Private Label Cards: Dead or Alive?

Arif Damji, director of strategy & development at 500friends wrote a nice article about private label credit cards in today’s Direct Marketing News.  That got me asking, “Are Private Label Cards Dead on Arrival?”

When I ran a large oil company’s payment programs in the early 21st century (O.K., from the mid-1990s to around 2006), it’s Private Label Credit Cards, not including the co-branded MasterCard cards, represented around 20% of the company’s fuel sales.  Around a billion gallons of fuel were paid for annually using its Private Label Credit Cards.

More important, the “share-of-fuel purchases” among the cardholders themselves was on average 25% higher than non-cardholders each month. Retention was equally impressive, with private label cardholders remaining customers for an average of eleven years, about 40% longer than non-cardholders.

What does this mean from a numbers perspective? Fuel marketers translate their metrics into gallons and margins.  That means each Private Label Credit Cardholders bought on average 2,745 gallons more fuel from the company over their lifetime vs. non-cardholders, worth an additional $411.84 in fuel margins each (based on a 15 cent/gallon margin).

Today, the definition of “private label” could and should include other payment form factors like prepaid, gift cards, mobile apps, and other yet-to-be-imagined private label payment enablers being crafted on dining tables and in garages across the world.

Damji tells us private label is actually growing.  He also poses some interesting ideas about private label loyalty. Check it out and let me know what you think: