Question

Topic: Other

Why Are Store Credit Cards So Important For Retailers?

Posted by Anonymous on 2/26/2004 at 1:50 PM ET 50 Points
I am currently working for a clothing retail business that offers its own credit card to customers. Selling these credit cards to customers seems to be an important thing to accomplish. My managers are always pushing and encouraging us to sell this credit cards to customers, and we even recieve a $1 incentive for each one we open. They even offer 10% off customer's transactions if they open one on the spot, with incentives and savings like these it seems obvious that our business wants to sell these things. I've always asked the question our managers why it is so important for our business to offer and sell these credit cards to customer. Each time I ask I've never recieve an explanation. So how does selling these credit cards to customers benefit the retail business?
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  • Posted by Paul Linnell on 2/26/2004 at 2:08 PM Accepted
    Your manager should explain it to you. Having a good reason to do it should be just as much an incentive as getting your dollar a pop!

    Firstly – the card provides the financial services division of your store a significant and profitable additional revenue stream.

    Secondly – it provides the customer with an additional line of credit that makes it easier to spend more in your shop than the might otherwise.

    Thirdly – because of its shop-specific nature, it helps to influence the customer to buy items in your store instead of someone else’s.

    Fourthly – if they end up spending more than they can afford – see item 1 above!:-)

    I hope this helps

    Best regards

    Paul

  • Posted by tjh on 2/26/2004 at 4:55 PM Accepted
    After several years in the commercial credit card industry I can say that everything said so far is absolutely true.

    As a side note, your company is also saving money over the expenses associated with accepting major commercial credit cards. This is something many businesses are working to avoid these days. Merchant accounts have become more and more expensive as the cards' lock on consumer purchasing is approaching monopoly proportions.

    With many years in general sales and small business marketing, it's also useful to point out that the loyalty building going on with proprietary cards is almost as priceless as the customer knowledge in the database itself.

    Your company has an automated, and extremely useful, customer database. Not only is this a remarkable marketing tool, it is also practical evidence of "controllable" good will.

    Proprietary cards are often expensive to manage and process, are usually truly complex to deal with, but given reasonable diligence - they're a wonderful business asset on many fronts.
  • Posted by Blaine Wilkerson on 2/26/2004 at 5:07 PM Accepted
    There is nothing more to it than customer retention and greed.

    The interest is lucrative and having a store credit card in your wallet is like a neverending gift certificate when you need something from that particular area of retail (i.e. clothing, hardware, electronics).

    Both point back to money. So to answer your question, they make more money that way.
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