Chase and InterContinental Hotels Group (IHG) recently launched the Priority Club Select Visa Card offering an annual free night certificate, a 10 percent point rebate on all point redemptions, Gold Elite status for the life of the card (Gold status includes a 10 percent point bonus on base points), zero foreign transaction fees and two points per $1 spent on eligible gas, grocery and dining purchases as well as five points for every $1 spent at any IHG hotel and one point per $1 spent on all other purchases. The annual fee is $49 and is waived the first year. We spoke with Tony Glover, general manager for affinity and co-branded cards, Chase Card Services.
How did Chase and IHG come up with this particular set of benefits?
We did traditional research, qualitative and quantitative research as well as through our online community, which is a unique aspect of this particular product launch. We understand that consumers are looking for strong value, especially as they rationalize their card products now. I think that over the last couple of years we’ve seen a very strong consumer trend toward awareness of what’s in their wallet. So you have to have a relative product for the marketplace, something that’s giving true consumer value.
So we’ve just been staying in touch with our customers, asking them about what works and doesn’t work for them, and this particular set of features and benefits are a set of key features that tested very strongly both in traditional research methods, and particularly in our online community. IHG and Chase worked together with a third party company, Communispace, that specializes in putting some of these online communities together. We have an online community with just north of 300 Priority Club Rewards members who also have our credit card and we talked a lot about why they use a card, and why they don’t use a card, and what kind of things they would like to see with this product. This really gave us an opportunity to have direct dialogue with those folks–to get a much deeper understanding than you normally would if you just have some people reply to a quantitative study–and for the small amount of time that you would get to talk to someone in a focus group.
Regarding the free foreign transaction fee, what is the typical fee for Chase for these types of transactions? In other words, how will this benefit play out for members?
It’s three percent; which is a great benefit, because if you think about it … when you’re traveling internationally, you’re probably going to stay at one of the IHG brand hotels, and you’ll be using this card, so, you get the benefit of a 5-2-1 product. It’s five points for every dollar that you spend at an IHG property, two points for things you use every day–gas, groceries and dining, and then one for everything else.
So, when you think of someone traveling internationally, they’ll be getting five points for staying at an IHG property, they’ll probably be dining in a restaurant, so that’s two points per dollar there and they’re saving this three percent on foreign transaction fees which basically turns the card into a three percent cash-back card when you’re overseas. So this is a very rich program for people who travel internationally.
We noticed you worked with the generous offer from BA for its British Airways Signature card, which offered an unprecedented 100,000 miles sign-on bonus. How was the response?
We’re very happy with the performance of the British Airways program. We did our research on that too and launched a program that we thought was appropriate for Executive Club members. We’re happy with the way it’s working and we’ll continue to build value in all of the programs that we work on.
Gary Leff of the View from the Wing blog, called credit cards “perpetual money-making machines” for loyalty programs. How do you see the relationship between credit cards and loyalty programs?
I think that credit cards make a lot of sense with loyalty programs–they work well together. I think one of the things we’ve seen over time is that a number of different kinds of affinity cards that were out there in the marketplace haven’t survived, but I think the value of a loyalty program, particularly a travel and entertainment loyalty program–hotels and airlines and the like–are a very strong marriage because they just work well together. There’s commerce, so you can use the card as your payment vehicle, and it accelerates earning into an existing loyalty program, and I think consumers have voted to say that works well.
Is there anything else related to Priority Club Select Visa Card that you would like our readers to know about?
There are two things that I’d add, on top of what we’ve talked about.
One is the annual free night on your anniversary of having the card. It’s very strong because we think it is one of the strongest, if not the strongest, annual free night certificates out there. This certificate is good at any of the over 4,400 IHG properties worldwide–any brand, so it could be an InterContinental, Crowne Plaza, Holiday Inn, Hotel Indigo and even the extended stay brands like Staybridge Suites or Candlewood Suites. Frequently what you’d find with these types of coupons is that they are only available for certain award categories, or they have certain restrictions. Here, there are no restrictions, no blackout dates and they are good at over 4,400 properties. We heard that loud and clear from our online community that they didn’t want any “gotchas” or any catches so we tried to make this certificate very, very powerful. There are a handful of all-inclusive resorts that it’s not good at, but whether you want to use this on a family vacation staying at a Holiday Inn in Illinois, or want to use it at the InterContinental Park Lake in London, this certificate is valid. It’s also valid for a 12-month period, which is great because every year you have one. This might be lost on some folks, they may think there are some catches, or that they won’t be able to use it or something like that where they think that they won’t have the utility that they actually have.
Another thing that I think is quite innovative is our 10 percent redemption rebate–a key feature of the card product. So if you have our Priority Club Select Visa, then anytime you redeem in Priority Club, we’ll put 10 percent of your redemption value back into your account. So that typical Holiday Inn hotel may cost about 15,000 points to redeem, but when you redeem that 15,000 points, we would populate your account back with 1,500 points. It’s good on all redemptions. So, if you redeem for merchandise, gift cards, whatever, we’ll put 10 percent back into your account. We think this is kind of unique and we hope that it resonates with consumers well in practice; it really resonated well in our research and working with the online community.