BMW Enters Affinity Credit Card Game As Means to Structure Loyalty Program

Brandweek, May 17, 1999 by Terry Lefton

BMW will soon join fellow German carmakers Mercedes and Porsche in issuing an affinity credit card.

While it has yet to be determined whether the card will be issued as a Visa or MasterCard, BMW has taken the somewhat unusual step of chartering its own bank, so it can both prop up the margin on the cards and keep all the information gleaned about cardholders spending patterns, industry sources said last week.

"That's the way these programs are headed," said a source familiar with the plans. "The brands doing these deals don't seem to think its worth all the effort and expense anymore without a better return and the loyalty aspects are becoming much more important to them than the rebates."

The card will be issued before the end of the year, barring Y2K problems which could push it into 2000.

After a wave of co-branding in the '90s offered rebates from brand names like GM, AT&T and Apple as a lure to grab credit card accounts, many have been scrapped, sold or completely revamped. Under those kinds of pressure, BMW will use its planned card launch as more of a device to promote customer loyalty and tap into their typically upscale affinities. As such, the company won't offer rebates, but things like accessories or BMW events, somewhere along the lines of Saturn's Homecoming to foster customer loyalty, but obviously somewhat less homespun. A full marketing plan has not yet been set.