Strong Preliminary Update on Caesars Total Rewards Program

Chairman and CEO Gary Loveman shared a few favorable results from the launch of the refreshed Total Rewards cobrand program on the Caesars’ quarterly earnings call. 

We’re so pleased to see such success from the program so far! 

“……Our recent investments to upgrade and refresh our marketing and analytics capabilities, I’m very excited about, are yielding results across the enterprise and we’re really just at the beginning. The early results of the new caesars.com are quite encouraging. The site, which has been rolled out for most of our properties, has helped generate double-digit revenue increases in key metrics, including direct bookings and cross-promotion. We launched the new Total Rewards credit card partnership with Alliance Data. This partnership provides Total Rewards members with another opportunity to earn reward credits, engendering further loyalty and functionality for the program and our guests. This card program has generated far more interest than past credit card offerings, resulting in the issuance of 15,000 cards in just the first 2 weeks of availability. We’re also seeing results from our investments to create a next generation analytics infrastructure. The Big Data capabilities that we’ve added are helping us to become more efficient, strategic and insightful in our marketing efforts, resulting in significantly enhanced customer segmentation and a higher a degree of intimacy and relevance in our offers to our guests.”

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Are banks or consumers behind the slow growth in credit cards? – Chip Baker

While profitability of the major credit card issuers has improved dramatically since the 2008-2009 recession, loans and total cards in force continue to remain largely flat. The rationale by many in the industry is that this is driven by changes in consumer behavior; principally, the desire of many consumers to decrease debt and the increasing interest in debit card products. However, a recent article in Payments Source illustrates another key driver of the decline in credit card acquisition growth, the fact that banks are becoming far more selective in the new accounts they target and approve. Over the past 4 years, the percentage of new accounts with credit scores below 660 dropped at each of the 6 largest credit card issuers while the percentage of new accounts with credit scores above 720 increased. The most significant change happened at Bank of America. In 2007 only 36% of new credit card accounts at Bank of America had credit scores above 720, but by 2012 52% of new credit card accounts has a credit score above 720.

This increased focus on highly credit worthy individuals not only limits the overall acquisition growth as all the issuers fight over the same high FICO score consumers, but it also leaves segments of the consumer base such as millennials out in the cold who may interested in acquiring a credit card. Going forward if this trend continues, it could have a lasting impact on the way the millennial generation uses credit and debit cards, especially as regulations such as the CARD Act make student credit card acquisition more challenging. It also provides opportunities for issuers interested in a broader FICO portfolio mix to find low hanging acquisition fruit lower in the FICO spectrum where the competition from an acquisition perspective has declined measurably.

Read more about the issuers are looking to change the FICO mix of their new accounts here: http://www.paymentssource.com/news/credit-card-lenders-keep-getting-pickier-interactive-graphic-3013257-1.html

To learn more about Partner Advisors and the way we serve our clients, please visit our company website.

Prepaid with a Purpose – Sean Collins

American Banker (article and link below) published an interesting story worth reading for banks and other FI’s considering a prepaid strategy.  Namely, how to address the small business marketplace with a meaningful payments product.  In this case, a company called PEX has targeted a market that has immediate need, namely, small businesses with employees and contractors that need to purchase supplies for jobs.  The use case offered is a good one — a plumbing company that needs to enable its plumbers to buy supplies after they assess the job, but can’t be expected to front the money for the supplies from the supply store.  It takes care of two big problems (one of which not mentioned by the article).  First, it relieves the company of issuing credit cards (which in a small business comes with joint AND several liability — a big issue).  Second, it relieves suppliers from offering house credit to its small business and contractor customers.  In our work with players such as ACE Hardware and ProBuild, this is a big issue.

As prepaid goes through its maturation cycle, this product seems to serve a clear need and should tip over into general use.  Banks and credit unions looking to serve small businesses like these would be well-served to evaluate what is a clear solution to a real problem.

Read the full article here. 

To learn more about Partner Advisors and the way we serve our clients, please visit our company website.