Go Back  FlyerTalk Forums > Travel&Dining > External Miles and Points Resources
Reload this Page >

Chase crackdown on affiliates / alleged gaming?

Chase crackdown on affiliates / alleged gaming?

Old Jun 3, 13, 11:48 am
  #1  
Original Poster
 
Join Date: Jun 2013
Posts: 4
Chase crackdown on affiliates / alleged gaming?

Hello -- So I've browsed FlyerTalk since last year for personal reasons, but I'm now curious about something in my professional capacity (which is a financial reporter.) I've heard that Chase recently held a call with its affiliates to announce that it was going to be running some heavy-duty analytics to make sure it's getting a good return on its partnerships with a lot of miles blogs.

I'm curious if anyone's heard much about this or was on the call. I'm also curious about what anyone thinks this would mean for the community -- as well as me and my 15 credit cards... Would love to see discussion here or hash anything out off-line!

Best,
Jeff
jhorwitz24 is offline  
Old Jun 3, 13, 12:31 pm
  #2  
 
Join Date: Aug 2012
Location: BOS
Programs: Chase Ultimate Rewards
Posts: 622
I'm betting any bloggers who were on the call can't talk about it as part of their NDA.

It doesn't mean anything for the community, but it might improve things. I'd imagine that some blogs will have their affiliate contracts voided, so that might stop the constant touting of credit cards.
augustus21 is offline  
Old Jun 3, 13, 12:43 pm
  #3  
 
Join Date: Jan 2010
Location: Austin Texas
Programs: "But, I'm a GLOBALIST guest...."
Posts: 2,835
Originally Posted by augustus21 View Post
so that might stop the constant touting of credit cards.
and stop the incentive for most of them to write to begin with.
austin_modern is offline  
Old Jun 3, 13, 1:03 pm
  #4  
jmw
 
Join Date: Jan 2003
Location: Northern California
Posts: 789
About time. We can also burn them by reporting them to Google (adsense) for promoting activities that can be seen as a useful tool for money laundering.

I won't be sad to see them go.
jmw is offline  
Old Jun 3, 13, 2:20 pm
  #5  
 
Join Date: Nov 2011
Posts: 6,030
Wasn't the last cut a few months ago? Most of the minor blogs lost their chase links.
yerffej201 is offline  
Old Jun 3, 13, 8:25 pm
  #6  
Original Poster
 
Join Date: Jun 2013
Posts: 4
Oh, just because someone's signed an NDA...

Doesn't mean that they're not happy to talk sometimes. Obviously, I'd only like to chat if they're interested in doing so. I guess the greater point of all of this is that it seems like (between the Citi axing of Thank You prepaid card buyers and this) that there might be more of a focus on analytics to deter gaming.

That would be personally quite sad, but an interesting development nonetheless. If anyone has ideas as to why most of the major card co's don't already screen for churning (say me taking out a jet blue card four times in five years) I'd be curious about it.

Best,
Jeff
jhorwitz24 is offline  
Old Jun 3, 13, 11:02 pm
  #7  
Moderator: Travel Buzz, Chase Credit Cards
 
Join Date: Aug 2012
Location: Sunny San Diego
Posts: 2,818
Welcome!

I thought it was very revealing that 4 or 5 bank reps gave a presentation at a recent Frequent flyer event, I think it was the Mega Do. If the heavy users of the frequent flyer points programs are the Untouchables of the banking world, then why present as a guest speaker at a FF event? Or for that matter, why support blogs (or FT) with referral links if a main point of that very blog is to teach you to churn cards?

I'm sure that it won't be hard for some programmer to figure out any number of "gotcha's" to weed out the so called abusers. I think the real problem that they have is that it's the best, bar none, way to lure people to their credit cards. Does the average cc user really know if a 30K offer with xxx spend is better than a 50K offer?

I think it's all theoretical to most cardholders. A bonus is a bonus is a bonus... the redemptions are tough and hard to find (although getting easier with the new award search tools the airlines have been rolling out). They get the card and hope to go somewhere. They don't change their spending habits (every penny on the cards) and they never heard of a VR or a BB. Half the time they just keep renewing the card, year after year, even if they never managed to book an award flight. Or they buy an overpriced item with their points, and that's that.
StartinSanDiego is offline  
Old Jun 4, 13, 2:16 am
  #8  
Moderator: Lufthansa Miles & More, External Miles & Points Resources
 
Join Date: Dec 2002
Location: MUC
Programs: LH SEN
Posts: 37,988
Chase and Amex have bought points from the loyalty programs which need to be disbursed within a certain timeframe, so churners are sometimes useful @:-) Still these freaks still probably only are less than 1% of their customer base, so the occasional audit/check is fine to keep it that way. The banks certainly know how to draw on this point drain when required. What may annoy them is the fact that they have to pay intermediaries cash for this captive audience, which is a waste of money. That would explain the bank folks at events and the crackdown of affiliates.
oliver2002 is offline  
Old Jun 4, 13, 11:15 am
  #9  
Original Poster
 
Join Date: Jun 2013
Posts: 4
Thank you! What about the idea that it may be the structure of the awards programs themselves that could be the target? For instance, my guess is most people on this thread tend to go for cards with large, front-loaded bonuses, and then switch to other cards when those targets are hit. (I certainly do.) When I spend $3,000 to rack up $500+ in UR and then shut down my account before the end of the free year, it seems like I'm costing them a lot of money. So I've been thinking about why they don't already pinpoint me as an undesirable customer, an easy thing to do if you look at the nature of the pulls on my credit report.

My pet theory on this is that there are two factors in play:

1. Most people don't actually do the research necessary to make these programs uneconomical for the banks, meaning that even if my account reeks of gaming (prepaid card purchases with a credit card, churning, transfers on Amazon payments etc etc.) it's worth approving me on the odds that I will settle down and just spend $150K over 10 years.

2. The marketing department is different than the underwriting department, with very different incentives. So as long as the marketing people are incented to bring in new bodies at all costs (and my professional sense is that this is how this works) they will scoop the bottom of the barrel -- and find me.
jhorwitz24 is offline  
Old Jun 4, 13, 12:05 pm
  #10  
Original Member, Ambassador: External Miles and Points Resources
 
Join Date: May 1998
Location: Digital Nomad Wandering the Earth
Programs: UA 1K/MM refugee to cheapest business class fare, SPG Lifetime Plat, CBP Global Entry, #datelife
Posts: 49,675
My wild arse guess is #2. So long as they show new sign ups in the quarterly reports thus making bonuses and happy shareholders, they are willing to put up with a little gaming.
kokonutz is online now  
Old Jun 4, 13, 1:21 pm
  #11  
 
Join Date: Jan 2005
Location: DEN
Programs: UA 1K, once-upon-a-time NW Gold, BMI Gold, Hyatt Diamond, SPG Gold
Posts: 6,246
Originally Posted by jhorwitz24 View Post
I'm also curious about what anyone thinks this would mean for the community
No affiliate income -> No credit card pimping -> Far fewer bloggers -> No need for this forum which we worked so hard to get!

Sad day!
hobo13 is offline  
Old Jun 4, 13, 2:17 pm
  #12  
Moderator: Travel Buzz, Chase Credit Cards
 
Join Date: Aug 2012
Location: Sunny San Diego
Posts: 2,818
Originally Posted by jhorwitz24 View Post

My pet theory on this is that there are two factors in play:

1. Most people don't actually do the research necessary to make these programs uneconomical for the banks, meaning that even if my account reeks of gaming (prepaid card purchases with a credit card, churning, transfers on Amazon payments etc etc.) it's worth approving me on the odds that I will settle down and just spend $150K over 10 years.

2. The marketing department is different than the underwriting department, with very different incentives. So as long as the marketing people are incented to bring in new bodies at all costs (and my professional sense is that this is how this works) they will scoop the bottom of the barrel -- and find me.

Every department has a different focus, and the right hand does not know what the left hand is doing.

Marketing: Increase customer base, increase spend levels
Loss mit(igation): eliminate high risk customers
Customer Service: Keep the cattle happy
Underwriting: Get only the best bred cattle on the ranch
Retention: keep the cattle in the pen
Management: keep the cowboys (shareholders) happy and well fed-- assure big feast from the chuck wagon (golden parachute) for self as exit strategy

So I think that when a storm's a brewing for FT's, it's because they came to the attention of the trail bosses higher up-- the loss mit department.

Last edited by StartinSanDiego; Jun 4, 13 at 2:24 pm
StartinSanDiego is offline  
Old Jun 4, 13, 2:49 pm
  #13  
 
Join Date: Jan 2006
Location: DCA/IAD
Programs: most of them
Posts: 3,237
The credit card reps were actually at the event the day before the latest FTU. They seemed to say that churning is a tiny percentage of their customer base. And that as long as they were getting that customer's spend and not one of their competitors that that was what they most cared about.

They also are amassing a huge amount of data on all of their customers. And they are trying to figure out the best ways to exploit that data. Personalization of rewards seemed to be a big thing they are all aiming to start doing in the near term.

They also know what goes on. They read FT and MP. They read the blogs. They understand how their programs are being used by the tiny percentage of people who are playing the game. Out of all their millions of customers, surely the number really working the system and playing the game hard is a drop in the bucket.

With respect to affiliates, I can't really answer that. But I would be shocked if the big players didn't pay fairly close attention to how well their marketing is working and which affiliates are worth their while.

I don't really get all of the antipathy towards bloggers that keeps popping up here. It almost seems like a lot of envy to me.
glennaa11 is offline  
Old Jun 4, 13, 2:50 pm
  #14  
 
Join Date: Apr 2011
Location: San Francisco, CA
Programs: UA Plat, Copa Pres. Plat, Hyatt Diamond, Hilton Diamond, SPG LT Gold, Marriott Gold
Posts: 769
Originally Posted by jhorwitz24 View Post
Thank you! What about the idea that it may be the structure of the awards programs themselves that could be the target? For instance, my guess is most people on this thread tend to go for cards with large, front-loaded bonuses, and then switch to other cards when those targets are hit. (I certainly do.) When I spend $3,000 to rack up $500+ in UR and then shut down my account before the end of the free year, it seems like I'm costing them a lot of money. So I've been thinking about why they don't already pinpoint me as an undesirable customer, an easy thing to do if you look at the nature of the pulls on my credit report.

My pet theory on this is that there are two factors in play:

1. Most people don't actually do the research necessary to make these programs uneconomical for the banks, meaning that even if my account reeks of gaming (prepaid card purchases with a credit card, churning, transfers on Amazon payments etc etc.) it's worth approving me on the odds that I will settle down and just spend $150K over 10 years.

2. The marketing department is different than the underwriting department, with very different incentives. So as long as the marketing people are incented to bring in new bodies at all costs (and my professional sense is that this is how this works) they will scoop the bottom of the barrel -- and find me.
I think it's like a bit of both, but I agree with others that #2 is likely the bigger driver of the two. I've seen this before working for clients in other industries with a focus on #subs, market share or something similar. The big cell phone service providers are a great example - big phone subsidy up front (or other similar "expensive" promotions), which people could certainly take advantage of before switching as soon as they're eligible for another big discount from someone else.

The other piece is how many customers are really negative LTV, and is it worth the hassle to "out" them? I could imagine that the pool of people who come in via the points and miles blogs is more "churner-heavy" (and therefore more likely to have negative LTV customers), but if the vast majority are net-positive, why rock the boat?

The impression I've always gotten from those working this part of the business for the bank is that they're not running these affiliate programs on behalf of bloggers. They're running them the way they do because it works really well, and they make a LOT of money. But maybe that tide is starting to turn at Chase...?
milesmuncher is offline  
Old Jun 4, 13, 6:46 pm
  #15  
Moderator: Travel Buzz, Chase Credit Cards
 
Join Date: Aug 2012
Location: Sunny San Diego
Posts: 2,818
Originally Posted by glennaa11 View Post
Personalization of rewards seemed to be a big thing they are all aiming to start doing in the near term.
Spend a little time reading the shopping portal provider web sites.

A system such as Ultimate Rewards, (powered by Cartera Commerce) is designed to track usage and target offers accordingly. They have 150 MILLION customers in that data base, and claim 60K vendors. I imagine the ability to track "spend" via tracking cookies, processing software and the like are only going to grow, become more tailored, etc.

If it's not possible already due to privacy laws, I don't think it will be long before the marketeers can figure out who spends more than xxx per year on widgets while also spending xxx at Acme whilst holding bank YXY's credit card.

Then, the underdog of the widget manufacturing world will team up with the Acme people and blow the original widget king out of the water with targeted marketing and strategic promotions, using unlimited marketing resources provided by XYZ bank. Deposed Widget King will go home to study George Orwell. New widget company owners make plans to conquer the world.
StartinSanDiego is offline  

Thread Tools
Search this Thread
Search Engine: