The volume and value of commercial card payments is increasing year after year. In this article, Frank Martien* examines the potential for commercial card organisations to cross-sell card offerings to the consumer segment, as well as to existing commercial cardholders.
For many commercial card organisations, a major issue is the conversion of consumer cardholders to commercial cards and the cross-selling of additional commercial cards to businesses. This represents a substantial opportunity, as the industry estimates that between 5 and 15 percent of consumer credit card spend is actually business-related.
The main question is how to identify consumer cardholders predisposed to taking a commercial card, and to identify where there may be potential in cross-selling existing commercial cardholders with additional commercial card products.
Commercial to consumer cardholders
A consumer-to-commercial card conversion initiative requires (i) a consumer card file (yours or somebody else’s) large enough to warrant the effort; and (ii) access to customer-level data to correlate the likelihood that a given cardholder may be interested in a commercial card. A few illustrative examples for identifying potential prospects for commercial cards within a consumer card customer base through analysis of a variety of cardholder touchpoints would include multiple cards under one account for which cardholders’ last names or surnames vary;
- a billing address that matches a record in a prospect database of businesses or with words more frequently associated with a place of business, such as ‘suite’; recurring airline, hotel or office supply spend, particularly if it’s during the week;
- relatively constant spend (ie, no spike) during the winter holiday season;
- inbound calls originating from a person acting on behalf of an authorised user;
- payment on accounts made using a business cheque; and
- downloading of transaction data on a monthly basis.
Typically, an issuer would start with their consumer cardholder file; remove accounts with delinquencies, late payments, sub-par risk scores, inactivity, ‘do not solicit’ indicators or better pricing than would be offered in a business card solicitation; and then select a prospect file from the surviving account records based on likelihood of response and credit approval.
The form of solicitation can be subtle (eg, a statement message or insert), more explicit (eg, a stand-alone mailing or outbound telemarketing call), or some combination of the above. Results from previous such initiatives have been closely guarded; however, the business case emanates from better matching of product features with intended usage and the potential for higher interchange rates.
Commercial credit to commercial debit cardholders
Commercial card industry experience regarding other types of cross-selling is less pronounced, although a significant opportunity could be available for a bank re-entering or relaunching a business credit or charge card programme by soliciting into its existing business deposit account customer base. Here, we would suggest looking for:
- seasonality in debit card usage or deposit balances suggesting credit need;
- frequent enquiries regarding deposit account balances;
- frequent usage of cheques for payment at mainstream card accepting merchants;
- issuance of forward-dated cheques;
- request for/usage of overdraft protection;
- enquiry into line of credit products; and
- signs of business maturation.
Commercial to fleet cardholders
A third opportunity for cross-selling emerges for fleet card issuers that have evidence of demand for general purpose commercial card utility within their fleet customer files. A few examples of such demand could be:
- frequent phone authorisations or usage of access cheques at non-accepting merchants;
- name of business denotes a specialised fleet with potential for general purpose spend (eg, a bus company with drivers unlikely to be eating or staying overnight at travel centres/truck stops);
- fleets whose drivers may benefit from a prepaid or credit-based payroll access card; and
- businesses whose name suggests existence of significant office-related spend, such as a pharmaceutical company or real estate company.
Fleet to commercial cardholders
Finally, we also see potential for cross-selling fleet cards (particularly fleet cards offering enhanced reporting/controls/potential for rebates) into pools of general-purpose commercial card accounts based on several criteria:
- customer seeks to limit card access to fuelling/maintenance merchants only;
- one or more sub-accounts are used primarily for fuelling;
- frequent requests for customised reports involving vehicle spend analysis; and
- the cardholder probably operates a commercial fleet, but there is a notable absence of fuelling spend placed on a card (eg, the company name includes words such as trucking, moving, lines, bus, coach, heating, oil, plumbing, painting or contractors).
*Frank Martien is a partner at international financial services and investment banking consultancy First Annapolis Consulting