In a recent article, “Value-Seekers Warm to a $450 Credit Card Fee,” Stacy Cowley, of the New York Times, describes the unorthodox launch of the new Chase Sapphire Reserve credit card which has reportedly gone “viral” fueled by message boards, blogs and YouTube. I spoke with Cowley as she conducted her research, and I urge all card marketers to read the article to better understand the story behind the launch and how the card is resonating with Millennials.

The Sapphire Reserve story, described by Cowley, illustrates three emerging trends that card marketers need to be aware of:

#1 Blogger power

One in 10 applications for new credit cards are sourced via third party websites

The Sapphire Reserve launch demonstrates the growing power of third party websites and bloggers. Soon after the reported leak on The Points Guy (whether deliberate or accidental), Chase began placing banner ads on the site in order to capitalize on growing interest in Sapphire Reserve. According to Mintel Comperemedia research, approximately one in 10 applications for new credit cards are sourced via third party websites illustrating the increased leverage such sites now have. Sapphire Reserve is the second card Chase has launched via a third party site by this year. In an unprecedented move back in the Spring, Chase partnered with Credit Karma to send over one million emails to Credit Karma subscribers promoting “early access” to Chase Freedom Unlimited. This was prior to the launch of Chase’s own, massive, omnichannel campaign promoting the card, according to Mintel ePerformance/eDataSource.

#2 Premium value

Cowley’s reference to “value-seekers” is spot-on given the Millennials who are flocking to apply for the card. This points to a new era of what I’m tagging as “premium-value” cards that no longer rely on the cache of owning a premium card to justify high fees but, instead, demonstrate a product that is value-for-money that will appeal to younger consumers. With its 100K points sign-on bonus (worth $1500), $300 travel credit and access to Priority Club lounges Sapphire Reserve is arguably the best premium credit card on the market, outperforming the American Express Platinum Card and the Citi Prestige Card in head-to-head comparisons on the increasingly powerful blogs referenced above. AmEx has been targeting some consumers with a 100K points offer for its Platinum Card using targeted direct mail, according to Mintel Comperemedia, but its standard offer online is 40K, as is Citi’s and, unlike other premium cards, the value-for-money aspect of Chase Sapphire Reserve justifies the $450 fee for some travel-focused consumers.

#3 Affluent shake-up

In recent years, Chase has been transparent in its goal of targeting AmEx’s affluent customer base, but this is its first direct play for the AmEx Platinum Card – the bedrock of the AmEx brand. Sapphire Reserve plugs a gap in Chase’s product line-up and will be appealing to both new and existing customers particularly some of those who already own the $95 annual fee Sapphire Preferred Credit Card, which Chase has been promoting heavily in recent months. Offers for premium credit cards accounted for a record 19% of all solicitations for new cards in Q2 2016, up from 14% a year ago, according to Mintel Comperemedia, suggesting that some card issuers are shifting their strategies as a result of increasing consumer confidence. Both AmEx and Citi will need to respond by improving the benefits of their own cards or risk losing customers to Chase. As a result it is likely that we will see a shift in innovation away from the recent trends in cash-back towards points, miles and other travel related benefits.

 

Andrew Davidson is SVP/Chief Insights Officer for Mintel Comperemedia. He is an expert in data-driven cross channel marketing intelligence, consumer behavior and global trends. As a thought leader and expert speaker, Andrew has consistently predicted the evolution of payments marketing for the past 23 years. He speaks at high profile industry events and has presented at conferences in the US, Canada, Australia, New Zealand, Hong Kong and Taiwan. Andrew is passionate about the global role of payments as the first step on the path to financial inclusion.

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