EXPANDING SMALL BUSINESS CARD PROGRAMS (Nov 2016)

Product Line Strategies

Specialized Rewards and Services

Account Management

Key Finding from the Report:

Results from SYNERGISTICS 2014 study, Opportunities in the Small Business Card Market, revealed that a majority of small businesses would value the ability to customize the look of their business credit cards.  Would these companies pay a fee for this specialized service?

F247 Prop Graphic

Highlights of the Study

This study examines small business usage of business credit and debit cards, as well as reaction to reward programs, value-added card services, and account management options.

 

National Internet Survey – The survey will include 600 small business owners/executives – 150 in the following sales volume categories – $50K-$99.9K, $100K-$499.9K, $500K-$999.9K, and $1M-$5M.  Industry categories include manufacturing, wholesale, retail, and services.

Key Dates

August 19, 2016 – Charter fee/Intro pricing ends.

August 19, 2016 – Final acceptance of comments on questionnaire.

November 2016 – Project Report available.

Strategic Questions

  • What is the share of market among small businesses between usage of business or corporate credit cards and personal credit cards used for business purposes? What are the reasons or motivations for using personal credit cards?  Is there potential for expansion of business or corporate card usage – including conversion of personal card users?
  • How widespread is participation in reward programs among business/corporate card users? Which types of rewards are seen as most valuable?  Are small businesses willing to pay fees to have credit card rewards?
  • Are premium and prestige credit cards an appropriate product for the small business market? What upscale features and benefits have the most appeal?  Is there fee revenue potential for this product?
  • How are small businesses using debit cards? How does this activity differ from credit cards in terms of frequency, volume, and purposes?  For what criteria or reasons would a debit card be used instead of a credit card?  Is there any growth potential for the business debit card market?
  • What is the overall role of credit in small businesses’ credit card activity?  To what extent have users obtained a card because it has a large credit line?  Is using cards as a credit line to finance major business expenditures a major purpose?  Are small business credit cards used as substitutes for other credit products?
  • What are the trends and dynamics for online account management among small business/corporate card users? Are mobile and tablet applications becoming widely used?  Can activity be expanded by promoting certain activities or applications?
  • What traits, characteristics, or identifiers are useful in segmenting and targeting the small business card market?  Are behavioral variables – such as monthly card frequency or volume – useful for designing and implementing strategies and tactics?

Research Issues

  • It seems the small business card market becomes increasingly more competitive and complex with each passing year.  Providers aggressively compete for a share of this market including credit cards and debit cards.  How do these card products fit together in a card product line?  Should they be promoted individually or as a combined payments solution?  Many of the current strategies in the small business card space have been adapted from the consumer market.  Rewards – including travel discounts, airline miles, cash back rewards, and merchandise points – are key features, as well as extra services such as purchase protection and travel and emergency services.  Are there particular business-oriented rewards that have appeal to small businesses?
  • Many issuers also promote premium or prestige business credit cards, which have the added benefit of fee revenue.  Usage of business debit cards is growing, but still lags behind usage in the consumer market.  How can providers spur increased business debit usage?
  • Account management is an important aspect of any card program.  What account management features are most needed by small businesses?  The exploding popularity of the mobile channel has unleashed a variety of potential applications for small businesses – from account access and alerts to point-of-sale applications.  To what extent are these new mobile services being adopted by small businesses?  It is essential for issuers to have a clear understanding of the card market from the small business owner’s perspective.  This study examines small business usage of business credit and debit cards, as well as reaction to reward programs, account management options, specialized services, and mobile apps and innovations. [F247]