Oliver Wyman Examines How to Win the Millennial Wallet in Time for
NEW YORK–(BUSINESS WIRE)–Oliver Wyman examined how consumers use co-branded credit cards as part
of its annual Transport
& Logistics Journal and found that co-branded travel cards
may not be rewarding enough.
Consumers like co-branded credit cards. In fact, 80 percent of card
holders believe co-branded cards offer as much or more value than
bank-issued rewards cards. But consumers also are willing to switch when
the grass appears greener: 40 percent change their primary credit card
at least every two years.
This leads to a critical question for airlines and hotels – how do they
persuade consumers to acquire their cobranded card, spend with it, and
Half of consumers leave for better rewards. Even customers who carry a
monthly balance are more likely to switch because of rewards rather than
a lower interest rate (11 percent).
“To create offers that “stick” with consumers, hotels and airlines need
to carefully consider the needs, preferences, and travel and purchasing
behaviors of their target customers,” said Jessica McLaughlin, a partner
with Oliver Wyman. “Discounts on in-flight meals and room service are
popular among travelers, but are becoming common. Rewards need to be
highly personalized with perceived exclusivity. Think flight simulator
tours, suite upgrades or private dinners with renowned chefs.”
The personalization trend can be most seen among Millennials, the
generation aged 18-34. In fact, this group favored options for
individual card design as the highest of any other age groups.
Today, only a third of credit card-carrying Millennials have a cobranded
travel card, compared to half of credit card users who are their
parents’ age. These tech-savvy consumers also value different features
and use credit cards in different ways than older generations. For
Millennials expect credit card payment capabilities and other features
to be wholly integrated with their digital lives and rank these
features significantly higher than other age groups.
Millennials are twice as likely to use mobile wallet applications than
the average cardholder and more than three times as likely as Baby
Boomers (52 percent vs 16 percent).
“Winning the wallets of this generation this summer and beyond will
require figuring out what rewards and experiences they most value,”
added McLaughlin. “The good news for travel companies is that
Millennials exhibit a passion for travel, spending a greater share of
their income on flights and hotels than any other age segment.”
The co-branded credit card survey was conducted between December 2015
and January 2016 among 1,311 card holders in the US across various
The Oliver Wyman Transport & Logistics Journal is one of the
firm’s longest-standing publications. This edition also includes
articles on the digitalization of the rail industry, the European motor
coach market, changes to the postal service worldwide, Uber-trucking,
aerospace innovation, among others.
With offices in 50+ cities across 26 countries, Oliver Wyman is a global
leader in management consulting that combines deep industry knowledge
with specialized expertise in strategy, operations, risk management, and
organization transformation. Oliver Wyman is a wholly owned subsidiary
of Marsh & McLennan Companies [NYSE: MMC]. Follow Oliver Wyman on
Francine Minadeo, 212-345-6417