What I Learned from a Room Full of Banks and Loyalty Programs

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I live, breathe, and occasionally eat miles, points, loyalty programs, and credit card rewards, but usually from the perspective either as a consumer myself, or from the perspective of sharing information about those programs with other consumers…i.e. all of you nice enough to stop by this site. However, I spent the last couple of days at the Grand Hyatt Atlanta Buckhead at the Co-brand Card Partnerships Conference, and boy was it interesting. Very rarely am I in a room full of those who are involved with actually running the loyalty programs, the banks that issue the co-branded cards, or the companies who make that technology work on the back end, but that was my reality this week.

Grand Hyatt Atlanta Buckhead

In the event you are curious as to what the current buzz is in the co-branded card space, read on for a few of my personal takeaways from this conference as I found it fascinating.

The Chase Sapphire Reserve is a Game Changer

This specific conference was geared for those who are involved in the co-branded space, so this means products like the Delta Amex Cards or the Southwest Chase Cards as opposed to cards like the Amex EveryDay or the Chase Sapphire Reserve that aren’t co-branded with a specific loyalty program. However, the card I heard referenced more than any other card during the conference by a wide margin was the Chase Sapphire Reserve.

It seems that the success this card had even with a $450 annual fee and without a traditional marketing campaign came as a bit of a surprise to those in the industry, perhaps even to Chase since it ran out of metal cards for a while shortly after the card launched. Since of course all of these cards are competing with each other for your spending dollars, there is some level of concern over whether the trend of the future will be a shift away from specific co-branded cards and towards the proprietary points program cards. From a consumer perspective, I think cards like the Sapphire Reserve do absolutely raise the bar, and while it hasn’t stopped me from carrying co-branded cards like the Hyatt Card, it has stopped me from really putting spending on many of those cards since I will do better earning points I can transfer into those programs on the Reserve Card. 

I know that many of us got the Sapphire Reserve when we did because it was offering a staggering 100,000 sign-up bonus points worth at least $1,500 towards travel. Of course that lucrative of a bonus, along with other perks, comes at a very real cost to the issuers. There was talk in the room about the banks now looking at a 5 – 7 year payback period when acquiring a new customer with bonuses such as that. While most of us were happy to pay the $450 fee the first year, 5 – 7 years is a lot of $450 annual fees to pay, so time will tell just how well this card will do for Chase over the longer run. 

Loyalty Program Overload, but Without Loyalty

One statistic that was quoted was that the average US consumer is a member of 14 different loyalty programs, though they are only “actively” engaged in about half that number. I don’t think that number surprises me since everyone from United to Nordstrom to my local yogurt shop has a loyalty program, but it does remind me of just how complicated this all is. I certainly don’t know everything there is to know about travel rewards programs and I am an outlier who thinks about this stuff all the time. If I can’t even keep up with it all, how in the world is it reasonable to expect an average consumer who is a member of 14 loyalty programs to know the ins and outs of how all of them work, or even be able to keep up with their points without letting them expire?

No wonder such a decent number of people just don’t feel like rewards programs are worth it…there really is a very tangible risk of over-saturation and the programs have to work hard(er) to make redeeming those miles and points easy and rewarding to keep folks coming back. In fact, that is where I think the programs and products have the most room for improvement.

The Millennials are Coming

If Chase Sapphire Reserve was the card most talked about card, then Millennials were the other most covered topic as they related to the loyalty and banking spheres. Studies have shown that Millennials (or the emerging affluent as they were also referred) are less loyal, less trusting of institutions, less brand oriented, and more reliant on recommendations of their friends, on overall value, and on experiences than previous generations. When you pair that up against something like the American Airlines Advantage program, it isn’t shocking to me that they missed their customer acquisition goals on their co-branded cards.

Not to pick on American here, but there isn’t much about the AAdvantage program right this second that would be attractive to the stereotypical Millennial. This is a group that will notice that there are virtually no Saver awards in many markets and simply move on. They likely won’t remain brand loyal to this large institution just because that “is what they have always done”. They will find a better option for their everyday spending and frequent flyer needs and go with it. 

While there was lots of talk about Millennials specifically, I think much of what is attributed to that generation really is just a byproduct of technology and better access to information. With better technology, communication channels, the ability to comparison shop from your phone, and more, consumers simply don’t have to just accept what they may have more readily accepted even 10 – 15 years ago. There are more options in the loyalty space and you can’t expect savvy “emerging affluent” to accept an overly complicated or misleading loyalty program that isn’t really loyal to them. They will demand better, which brings me to my favorite takeaway.

I Think Traditional Loyalty Programs Will Improve

Out of necessity to stay competitive with the demanding “emerging affluent” generation and the growing number of “proprietary products” such as the Sapphire Reserve, I think that the traditional loyalty programs and related co-branded products will improve in the coming years, assuming there isn’t a huge overhaul to how the interchange fees and such work in this country. Devaluation after devaluation after devaluation coupled with crummy award availability simply won’t work over the longer term in this information age.

Now this doesn’t necessarily mean that credit card sign-up bonuses will continue to go up and up as that math may not play out for the banks, but longer term loyalty and transparency within the loyalty programs simply has to improve with some programs or they will (in my estimation) continue to have trouble hitting their acquisition targets with their co-branded products. Not only that, but those who do have the co-branded cards would be remiss to put all of their everyday spending towards earning one mile per dollar in a program where those miles are only worth around a penny each when they could simply use a 2% cash back card. Some folks may be stuck in their ways and continue to display that behavior favoring the same card they always have, but the next wave of consumers is not displaying that same programmed behavior and loyalty.

While this wasn’t a specific takeaway from the conference, but rather my own personal conclusion, I think that the loyalty programs and co-branded products that do a good job meeting the needs not just of a single traveler, but of the whole family, will be the ones that rise to the top as the “emerging affluent” (aka Millennials) that everyone seems to want to attract continue to become parents with young families. Millennials may be having children later, but they are still having them, and children are a game changer. Speaking from experience, a stereotypical Millennial may not be inherently brand loyal, but if a loyalty program takes good care of their whole family on a consistent basis, I can all but guarantee that they will become loyal to that program. Given that, it is not at all surprising we are starting to see more and more frequent flyer programs formalize elite status extensions for new parents.

I’m really glad I was able to hear about the same co-branded products and programs that I think about on a daily basis, but from the other side of the mirror thanks to this conference. I left feeling optimistic about this corner of the world, but there is no question that there is some growing and evolving that needs to happen within the co-branded space as the demographics and demands of the most desired consumer changes a bit.

What do you think the future holds for loyalty programs and the associated co-branded card products?

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.



  1. Dear Summer. This is as thoughtful as well written miles and points blog as I have read in a long time. So first of all, thank you for sharing. Here are my comments:
    1. I agree with you, the survivors of the loyalty game will be those who actually care about their customers (e.g. Southwest, Singapore Airlines), that means: , delivering value both in their services and their reward programs, and providing good service in everything that constitutes the customer experience (phone, web, airport, airplane). I am tremendously loyal to T-Mobile because they deliver value in a way that no other carrier does. In contrast, I will not buy a ticket with United, just use miles, preferably in business, only when they are the only reasonable option.
    2. With regards to loyalty program credit cards, those that heavily reward putting spend on them and provide annual incentives are worth keeping. For instance: Club Carlson Credit Card, which effectively gives me 2 free nights at most of their top hotels if I spend $10,000 in a year. I also keep the IHG card because it is a free night for $49, but I would not put any spend on it. These are the only 2 loyalty cards I consistently keep. The rest I dump and reapply. That is not loyalty, just taking advantage of sign up offers. SPG is a great program, but who knows what is going to happen.
    So yes, there is an incentive to improve the value proposition of those loyalty cards, but loyalty runs much deeper and it is (in my opinion) a combination of genuinely caring and delivering value. If you try to fake it, you will probably get killed. United, American, and Delta (to name a few) are like the cable company, you use them when you have no choice.

    • Thank you and I’m so glad you enjoyed the post. I agree with you 100%. Not only is loyalty more than just about the points, but that more genuine loyalty from both parties is what will make the whole thing sustainable. 100,000 points on a regular basis simply isn’t, and consumers don’t truly benefit by not having a go-to program or two that knows and cares about them either. I think the SPG thing will be VERY interesting to watch. Lord knows Amex will not want to lose that product, so we will see what happens.

    • Good points overall. On your Club Carlson illustration, the math is throwing me off. The cards offer 5 points per dollar, so that would be 50,000 points, which is less than needed for a single top tier night.

  2. From the conference webpage this told it all:

    “The co-brand market is particularly interesting in 2017 with the world’s three largest co-brand cards, those of the three largest US airlines, reportedly seeing a major decline in approved applications. Is this a harbinger of things to come for other co-brands? Are the banks’ own travel cards to blame? ”

    I’ve only seen advertising for the United card, probably because I’m in the SF Bay Area and I can’t recall the last time I saw an advert for the Delta or American cards.

    But I think the flexibility of points/cash that the bank programs offer is a growing allure vs. points in one program that effectively holds points hostage to a supplier and its partners.

    Curious, how did you attend? As a media, bank or air/travel rep?

    • As a guest. I was invited to speak from a consumer perspective, but declined until I knew more about the conference so I went to observe this time around.

      • When you say 5-7 year payback on the Chase Sapphire Reserve, what is the breakdown of how they make their money back?

        • They didn’t share nor do I have a breakdown of how that all shakes out, but you and I could guess…annual fees, fees from purchases made with the card, interest payments, etc.

    • I agree exactly about captive spend – whenever a proprietary-points company starts to offer a transfer of points to Hilton, AA, Hyatt, & SPG (without a transfer from Marriott/RC) on one platform, I’ll be first on board! Until then, it’s just as efficient to manage individual loyalty co-branded programs as it is several “packaged” programs to get all the various rewards I want!

  3. Dynamite post. Very refreshing to see something more information packed than normal on boardingarea. Totally agree with the last part about if you take care of my family, I’ll be loyal. That’s the main reason DL has lost most of my business, but SPG has retained my business.

      • I forgot to add to this. 100% agree on the family thing. I started traveling with our 6 month old baby since he was 3 months and I have already seen the difference between airlines that do the obvious: easy booking for lap infant, allowing free choice of seats, pre-boarding for families. How stupid can you be to not do pre-boarding for families: nobody is opposed to it (except for a few stressed out top tier business fliers), it shows you care, and it makes the boarding process easier, yet after years of messing with the process, I don’t think American Airlines have gotten it right.

  4. That’s being said. You only focus on 4 Programs that will never disappointed you in many ways. Chase UR, Amex MR, Citi Thankyou point on SPG. Other programs are just temporary.

  5. I feel the industry itself has caused applications to decline. They devalued so frequently so that you know getting a new card will not be a good investment. I will not carry any co-brand cards for more than one year unless they provide me with benefits to outweigh the fee.

    The other thing that the airlines in particular have done is changed to revenue based earn, which in reality is just a rebate of about 5%. This creates a cut off point at which it’s just not worth the average American to even think about joining a loyalty program or being loyal. If you spend less than $1000 a year with United it will take you about 6 years to earn a single domestic roundtrip. Compare this with distance based earning – anyone can be sucked in, even the student or millennial buying $39 fares. I steer everyone to the one remaining distance based program in the US.

  6. Was there any mention of the 5/24 rule as a possible reason for decline in approvals for cards like Southwest and United? I would think that the airlines/hotels have the final say as to whether that rule should be applied. Seeing as it is applied for some cards and not others.

  7. I feel the ultimate carrot still dangled by many co-branded cards is status. Free or discounted suite upgrades/spa treatments/cocktails/breakfast/lunch/WiFi/bonus points, etc. awarded by status level can be extremely valuable to any traveler, regardless of how often they actually travel. Perhaps even more so if all the above occurs during a person’s only time away that year!

    CSR will ultimately get you more points that can then be transferred to more flights and hotel stays, but it will do nothing to elevate your standing in the eyes of an airline/hotel. True more points can “buy” you into a suite, but I personally like the free upgrades a hotel can offer at their discretion to award loyalty.

    There is a cost/benefit to either approach. If volume is more important than better service, amenities, treatment, or upgrades, however, then it (& other proprietary point cards) is probably the better pick.

  8. Nice topic. I’m sure the meeting was interesting. Thanks for sharing.

    I think a few things will happen in the short run. For example I think we’ll see a return of some low earn co-brand debit cards. I speculate on this due to changes under Trump that reverses some issues in debit card fees. I also think we will see airline programs get worse and devalue more.

    In the long run we will see travelers convert to revenue based rewards like CSR, Amex membership points, etc. It’s like we will wake up one day to find that we can book any route we want on an award ticket via say Chase but that we’ll have to pay way more points than we would have on a saver airline mile award. This will soften the blow when all the airlines go revenue based.

    The real winner in the short run seems to be Alaska Airlines if they can keep going down the same road without too much more trouble from Delta and without massive devaluation at the hands of some corporate types.

    Oh and when you do finally give a speech on one of these conferences just use the Ryan Bingham Backpack speech from Up in the Air 🙂

    • Well the new United prepaid product will also be interesting to watch, but yes I pretty much agree. Now let’s put all our loyalty programs in our backpack, one by one. All the rules, the expiration dates, the nuances, all of them. Now is the backpack getting heavier? 😉

  9. Well said. Over the last few years, loyalty has become increasingly one sided. There are exceptions, of course, like SPG, but it’s not just “emerging affluent”, or whatever other clever euphemisms they care to use, that are reacting to the constant stream of bad news. Eventually, everybody gets tired of being kicked around in exchange for their loyalty.

    • Agree. Millennials/emerging affluent/whateveryouwanttocallthem are not the only ones who react to this stuff…they just may react faster. Almost everyone eventually catches on and moves their loyalty elsewhere.

  10. Let me join the chorus of what a great post this is. Very thoughtful and having insights from the conference is interesting.

    Ever since United and Delta had their big devaluations I’ve been particularly adverse to having their cards. Unless they offer club membership or something else of value I’m not in. Who doesn’t love the fact CSR or AMEX let’s you pick an airline or hotel.

    We’ve had the Alaska card for years. The companion certificate is a real value add (especially for family’s or couples) and I trust the program with additional spend. Alaska NEVER plays games with the certificate redemption. Such a breath of fresh air vs other cards.

    I think I could live with the Alaska, CSR, and AMEX plat cards for a long time time as the three offer such value.

    Thanks again for a great post.

  11. You basically said this already, but I’m so mad at AAdvantage that I want to say it anyway. 🙂 I maintain that going “revenue based” is not what why airline card apps are down. Heck, it’s still easy to earn lots of points. The problem is one can search for months and not find a single saver award seat to anywhere on American Airlines.

    While you might not be able to redeem a “saver” award on Southwest for biz to Europe, Rapid Rewards is a pretty straightforward program and there are always seats available, even if the “cost per mile” might not be the best deal ever.

    This is also making programs like Ultimate Rewards and the Sapphire Reserve card seem like that much more of a better deal.

    • Totally agree. That and frankly the culture of those programs is hardly one that is endearing and pleasant. There are exceptions, of course, but the general perception of the traditional airline programs isn’t great, and the reality can be even worse.

  12. Speaking of using the same card over and over again… at one time, every Flyertalker I knew would pull out the Starwood Amex card to pay a bill. It won awards. It was a favorite of my travel friends, and travel bloggers. The 1.25 points you got for converting to most airline programs was the icing on the cake. 20000 points converted to 25000 airline miles.

    These days, the Starwood Amex card is in my sock drawer. My card if choice is the Chase Sapphire Reserve. The cost to redeem points for a $300 ticket is less than the cost if a saver award on legacy carriers.

    For now, we win, and so does Chase.c

    • So true. The SPG Amex was and is still great and one of my favorites, but it was clearly dominate at one point in time.

  13. A good loyalty card has both valuable points and perks with travel provider. For example, an airline could improve its co-branded card if it offered customers a free drink on board. Many people would enjoy the drink, but don’t think it’s worth $8. Seems like the perfect perk. And if you offered a fee snack, too, you could probably get more folks to pay the annual fee. 🙂

  14. Having worked for several years on the bank side of airline cobrands what I have seen is a total destruction of customer loyalty in the credit card space. This is a self inflicted wound by the travel programs by allowing their programs to be transfer partners of programs like Ultimate Rewards and Membership rewards.

    For a savvy consumer, which many in the travel rewards space are, there are very few reasons to put spend on a United Card, or a Southwest Card when I can use a Sapphire product, earn at a better rate, and keep my points liquid and only transfer them when I’m ready to redeem on one of ten partners. The travel programs have enabled cardholders to be loyal to Chase’s card product, not their own brand. That’s why I believe that many travel card programs have seem lagging card acquisition totals. While the devaluations within the programs no doubt have had an effect, the ability to keep my all my miles or points in “Multi-Currency” bank issued travel programs and only transfer when I have a specific redemption in mind is more of an issue.

    Finally, think about redemption percentage and profitability. Spend on cobrand cards has a high level of unredeemed miles or “breakage” because a decent sized percent of the population won’t ever redeem, but the bank still buys those miles. When miles or points are transferred over from a bank program there is a high percentage chance that those miles or points will be immediately redeemed, costing the travel company money.

    At the end of the day, Chase could probably care less whether you spend a dollar on a Sapphire product and transfer it to one of their cobrands or spend directly on one of its cobrands cards, but its travel partners certainly should.

    Just my thoughts, sorry for any grammatical or spelling errors, not time to proofread.

    • Thoughtful post, Jeff, but I don’t understand from it why customers are more likely to redeem miles/points on a proprietary-points card than on a co-branded card (and are therefore more expensive for a travel company)? My guess is because there are more available choices so therefore greater odds of using? Or?

      Seems as though consumer redemption behavior (hoarding, procrastination, indecision, etc.) would be the same for both? Thanks in advance for your feedback.

      • Sorry if that wasn’t clear. If we take an example of the United Explorer Card. I don’t know the specifics of that agreement, but how it typically works is the bank buys the miles from the airline each month for however many miles its cardholders earned. Now a large portion of the miles won’t be redeemed for some time, and some may never be redeemed, and the airline keeps the revenue for those miles and does not have any redemption expense for those unredeemed miles.

        What you would expect to happen in the other instance, where a Sapphire cardholder transfer miles over to United is that they would be immediately used because there is no incentive to the cardholder to transfer the miles to United unless they planned on using them. United then sees an immediate redemption and expense associated with those miles.

        In both situations Chase is getting the spend on one of their cards and is buying miles from United. I would argue redemption behavior is different on the Sapphire card because of the number of options available, but assuming it is the same Chase is now gaining all the benefits of cardholder hoarding, procrastination, etc instead of United. And on top of that United is allowing their frequent flyer to substitute Ultimate Rewards instead of United Miles, and become less loyal as there are other redemption options instead of United.

        Now I pick on United here, but the other transfer partners are also guilty of the same thing. So now its not a loyalty question because I can earn the same miles on a nonairline card, its a question of do the Airline/Hotel benefits on the partner card outweigh the enhanced earn and other benefits of the Sapphire card.

        • Jeff, thank you for your great detail on point logistics & for your explanation. I feel consumers apply for a particular co-brand credit card because they already prefer that hotel or airline and hope to accumulate enough points to get free rooms/flights. In other words, I don’t think consumers randomly choose to apply for a large credit card bonus they don’t think they will ever actually use or enjoy or at a minimum even recognize the vendor. I correspondingly think a proprietary points card would have to have 1, or more, underlying travel partners appealing to a consumer before they will apply for a card. I therefore don’t think redemption times are much different between the 2 types – a consumer must still “save up” points before they can then use with either type card towards their preferred partner (although robust upfront bonuses certainly help with that in the short run). I am sure the research is being done to find out how the 2 compare, though, & I would be interested in those results.

          I hadn’t considered your enlightening point about the lesser immediate cost to the bank with a proprietary-point account. Chase, etc. doesn’t have to come out-of-pocket until the credit card holder actually pulls the trigger to transfer and “buy” points from a travel partner! VS Chase having to buy them monthly for the account holder with a co-branded card. Sure seems as though that woukd significantly reduce the 5-7 year ROI that MP says Chase opines on its CSR! By the same token, I would also imagine Chase would actually very much prefer spend on their CSR over a United card.

          Really good info & perspective, Jeff, thanks so much again. I learned a lot from your posts. Travel partners must be a little nervous about their future numbers with banks like Chase no longer paying them immediate revenue streams! Hopefully the result will translate to a better value for consumers on co-brand card spend rather than its collapse.

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