant bank are the same).  This means that AMEX has data for both buyers and sellers and that they are in a better position to mine that data to make it easier for businesses to make customized offers to individual customers.

Randy (to all participants):  What’s more valuable – airline miles or hotel points?

Airline miles won by 3 votes to 2 votes, but the most interesting response was from Matt of Barclays card who admitted to having 2 identical (i.e 2 of the same) airline loyalty card issued by his bank!

He said that having 2 of the same cards made it easier for his large family to travel.  I’m guessing he was referring to the Barclays US Air card, which besides having a sign-up bonus also gets you a companion pass which reduces the amount of cash for families to travel.  It was nice to know that a credit card executive had 2 identical airline loyalty credit cards!

Other Interesting Snippets

The banks look to see what the competition is doing, but they agree that 100,000 mile/point sign-up bonuses don’t make sense for the banks.  But they did seem to suggest that the current bonuses of 25,000 to 50,000 points won’t be going away soon.

Social media (blogs, message boards, twitter, facebook etc.) are becoming increasing relevant to banks.  I suspect that most business owners, around the world, would agree with this.

Banks want to get you to keep the card after the 1st year (where the fee is usually waived) by offering extra points at renewal (like with the Southwest card) and good customer service.

Bottom Line

It was very helpful to get all the big credit card executives (save for Citi and Bank of America) in a room to hear their thoughts on credit cards!

You’re not going to see mega credit card offer anytime soon, but you can expect the current sign-up bonuses to remain as high as they currently are.

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24 responses to “Are 100,000 Point Offers Coming Back?

  1. Nice summary, I’m going to call showmanship on this 24 month patent that’s going to catch everyone off guard. 24 months in this industry is an eternity.

  2. Great analysis!

  3. Iolaire McFadden

    Thanks for the summary.

    Good job with the table/sponsorship at FTU. Having your fiancée Emily at the table almost full time made your publication seem much more approachable than the other major publishers seem to clump up with their peers. That clumping made it appear more intimidating to make contact.

    Also please may I suggest you do one of the award booking seminars some time with almost zero award charts, and really just do some mock award booking with tips in an improve style setting. Its seemed like there were so many people just getting started, that they could really benefit from an example of you now have 50K UR points, this is what you do next. (I’m suggesting you because of your screenshot visual make it easy style of posts.)

    Thanks,
    iolaire

  4. US Bank has all sorts of ideas for the future of payment systems.
    http://www.startribune.com/printarticle/?id=126417528

  5. And this is worthy of a blog? Just to tell us it’s business as usual?

    Come on D, you gotta do better.

  6. Seems like a poorly worded blog post considering the only mention of 100K was when they said

    “they agree that 100,000 mile/point sign-up bonuses don’t make sense”

  7. I believe what Sonali from Amex was referring to, in “having the technology to connect buyers to sellers” is that Amex has a direct relationship with their merchants. In other words, as a merchant, I have a single processor for my V/MC/D charges and while I still use their hardware for my Amex charges, I actually have to maintain an account with Amex directly from me to them. It’s more of Amex “cutting out the middle man,” I suppose, but I think this is what she means if she’s saying Amex is uniquely positioned to connect buyers and sellers. So it’s in fact a totally closed loop, Buyer-Amex-Seller. Not Buyer-Bank-Visa-Processor-Seller

  8. What does the Chase comment “size matters” mean in relation to UR points?

  9. Ron: “And this is worthy of a blog? Just to tell us it’s business as usual?”

    For us newbies? This is fantastic, interesting, NEW information… So, yeah, absolutely worth a blog post — and thank you SO much Darius for posting this report!

  10. @Ron

    Would you prefer that he make up stuff and put words in people’s mouths? That would certainly be more interesting! I don’t see how reporting on what was said (so that those of us who didn’t go can still “hear it”) is anything but helpful.

  11. Pretty much telling us stuff we already know, since it’s not in their business interest to tell us things we don’t already know. Saying 100K offers are history makes sense, even if it’s not true, since it encourages people to apply for low value ccs, instead of waiting for exceptional offers. They are happy for us to have 2 of their cards? I have multiple cards from Chase, Citi, B of A, and Barclays, so this isn’t exactly news to me. I didn’t expect to learn anything of value from this type of event, and I didn’t. Yawn….

  12. I wasn’t there, but this was a very illuminating recap. Good analysis!

  13. Excellent summary Daraius. Thanks for “reporting” this. 🙂

  14. Very helpful summary for those of us who couldn’t make it — thanks!

  15. Nice & helpful post D. Since I too was not able to attend, I appreciate the recap.

    @ron: stop being so mean! “Mean people suck!”

  16. Thank you for the summary! Much appreciated. I’m curious when did the last real cc revolution (airline/hotel points become available to credit cards) occur?

  17. Having not been able to attend, I appreciate your summary. Thanks.

  18. How do I load this to the bluebird? Can you draw me a diagram?

  19. I would not put much into what executives say at a panel like this. They can change things in a blink of an eye. Bonuses will eist because without them, the apps for these cards would go way down. Chase, Amex and Citi have been big in the cards/points area for a while now. Barclays and US bank have some decent products as well. With Barclays losing US Air, who knows what other things they will come up with. Also Bank of America could decide to make or market some additional cards. They have a few that are pretty good and Merrill Plus card is a fee free card that has some amazing perks. Even the claim from Chase about cards in your wallet for the next ten yrs seems like just idle talk of claims. He may mean that Chase doesn’t want to do anything. Should some competitor figure a way to get this done, it wont take 10 years.

    • @WeddingSpend – And having a patent doesn’t necessarily mean that it will get commercialized.

      @Lively @Elenor @Justin @Amol (@PointsToPointB) @Robert S @Points on the Dollar @Theresa @TWA44 – Thanks and glad you enjoyed it!

      @Iolaire McFadden
      – Thanks for the feedback and I’ll pass it back to the organizers.

      @wtfci – thanks for the link!

      @Ron @david0603
      – Read between the lines…

      @Justin – That’s correct, and perhaps I wasn’t very clear – that AMEX has more info on the card owners and the business than the other banks.

      @J – I suspect he was saying that Chase wants to grow, and they are perfectly fine with you having more than one of their cards. So they won’t limit you to only an Ultimate Rewards card among all the cards in your portfolio.

      @Robert Hanson – I thought it was telling that a bank executive had 2 of the same airline card from his bank!

      @Joey
      – I don’t know an exact date, but perhaps ~20 years ago? I’ll have to do some digging on this.

      @robertw
      – The US credit card industry is saturated so bonuses are the only way to get folks to switch to new cards, so I don’t see them going away. Barclays likely has the Arrival card slotted to be the US Air replacement. Even if there are ways to have all your cards on your phone and you just use your phone to pay, there WILL be lots of people still with plastic cards in 10 years. He was saying that plastic cards won’t disappear anytime soon.

      @Pause The Moment – I don’t think we’ll see a really juicy public 100,000 point offer for a long time or unless there is another deep recession.

  20. Sounds like an interesting conference to attend. I was really hoping you’d be sharing some breaking news about a couple 100,000 point offers. Wahhh!

  21. Thank you, Daraius, I appreciate the reply!

  22. Thanks for an insightfulal post, D!
    Of course the credit card/bank execs won’t spill (all) the beans…who does that? But it’s nice that Randy and Daraius decipher what they really mean from their (limited) answers. More power to you, D.