For decades, major card companies in Australia won new business by offering a rebate on purchases, and we all loved it.
Newsagents would change card companies because of a bigger rebate offer. Oh, that and ‘interest free’ loans we could draw based on anticipated rebates.
What many of us soon realised is that the rebate is worthless unless you sell the cards as it is only when you sell something that you bought at a discount off wholesale, which is, after all, what a rebate from a card company is, that you bank the rebate value.
Switching to a new card company because of rebate could be a mistake unless their cards sell as well as or better than what you have today.
The main reason to switch card companies in my view is to sell more cards.
It’s only when you sell cards that you make money.
Already in 2023 we have seen enough trading to consider 12% year on year growth in card sales as a reasonable benchmark against which to compare your newsagency business.
If a card company’s main pitch is the quantum of the rebate, my advice is question why they pitch this ahead of the actual products.
What you want, and need, is cards that drive new traffic and more purchases in each visit, you want product that perform above average. This is about card company choice and about how your in-store range is managed – two quite different things.
Cards are the best margin products in our businesses. They deserve our active management attention.
My advice is check your year to date performance against 2022. Are you up 12%? If not, think about what you might do about that, and consider it in the context of any rebate pitch put to you.
This has been on my mind because of conversations with some newsagents recently where rebate was the topic.
One stuck out – they said they would not switch unless a card company matched their current rebate. Their card sales are down 9% year on year. That decline is twice the overall business decline, meaning there is a problem with card range. They refused to look at any other supplier, thereby =not considering that range might be the issue.
I see any rebate as a pot I can draw from to help drive card sales, and I do that to fund a loyalty program, and more. each month I am seeing terrific results, like for April.
Yes, that’s 19% growth in 2023 over 2022. If I compare back to 2019, cards in this business are more than 50% up.
I know that if I get the card story right in-store and in socials pitches not only does that department benefit but the whole shop benefits because of card shopper dwell time. And, all that flows to margin dollars banked, which are far more value than the promise of a rebate in the hope of selling something.
This post is not about any specific card company. I am not suggesting you switch to any specific card company. My advice is that you make your business decisions on what you bank, and that spends solely on sales.