Kohl’s and Capital One—PLCC shutdown, loyalty and co-brand issuance

Our Take: When it comes to loyalty, always put your customers first. A successful program should enhance the shopping experience, not complicate it. Whether you’re considering a co-branded partnership or simply updating your rewards system, remember: clarity, flexibility, and customer-centric design are key to building lasting loyalty.

A brief history lesson and then a story from today’s co-brand marketing sector courtesy of Capital One and Kohl’s.

Many years ago Sears caused a co-brand disaster of their own making by killing over 5MM private label cards and issuing a Citi co-brand. No customer asked for the Mastercard. Credit Services thought it was a good idea to increase credit limits and also earn new revenue through outside spend plus revenue share from fees. The result? Anger, frustration, disenfranchisement of long-standing PLCC holders (like me who got the card right out of college to then build my credit score). In addition, huge bad debt from those cardholders who pushed it to the limit and failed to pay.

Fast forward to today. Kohl’s a 6 decade plus department store who in partnership with Capital One decided to shut down our PLCC and issue a Visa card with a “weak” $1k limit. On the surface, good idea right? Causes us to consider taking “advantage” of a tiered reward structure (7.5% in-house, 3% on petrol*, 2% on grocery* and 1% everywhere else). You can’t shop and buy plane tickets for under $1k!

Rewards earned are issued in $5 Kohl’s Cash increments, first day of the following month (rollover?)—not convenient, should be on demand to make it cardholder friendly. P.S. Is it Kohl’s rewards or Kohl’s Cash?

• 30 days to spend your hard earned Kohl’s Cash. Smart? Yes, if you like the idea of forcing valued customers to shop when they might not need to and would prefer the flexibility to spend their reward when they want to
• Valid everywhere? Nope, can’t spend your Kohl’s Cash at Sephora which more and more is where people like to shop. Don’t get me started on my holiday 2022 shopping experience where I wanted to buy small appliances and there was nothing on the shelf in early December
• Now on to the cardholder activation process—ugh. Why oh why do two brilliant companies not have their call centers sync’d up? Why does the number on the back of the card go to a Kohl’s CS rep and not to Capital One? Why don’t you have a process for the cardholder who does not want nor need another Visa card, keep their credit record “clean”, does not want to activate the card have to wait until after 9.16 cancel it? FYI, the Kohl’s CS rep was not trained on credit – just there to answer questions and the other Capital One rep advised that they could not help me either because the system could not support my request to cancel/deactivate the Visa number until AFTER 9.16. So after 20 minutes of fooling around I get to call back!SummaryRely on experts to help you build the optimum customer experience, especially when addressing both loyalty/rewards and credit card experience. Likewise, fully train your customer service reps on all journeys and help avoid an experience with no resolution. Lastly, be careful when auto-issuing a Visa can have negative P&L effects.

Summary

Rely on experts to help you build the optimum customer experience, especially when addressing both loyalty/rewards and credit card experience. Likewise, fully train your customer service reps on all journeys and help avoid an experience with no resolution. Lastly, be careful when auto-issuing a Visa can have negative P&L effects.