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Neil Caldwell

June 2021

Senior Vice President and Head of Merchant Sales & Acquiring for Visa CEMEA


3 - 4 minutes

The new co-brand opportunity

In 2000, Visa, Citibank and Emirates - the airline, announced they were joining forces to bring travellers a card, allowing customers to collect air miles as they spend, making travel much more cost effective and creating opportunities to upgrade to business class more frequently. This partnership was the United Arab Emirates’ first example of a “co-brand”.

Co-brands are now a well-established way for a brand and an issuer to team up with Visa to bring extraordinary value to consumers through a rewards program. Some of these deals have become so successful that they hold international cachet, and coveted “top of wallet” status.

Over the years, three industry segments have dominated the co-brand opportunity across Central and Eastern Europe, Middle East and Africa (CEMEA): airlines, hotel and retail. As the region emerges from the grip of the pandemic, we explore how these partnerships have fared. Are there any emerging trends shaping the future of co-brands? How has COVID-19 changed the landscape? And, most importantly, how can issuers and merchants continue to maximize the effectiveness of their co-branding initiatives?

A changing landscape

eCommerce is increasingly moving in on the international co-brand space following the pandemic. Widespread digitization, and national lockdowns has meant that many industries, including eCommerce, have acquired more customers resulting in a number of new co-brand partnerships.

The rise of eCommerce co-brands is particularly evident within the CEMEA region. In Russia for example, eCommerce is fast becoming a key player with new entrants from marketplaces and big tech companies, with large, pre-existing audiences, acquiring their own FI’s to launch in-house financial and payment products.

The power of the co-brand

Traditional co-brand partnerships have adapted well in a post-COVID environment. Neil Caldwell, Senior Vice President and Head of Merchant Sales & Acquiring for Visa CEMEA, explains: “People couldn’t fly but they felt affinity with their card and wanted to continue to collect miles in the hope they could use them for future travel.“ Airlines found innovative ways to reward customers, such as earning points from home, while observing local government travel bans and guidelines.

Those who could not take holidays abroad were incentivised to take staycations or book “a home from home” through the partnerships such as the Visa customer loyalty program with Accor, the hotel chain behind Sofitel, ibis and Mercure. This meant that hotels were able to boost engagement with loyal customers by offering new, innovative experiences.

Many brands have also launched new and unique digital rewards through their co-brand schemes - there has been a real convergence between the loyalty program and the co-brand program. “This is due to the heightened importance of human interactions in a digital environment in the wake of the pandemic, and live program experiences have become the new norm”, says Caldwell.

There is no question that COVID-19 has forced a rethink when it comes to rewards programs: expiration dates on perks have been extended, points may be accrued at discounted rates – or with bonuses – but this has helped brands to continue engaging with their customers and also compete with other bank branded proprietary cards that may seem to offer more flexibility and choice with redemption. Travel programs specifically needed to adapt their customer value proposition to maintain relevancy during the time when people weren’t traveling.

Creating meaningful partnerships

“Visa has a lot of expertise in the co-brand arena and over the years we have seen what makes these partnerships successful,” says Caldwell. “The most important factor is loyalty or affinity to a merchant and the value that they bring to the clients. The brand must have a strong value proposition and have a lot of credibility in the eyes of the consumer.”

The best partnerships are built on tri-party environments where each party brings something unique and important to the partnership to drive success. It’s crucially important for the merchant to offer up benefits as that is what really matters to the customers applying for the card. Crucially, the way these partners come together must be managed carefully, “ensuring the right pairings are made with an impartial eye that considers all variables,” explains Caldwell.

It is vital that all parties involved in the co-brand work together on marketing and sales, communicating the same messages consistently and well, he adds. “Visa helps with this process by leveraging its data and analytics to support co-brands, deepening engagement using machine learning,” he says. Research shows that co-brands outperform payment methods without loyalty, in terms of customer satisfaction1. Consumers really engage with co-brands, too: 71% of consumers who are members of loyalty programs say membership is a meaningful part of their relationships with brands2.

The co-brand future

Co-brands remain a smart way to increase customer loyalty, drive a higher frequency of transactions, and enhance brand awareness. Devendar Agarwal, Head of Co-Brand for Visa CEMEA, explains “the barriers to entry are coming down and there is now scope for partnerships outside the traditional travel and hotel sectors”. The loyalty programme modifications that were trialled during the pandemic show what can be achieved through experimentation and innovation. “For example, we have seen a real trend towards social impact over the past year, such as airlines allowing members to donate points to charities. These initiatives have resonated with everyone, from card-holders to shareholders, and show the potential for co-brands to become major value drivers of the future.”

Five steps to a successful co-brand

  1. Targeting - understand the customer and get the targeting right
  2. Customer Value Proposition - develop a strong customer value proposition by leveraging merchant assets as benefits and privileges
  3. Lifecycle Marketing - tailor the marketing tactics at each and every stage to ensure the correct channels are available
  4. Data & Analytics - review, monitor, measure and test by using data and analytics
  5. Innovation - adapt to digital trends, including the Application Programming Interfaces (APIs) and functionality, to drive engagement and ease of use

1 Bond Study 2019 *The hotel co-brand satisfaction level refers to the US market in 2020, due to insufficient data for sector average outside of this market (Pg 18 of Visa Co Brand Deck)

2 The Game is Changing: The Loyalty Report 2018 https://cdn2.hubspot.net/hubfs/352767/Loyalty%20Report%202018%20Files/Bond_TheLoyaltyReport%202018%20US_Exec%20Summary.pdf?__hstc=20629287.9baff9b886da5e2fe655b4113897e76d.1580934235534.1585683608724.1586982181323.7&__hssc=20629287.3.1586982181323&__hsfp=3576519970

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