This story was updated from its original version.

ORLANDO–A leading provider of hardware supplies appears to have pieced together the nut and bolts necessary to secure a successful cobranded credit card initiative.

At least the numbers suggest it’s heading in that direction.

Ace Hardware Corp. launched the Ace Rewards Visa Card program in 2010. Since then, the average sale among cardholders is 12% higher than participants in the company’s tender-neutral Ace Rewards program and 31% higher than that of non-Ace rewards customers, Jonathan Gelfand, managing director at Partner Advisors, said here last week at SourceMedia’s 24th annual Card Forum and Expo. SourceMedia publishes PaymentsSource.

In addition, the gross profit from the cardholders’ business is 20% higher than that of the tender-neutral rewards members and 35% higher than nonrewards customers, said Gelfand, whose company helped put the cobrand deal together with issuer U.S. Bancorp. Cardholders also make twice the visits compared with Ace Rewards members, and they spend almost three times as much, he said.

“Additionally, converting a member from Ace Rewards to an Ace Rewards Visa card increases their annual sales an average of 36%, Gelfand said.

Ace launched its points-based tender-neutral Ace Rewards initiative in 1997. And that program serves as the core of the Ace Rewards Visa value proposition for all stakeholders.

With points-based tender-neutral Ace Rewards, customers earning 2,500 points receive a $25 reward. They receive 1,000 free points on their first purchase, 10 points per $1 they spend and a $5 reward for every 2,500 points earned.

Ace Rewards Visa customers receive $25 for every 12,500 points they earn.

Other perks also include member-only coupons, e-rebates and the ability to manage their account online.

One of the lessons learned in the card program is that points don’t generate as much interest as straight cash-back incentives. The Ace Rewards Visa and Visa Business cards offer cash-back bonuses–5% cash back (3% back when shopping at Ace stores plus a 2% bonus), and 1% cash back when shopping elsewhere. Ace issues its rewards automatically via Ace Rewards.

Of the more than 18 million members of the Ace Rewards program, 8 million are active, and 2 million new members join annually, representing 10% of total Ace Rewards sales annually, Jim Friel, Ace consumer card manager, said during the presentation. The company’s vision is for every Ace Rewards customer to have an Ace Rewards card and use it for every purchase, he said.

Neither Gelfand nor Friel said how many Ace Reward Visa Cards the company has secured thus far.

Ace is organized as a cooperative of more than 4,400 hardware and home-center stores, about 50% to 60% of which participate in Ace Rewards, and about half support the Ace Rewards Visa Card, Friel said.

Ace corporate distributes 228 million marketing communications annually to its Ace Rewards members via direct mail and email, “so it just made sense to target them with this credit card program,” Gelfand said.

Each participating store also is does its own share of marketing. Since the card launch, Oak Brook, Ill.-based Ace has found that the co-op’s top stores can book more than 400 new card accounts per month, he noted.

Consistent with its brand slogan as “the helpful place,” Ace trains participating stores’ owners and workers on how to solicit program participation, and it occasionally will provide financial incentives to encourage efforts to solicit more customers into the rewards card program, Friel said.

“If they believe in it, we’re seeing stores flat out ask everyone and put it into the context of what it can do for them,” he said.

Indeed, Ace secures most of its card-program acquisitions within stores, followed by direct mail, Friel said. “It’s easier to encourage existing rewards customers to move to the card than it is those off the street, he said.

Looking ahead, the chief objective is to create a profitable credit card program for U.S. Bank that is sustainable over the long term, Gelfand noted during the presentation. And one of the chief means to accomplish that goal is through efforts to boost transaction activity and card sales.

“The credit card helps drive larger sales,” Gelfand said. “For the card issuer, it’s all about loyal customers and positive credit selection. Our high approval rate reflects the type of customers coming in, and it provides access to profitable customers.”

For Ace corporate, the card program enhances the company’s brand and provides long-term growth and increased sales, Gelfand added.

The card program’s near-term goals also include boosting same-customer sales by 20% or more annually and to grow the Ace Rewards percentage of overall sales by 60% by next year, Friel said.

“We know how much they buy and how often they come in, and we do that through analytics,” he said. “The Visa program sits on top of that and reaches more customers than we have.”

U.S. Bank in April announced a new Apple Inc. iPhone credit card app for its cobranded Visa rewards card with Ace (see story). U.S. Bank has 22 cobranded credit card programs with retailers.

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