The partnership between BJ’s Wholesale Club and Barclaycard, the payments business of Barclays Bank that began in 2007, has paid dividends for both companies. Barclaycard’s co-branded credit card with the warehouse giant has strengthened the financial service provider’s position in the market and provided a wealth of incentives for BJ’s customers.
“I think it is a great program because BJ’s core business is getting members into the wholesale clubs, and what we’ve tried to do with this card is create a currency that reinforces the value proposition that BJ’s has through the Visa program,” said Scott Young, general manager of partnerships, Barclaycard US. “We want people who are engaged as cardholders, and in a partnership like this, you are going to see a higher spend and higher loyalty than you are going to see with a typical direct-to-consumer credit card program.”
Barclaycard worked closely with BJ’s to develop a card program for its members that delivers greater value and convenience, including faster rewards accumulation, integration of the credit card with the membership card, and the addition of Visa’s payWave contactless payments. As part of the program, BJ’s customers get 2% back on their purchases at the wholesale clubs.
“It has been giving our members a more satisfying experience,” said Bob Eddy, BJ’s senior VP and director of finance. “In addition to the products on the floor, we try to offer our customers a lot of opportunities to have a positive experience, such as this arrangement with Barclaycard. We look for things that will help us sell more paper towels and diapers, and getting 2% back on those purchases is helpful.”
In addition to getting the 2% back on BJ’s purchases, consumers receive 1% back on purchases made outside BJ’s. “It’s gone well from our point of view,” said Eddy. “We’ve seen good activity from sign-up and card usage perspectives. We’re very happy with the program so far.”
The cash back on purchases at BJ’s is run as the BJ’s Bucks program, which comes as a check with the customers’ monthly statements. “It’s very convenient for them, and it reinforces the value of the program on a monthly basis,” said Eddy. “It takes a little bit of the sting out of getting a bill in the mail.”
Young agreed that the rewards program is one of the major reasons for the partnership’s success. “When you look at loyalty marketing 101, it’s all about rewarding people early and often,” he said. “When you pick a great brand like BJ’s and marry it with a loyal membership base, it helps people keep the card at the top of their wallets.”
As the program moves forward, Young said the companies will have to keep an eye on complying with new federal credit card regulations. Overall, he said, the partnership is in a good position for continued growth. “We don’t feel that we will be impacted too negatively because of the strong brands and the strong loyalty,” he said. “We’re not competing on price, it’s about the value proposition, and those are the programs that are going to hold up after this legislative change.”
The data shows that the partnership between BJ’s and Barclay-card has been successful thus far. Eddy said he’s seen that customers with the Barclaycard Visa card shop at BJ’s more often and spend more than they did prior to getting the card.
“When a customer is building up point value, he/she feels invested in the club,” Young said. “If you get the value proposition right, you’re going to get a much better retention rate with the cardholders versus the non-cardholders.”
Young said there is less of a reliance on direct-mail campaigns to get BJ’s customers to sign up for the card than there is a focus on getting new customers when they come in the door. “When the customer comes in as a new member, that’s when we get the best results,” he said. “We work with Bob’s team to make sure that happens when they are signing up new wholesale club members.”
One benefit to new customers that BJ’s has arranged with Barclaycard is an instant credit shopping pass that allows the new customer to use the card and get benefits the first day, even if they do not have the physical card in hand yet. “It gives them an immediate feel-good experience and gets them more invested in BJ’s and the card process,” said Eddy. “It’s a win for both of us.”
Making the process simpler
Although there has been a focus on getting new members signed up for the BJ’s card, Young said there are plans to increase efforts to get more existing members signed up in the coming years. “We have an opportunity to increase penetration by using data more acutely to look at existing customers who look like they would be good candidates to get into the program,” he said.
As the issuing partner in the arrangement, Barclaycard tries to make the process as easy as possible for BJ’s. “We try to fit ourselves into what they are doing, whether it is at the point of sale or other channels,” Young said. “BJ’s is not in the credit card business, but if we can use the card offer to deepen customer relationships and increase retention and spend, then we have both succeeded and helped each other out.”