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Tail: Why Do Consumer Card Propositions Get All of the Attention?

Cashback and loyalty schemes that target consumers using their debit cards are becoming more and more popular – so why isn’t this happening with corporate card programmes?

James Done, CEO of Tail, has over 10 years of experience in the financial sector. He takes an in-depth look at why businesses are not applying a rewards system to benefit spending from partnered merchants, and how revenue can be bolstered by adding some form of loyalty rewards system to one’s business card:

James Done, CEO of Tail
James Done, CEO of Tail

Thinking back to the way many loyalty schemes used to work just a few years ago is like looking into another world. Clunky sign-up processes, usually done manually at the checkout. Yet another piece of cardboard or plastic for the customer to have to keep in their purse or wallet. It was such an analogue way of doing things. Often the boost in customer loyalty was outweighed by the inconvenience for both merchant and customer when it came to redeeming rewards.

Things have since evolved – with the fintech revolution bringing loyalty schemes into the digital age. We have smartphone apps that make both signing up and the redemption of rewards very easy. Even better, merchants do not have to worry about capturing the data and issuing cards to their customers, as all that can be taken care of by a third party – the bank. With bank-driven loyalty schemes, the customer simply needs to use their existing debit or credit card to make their payment, and everything else happens behind the scenes. All merchants need to think about is how to market their offers and what kind of rewards will appeal to consumers without impacting too heavily on their bottom line.

The whole process has become so seamless and slick that the staff don’t even need to know that it’s happening – the reward is applied automatically when the card is used, and the money is credited to the customer’s account at the end of the week. It’s a big boon for not just the merchant but participating banks as well, allowing them to reap the rewards of a loyalty programme that gives customers something they’ll never turn down – more money in their pocket.

It seems logical, then, that banks could offer reward schemes for other types of customers and not just limit them to consumers. Indeed, many banks do have some type of reward programme for corporate clients. However, it’s rarely seen as a unique selling point. Rather than shouting about the reward element of their business accounts, many banks shove them to the very bottom of their list of benefits, as if they were a mere afterthought. It’s clear that they’re doing little more than replicating the consumer programme and bundling it in with their corporate offer. By doing so they are missing out on a great chance to really stand out from their competition.

Done right, it’s not hard to imagine a programme whereby business card users making purchases from participating merchants earned appropriate rewards both for the business and the cardholder being extremely popular. It’s certainly a great point of differentiation for banks looking to attract business and corporate clients. So how can they begin to build a loyalty programme that will really appeal to these customers?

Points-based reward systems are better than nothing, but lack imagination. If banks want to make a big deal of those programmes and really use them as a way of winning custom, they need to do much more than this. The incentives need to fit well with the business as a whole and the people who will be using the cards. Therefore, the merchant partnerships need to be relevant. They also need to be flexible.

During the covid-19 pandemic, business travel – something that accounts for a big chunk of corporate card spend – ground to a halt almost entirely. Banks providing corporate card schemes were put onto the back foot, struggling to encourage their clients to find ways of putting more spend through their cards to make up for these losses. This is when it can really pay off for banks that offer the right kind of incentives for businesses to start using cards for purchases in categories other than travel and hospitality.

For example, suppliers of office equipment saw an increase in sales during the pandemic as millions of people switched to home working. While a lot of these sales would have been made through purchase orders – which take time to trickle through to merchants – offering businesses an incentive for putting these purchases of chairs, desks, laptops, monitors and so on their corporate cards would have been a very effective way of boosting revenue for banks.

These schemes also open up a world of possibilities for businesses when it comes to generating data insights. Sure, corporate banking relationships have always enabled businesses to see where money is being spent, but with the reward element added in it has the potential to drive even greater efficiencies. It puts business in a position to evaluate existing supplier relationships, favouring those that offer rewards over those that don’t.

It makes sense to offer rewards programmes to business accounts. Business customers make repeated, regular purchases with specific outlets – such as airlines, hotel chains and restaurants, for instance. By partnering with the right merchants and actively targeting the corporate sector, banks can make the most of what is already a reliable revenue stream. It will require significant investment, but if they get the incentives right, they too will reap the rewards.

What doesn’t make sense is the seeming reluctance of many banks to use their rewards programmes as a selling point for business customers. Perhaps it’s because they don’t have any confidence in them because they haven’t invested enough in them. But there is a massive opportunity here for banks that are prepared to put their loyalty programmes front and centre of their push to engage with more corporate clients.

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