Case

Alliances Operational Framework, Asian Journal of Management Cases

17(1) 107–118, 2020
Initiatives and Key Challenges © 2020 Lahore University of
Management Sciences
Reprints and permissions:
in.sagepub.com/journals-permissions-india
DOI: 10.1177/0972820119892721
journals.sagepub.com/home/ajc

Faheem Bukhari1 and Saima Hussain2

Abstract
Alliances and loyalty programmes play an important role in building brand awareness and increasing
customer loyalty. An effective alliance initiative in the credit card domain strengthens the product’s
features by offering value to current and potential credit card users. The purpose of this case study is
to highlight the holistic alliance roadmap developed by the local bank visa credit card team. The data
have been acquired from the field. This real-life example highlights several challenges and raises ques-
tions about how to measure success in alliance initiatives and the lessons learned from the experience,
especially regarding strategy modification.

Keywords
Alliances, loyalty, credit card, operational framework, credit card users

Discussion Questions
1. In your opinion, what is the importance of alliances and loyalty initiatives for a bank which is
new in business? How far did this bank go to achieve this?
2. Evaluate the competitors and address the challenges that could have faced to overcome the
competitive environment.
3. How could the credit card team improve communication channels so that better market penetra-
tion could take place?
4. The Spend and Win campaign and alliances with telecommunication companies were more
emphasized in terms of their execution and operationalization. Critically evaluate the strengths
and weaknesses of these initiatives.
5. What additional alliance initiatives can be added to revamp its current standing in the market?
6. In light of the stated concerns and challenges what would be your recommendations to the credit
card team?

1
Business Administration Department, Iqra University, Karachi, Pakistan.
2
Management Science Department, Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology, Karachi, Pakistan.

Corresponding author:
Dr Faheem Bukhari, Business Administration Department, Iqra University, Defence View, Shaheed-e-Millat Road Extension,
Karachi 75500, Pakistan.
E-mail: faheembukhari@iqra.edu.pk
108 Asian Journal of Management Cases 17(1)

Preface
It was a fine Monday morning on 12 June 2006, when the head of the visa credit card division of a local
bank, Mr Usman, had his first cup of tea in his office. While going through the local newspaper, an ad
from a local competitor bank offering a credit card with extra features suddenly grasped his attention.
The idea was so appealing that he left his cup and immediately called the head of loyalty and alliances.
This local bank was entering the credit card segment for the very first time and with the competing credit
card brands giving tempting loyalty offerings, it was inevitable for Mr Usman and his team to come
up with a strong alliance plan to add value in the bank’s first visa credit card proposition. He called an
urgent meeting with the product and loyalty head, head of credit card operations and marketing director
to develop a strong loyalty initiative, attractive communication campaign and a sound operational
framework that would lead to a number of initiatives promoting loyalty.

Introduction

Banking Industry of Pakistan

The International Monetary Fund (IMF) published a report in which the banking sector of Pakistan ranked
third in the world. This was because of its higher profitability in the international banking markets, which
brought foreign investment and also attracted multinational financial institutions. The first and second
places on the IMF list went to the South American states of Colombia and Venezuela, while India was
in the thirty-sixth position and China was in the fortieth position. The report said, ‘Pakistan’s banking
system continued to strengthen since 2004’.

Credit Card Service Providers in Pakistan

Credit cards were introduced along time back in Pakistan but neither banks nor the cardholders got any
benefits from the credit cards; however, in the early 1990s, the liberalized economy enabled many banks
to introduce master and visa credit cards in the country. This paved a way for much wider acceptance.
At the time, almost all commercial banks, local and foreign, operating in Pakistan offered credit card
services to the customers, mostly in alliance with VISA or MasterCard International.

Credit Card Users in Pakistan

By the end of December 2015, as stated by the State Bank of Pakistan (SBP), the total number of credit
cards reached 1.4 million. Oxford Policy Management conducted a study in which it said that consumer
credit specifically, and more generally credit in the private sector, had grown sharply in the last decade.
A report by the Department for International Development—DFID, the UK in 2007 said that the number
of credit card holders increased fivefold since 2000. Still, credit cards were not very common and were
only given to people with a certain level of disposable revenue. Before offering credit cards customers’
repayment worthiness was evaluated; this selective distribution created a status symbol in some parts of
the world.
Bukhari and Hussain 109

Credit Card Services

Credit card services that were intangible in nature normally described as part of continuous membership-
based services. These services were characterized as information processing services. The most important
element that changed the nature of credit card services and its delivery was technology by the creation of
technologically enabled services. This allowed the services to operate at an international level, based on
telecommunications and information technologies. These technology-enabled services contributed to the
formation of economies of scale and economies of scope for services and service providers. They also
allowed ways to standardize the service and enable the definition of specifications of service quality and
significantly changed the high-contact to low-contact services as customers depended on these services.
Credit card services became ‘low contact’ services as they were technologically enabled.

Theoretical Background | Loyalty and Alliances

Strategic alliances grew as an important tactical tool, as shown by their recurrent use in many businesses.
Despite the explosion of strategic alliances; however, early studies have indicated high failure rates;
in fact, the empirical proof showed that about 50 per cent of alliances do not live up to expectations.
As such, the quest for the drivers of alliance performance became a serious issue for both professional
experts and scholars. Alliance researchers, thus, became gradually interested in the organizational-
level factors that explained why some companies had a greater alliance success than others. Strategic
alliances posed an important managerial challenge given the complications and doubts associated with
managing projects across organizational boundaries. Interestingly, it was found that alliance performance
varied substantially among firms, suggesting that certain organizational characteristics determine how
effectively the alliances were managed. As a consequence, a stream of research emerged to explain what
these characteristics were and why some organizations had greater alliance success than others.

About the Visa Credit Card

The Launch of the Visa Credit Card

The local bank launched its first credit card in December 2006. The bank offered a complete suite
of Classic, Gold, and Platinum Visa credit cards and focused on providing superior services, travel
privileges, and shopping deals. It also offered comprehensive insurance and installment plans, reward
points, and SMS alerts. Other unique features included phone-based credit functions, transaction
processing, and billing which made the credit card the only card with world-class features.

Card’s Unique Selling Point (USP)

After a thorough competitive analysis, the card team came up with an appealing points redemption
programme unmatched by competitors This differentiated the credit card by offering three different
options at the time of redemption: acquiring a product or service by redeeming the accumulated points,
booking the same on instalment for a period of 3, 6, 12, 18, 24 or 36 months, with a 0 per cent mark-up
110 Asian Journal of Management Cases 17(1)

option when bought through the catalogue. However, the competing banks were offering the first point
redemption option only.

The Team Behind Alliances Initiatives

Credit Card Product Team Hierarchy Structure

A good team played an important role in achieving departmental and overall company objectives. The
credit card department was equipped with dynamic individuals with rich industry experience. The
departmental structure was clear with defined roles. The head of the credit card division was responsible
for the entire function of credit cards. The head of product (credit cards) was responsible for developing
the product proposition and the product manager (credit cards) assisted in managing the day-to-day
issues related to credit card design, operations, sales, budgets and marketing. The head of loyalty and
alliances was responsible for developing alliance propositions with a team designated for the operational
management and implementation of alliances and loyalty initiatives (see Figure 1).

Departmental Coordination for Alliances Execution

To ensure smooth operations, liaison with the card operations team was constantly necessary. This
enabled better back-end system integration of transactions and quick turnaround time, especially in
reward point’s redemption, booking of products on instalment or booking of post-paid SIMS. Managing
the call centre team was yet another challenging task that required attention to detail: training the call

Figure 1. Credit Card Product Team Organogram

Source: The author (developed from company records).
Bukhari and Hussain 111

Figure 2. Key Operational Alliance Considerations at Credit Card Division

Source: The author (developed from company records).

centre representatives, developing the scripts when booking the order on various alliances initiatives,
such as instalment plans, point’s redemption and cash advances, ensuring that frequently asked questions
were well developed and most importantly, integration of the alliance campaign in e-form (electronic
form) (see Figure 2).
The marketing department played a significant role in developing loyalty campaigns and their timely
execution. The product manager (loyalty and alliances) was responsible for developing a campaign brief
so that alliance initiatives could be implemented in a timely manner. Outside the domain of the market-
ing department, vendor and financial management were important concerns related to loyalty and alli-
ance initiatives. This included signing the legal agreements with the vendors, ensuring that all the legal
clauses were covered and confirming that the finance team was up to date with vendor accounts and
payment management. A complaint management system was developed with the help of the service
quality unit, which ensured that complaints were resolved within particular turnaround time. In addition
to that, coordination with the credit card sales team was an added task. The loyalty and alliances team
provided proper product training to the sales team. To ensure conformity within all the above-stated
functions, the product team developed a service level agreement (SLA), an internal document ensuring
that internal stakeholders were on the same page and that the alliance activity was performed in given
turnaround time.

Competition Analysis
A prerequisite for banks intent on marketing new and existing products was a comprehensive prelimi-
nary screening of competitor offerings, whether they be upfront discounts, seasonal campaigns, strategic
alliances, instalment plans or other promotions. Analysis of competition behaviour included what kind
112 Asian Journal of Management Cases 17(1)

of alliance partners they had, what products they were offering, the tenure of repayment, the process
flow, the marketing material and especially how they were marketing their alliances. Investigations were
conducted to facilitate the loyalty and alliances team adding value in its alliance proposals.
This competition analysis revealed that in instalment plans, Bank Al Falah, United Bank Limited
(UBL), Standard Chartered Bank (SCB) and Faysal Bank were quite active in promoting home appli-
ances, mobile phones, generators and travel plans with 0 per cent instalments available for the tenure of
3 and 6 months. Moreover, Bank Al Falah was considered to be a pioneer in the rewards programme due
to its number of alliance partners and heavy marketing budget. Moreover, strategic alliances with reputed
airlines and renowned superstores for various periods were part of the key initiatives taken by banks,
such as Bank Al Falah, UBL, SCB and HBL (formerly known as Habib Bank Ltd.). This overall competi-
tion comparison helped the loyalty and alliances team to develop a better alliance strategy to differentiate
its alliance offering from the competing banks.

Phase-wise Planning

Phases of Alliance Activities

After the detailed competition analysis, the team developed the phase-wise alliance activities and
addressed five key phases to avoid any duplication and inconsistency. Each phase was carefully designed
to achieve its required objective. Phase 1 comprised flat or upfront discounts at the time of the launch,
which were discontinued after 2 months. The objective was to add value in credit card propositions and
to entice a good shopping experience. Phase 2 offered instalment plans when the credit card campaign
achieved 50,000 active card users. The objective was to engage customers in spending and building
awareness of instalment plan initiatives. Phase 3 involved a time-specific spend and win campaign
in collaboration with the personal loan department and Qatar Airways. Phase 4 entailed the rewards
programme and was mainly focussed on points redemption. Phase 5 consisted of strategic alliances
with leading Pakistani telecommunication companies, which was a long-term initiative to generate more
spending and loyalty. Alliance details are provided in the next section of this case study.
Phase 1
Flat or Upfront Discount. A flat or upfront discount was the first alliance initiative taken by the
credit card team. These discounts were available at more than 300 outlets in major Pakistani cities,
such as Karachi, Lahore, Islamabad, Faisalabad, Multan and Peshawar. All agreements were signed
by the merchant team directly following the installation agreement of the credit card machine at these
outlets. The mechanism was quite simple; credit card users were given a welcome pack which included a
catalogue in which lists of outlets with their respective discount percentages were mentioned. Customers
only needed to present their Visa credit card to access these discounts.
Phase 2
Instalment Plan. The credit card team had to wait for the right time to initiate alliances as it took
time to build the customer base and spending behaviour. Initial upfront discounts through a number
of merchants developed the groundwork and in May 2007 the team attained management approval for
Phase 2 when a target of 50,000 active credit card users was reached. In this initiative, the team offered
various instalment plans to target credit card users who could book the selected products and pay later
through periods of 3, 6, 9, 12, 24 and 36 months with an option of 0 per cent mark up. The core reason
for market instalment plans at this early stage was to utilize the notion of credit card limits and engage
Bukhari and Hussain 113

Figure 3. Instalment Plan and Point Redemption Process Flow

Source: The author (developed from company records).

credit card users in heavy spending. Credit card instalment plan partners included Bose, United Mobile,
Samsung, Tissot, Kenwood and other reputed brands (see Figure 3 for the instalment plan order process
flow).
Phase 3
Spend and Win Campaign with Qatar Airways. The spend and win campaign was a joint initiative
by the credit card team with the personal loan department whose strategic objective was to develop a
relationship with a reputed airline to build a positive brand image.
Campaign Proposition. There were two lesser objectives. One was to increase spending via credit
card usage (PKR 5,000 or above), the more the card spending, the greater the likelihood to win a free
ticket to any Middle Eastern or European destination. The other was to increase personal loan customers,
114 Asian Journal of Management Cases 17(1)

those who applied for a personal loan within the campaign period and were approved could join in for a
draw for a free ticket too.
Campaign Operationalization and Execution. The campaign lasted for a month. Qatar Airways
offered 20 free tickets to the credit card and personal loan department and in return the credit card
team developed the complete marketing campaign: print ads in local newspapers, billboard place-
ments in major cities, co-branded flyers inserted in monthly credit card statements, SMS and email
marketing, stand placements at designated branches and modification of the bank’s web page. To
avoid any issues, proper training was given to selected branch managers, branch customer service
officers and the call centre team. As with Qatar Airways, formal agreement was signed and a com-
munication plan was drafted which included a co-branded flyer insertion in credit card monthly billing
statement, branding on the inside of the credit card statement, a co-branded credit card envelope, SMS
and email marketing and stand placement at designated branches, out of home billboard and newspa-
per print ad was established.

Phase 4
Rewards Programme | Points Redemption Campaign. The reward programme was another
initiative by the credit card team. Unlike other redemption systems, the credit card team launched the
first reward programme with a name, ‘I Shop’ wherein credit card users could contact the call centre
or by filling the application form and order a product as per the accumulated points or opt for other
redemption options. This kind of initiative needed time to develop as it required detailed backend
operations. The ‘I Shop’ rewards programme was launched in March 2008 with a complete marketing
campaign including a rewards booklet, branded credit card statement envelope, marketing by email
and SMS, branding on the bank’s web page, display stands at designated branches and billboard
marketing. The USP of this initiative was that the credit card user could use the instalment plan,
purchase price or buy the product outright through point’s redemption. For an end to end redemption
process flow see Figure 3.

Phase 5
Alliance with Telecommunication Companies | Warid and Mobilink Pakistan. Alliances with
leading telecommunication companies in Pakistan were also made by the credit card team, another with
two different campaign propositions to avoid legal issues.
Campaign Proposition. The strategic objective was to develop a better brand image and maintain
customer loyalty. Another objective was to increase spending and provide a trouble-free billing opportu-
nity for credit card customers. With Warid Pakistan, the arrangement was a free post-paid SIM if billing
was via the credit card. With Mobilink Pakistan, the alliance involved direct debit of post-paid numbers
through the card. To give more options to credit card users, and to maintain parity for the two telecom-
munications partners, both campaigns were rolled out simultaneously.
Campaign Operationalization and Execution. The Warid alliance required heavy back and front-
end operational work with training in processing, the call centre and the regular sales team. A portfolio
initiation unit (PIU) was established which phoned credit card users to sell these offers, with targets
and incentives set. The call centre and card operations teams were trained for the Mobilink alliance,
to deal with queries and integrate the direct debit facility, blocking the credit card limits with the
billing amount.
Campaign execution was a blend of various communication platforms. A co-branded flyer insertion
in credit card monthly billing statement, branding on the inside of the credit card statement, a co-branded
credit card envelope, SMS and email marketing and stand placement at bank’s designated branches and
promotion through call centre and outbound PIU was established.
Bukhari and Hussain 115

Other Alliances Initiatives by Credit Card Team

Corporate Social Responsibility (CSR) Activity with The Citizen Foundation (TCF)
The credit card team also initiated a CSR activity in the holy month of Ramadan. The alliance was
signed with a charity, TCF to help the needy. The strategic goal was to engage in CSR activity to serve
the society and the initiative was marketed through a co-branded flyer inserted into the monthly billing
statement.

Seasonal Campaigns
The credit card team launched numerous seasonal campaigns at the time of New Year, the wedding
season, Valentine’s Day, special occasions and also during Ramadan. As an example, for Ramadan, an
agreement was signed with MAKRO Cash and Carry, a leading Karachi superstore. In this alliance, the
credit card member was entitled to a free bottle of juice on spending PKR 3,000 or above with the card.
The campaign was marketed through flyer insertion in the credit card billing statement, SMS and email
marketing, branding of credit card statement envelopes and standees which were placed at designated
bank branches.

Communication Pattern

Marketing Communication Channels Adapted for Credit Card Alliances

For better alliance execution the credit card team developed various communication channels to reach
its current and target customers. All the communication channels were designed and finalized after
reviewing the competing credit card brands. The key communication channels were co-branded flyers,
email marketing, SMS alerts, bank’s website and credit card statement envelop branding. Instalment
plans and upfront/flat discounts were normally communicated by co-branded flyers, email marketing,
SMS alerts, website and credit card statement envelop branding. However, credit card point-based reward
programme and strategic alliances with telecommunication companies, such as Warid and Mobilink
& Spend and Win campaign with Qatar Airways, were promoted through electronic and print media,
billboards, branch branding, standees placement in designated branches, bank’s website, co-branded
flyers, email marketing, SMS alerts and credit card statement envelop branding (see Figure 4).

Key Management Concerns

Although the credit card team came up with a number of alliance activities to make the brand more
vibrant and appealing backed by marketing communication, backend operations and training, the head of
the credit card division had a few concerns with the execution and potential success of alliance strategies.
The major concern was to enhance the overall reputation of the bank as a brand in terms of service and
customer orientation and whether the alliance initiatives will be able to achieve this. There was also a
reservation about whether customers will place their trust in a number of different loyalty campaigns.
In addition to this, as this was a new territory, there was no guarantee that the bank would achieve its
strategic alliance objectives. With rising competition, there was a doubt as to whether such alliance
116 Asian Journal of Management Cases 17(1)

Figure 4. Marketing Communication Channels Adapted for Alliances Proposition

Source: The author (developed from company records).

activity would be able to create its own mindshare in the Pakistani credit card industry. Most importantly,
a change of staff within the credit card team was one of the biggest concerns as it totally altered the
planning and execution. Many team members and the head of the credit card division did move to
another bank, soon after the execution of Phase 4 of alliance activities.

Challenges
Alliance initiatives at one time looked very exciting and appealing, but they brought a number of
challenges. In the case of credit card, the multidimensional challenges faced are outlined below:

• The foremost challenge was to develop and communicate the credit card as a user-friendly and
most sophisticated product. It was a great challenge for the alliance and product teams to think
outside the box to change the overall perception of the credit card.
• Due to the size of departments and the chain of command, there was a delay in finalizing any
initiative. Every department worked within its comfort zone to make things easier for its own
team. This created unnecessary delays in executing any new alliance initiatives.
• The competition was a major challenge and being the eleventh player in an aggressively competi-
tive credit card market it was difficult to come up with innovative and creative ideas.
• The budget was another challenge in such a competitive environment. In the case of credit card,
a limited budget meant valuable alliance partners were not easily attracted. Meanwhile, some
competitors could afford to spend millions on alliance activities.
Bukhari and Hussain 117

• Better coordination is essential for any alliance activity, in this case, the challenge was interdepart-
mental coordination and ownership. Alliance initiatives were treated as of secondary interest,
which hindered timely implementation.
• Consistent teams play an important role in the success of any new initiative. Unfortunately, in this
case, the team which launched the credit card and completed the alliance proposition switched to
a foreign bank and left the vision of implementing an appealing credit card proposition that was
hampered by a lack of effective leadership.
• Two factors have been recognized empirically as key organizational determinants of alliance
success: alliance experience (Sampson, 2005) defined as the extent to which a company had
previously been involved in strategic alliances, and alliance structures (Hoffmann, 2005) which
are specialized organizational units and personnel dedicated to the management of strategic
alliances. In this case, the team was new and built alliances for foreign banks but with local
experience, for example, understanding the local culture, was lacking. Moreover, the alliance unit
could have benefited from a couple of more professionals specialized in alliance activity.
• Before selling any idea to the external stakeholders, either customers or shareholders, a new idea
needed to be sold internally, first. Employees, especially those involved with a credit card were
never sold by loyalty initiatives and did not show much interest. This attitude ultimately resulted
in negative work behaviour and thus affected the alliance propositions at every stage.
• Motivated employees play an instrumental role in the success of any venture. In this case, when
the credit card team initiated the alliance activities, concerned units, especially the sales and call
centre units, were motivated due to the visionary leadership of the head of the credit card and were
rewarded with awards and financial perks. As time passed, when the entire team moved to a for-
eign bank, motivation reduced and the team which took charge removed financial incentives and
replaced them with unrealistic sales figures and deadlines. The unrealistic sales targets set by the
new head led to confusion and poor motivation for the call centre team, which had to handle the
complaints, and also for the sales team, which started selling the credit card with false promises,
such as a waiver of annual fees, faster credit card delivery time or higher credit limits. Hence, this
decision damaged the brand in the eyes of both customers and retailers.
• Good leadership is important to achieve strategic objectives. The change of leadership in the credit
card team negatively influenced the enthusiasm of the entire credit card team. The arrival of a new
team brought many surprises in terms of its limited vision and business acumen. An authoritarian
leadership style adversely affected the overall alliance activity and the remaining staff’s
behaviour.
• Overall, the underlying challenge was to change the service mind set. A positive service mind set
came from strong upper management and effective local governance. In organizations with these
characteristics, internal stakeholders could achieve short and long-term strategic objectives more
readily.
• Issues of control and the intervention of other departments often led to miscommunication and
diversion of goals. The intervention of the marketing department in campaign design and conse-
quent delays in execution were other challenges. The standard development of communication
artwork normally takes 1 week, while feedback from the product team is sent within a day. Once
the artwork is finalized, printing takes another 2 weeks. Development and creation of campaign
communication materials ideally took nearly a month. In this case, however, delays were caused
because the agency was late in providing the artwork. Also, the procurement unit was slow to take
printing quotes and arranging the final printing. Hence, the complete process from artwork devel-
opment to printing moved from 1 to 1.5 months, due to poor follow-up by the marketing depart-
ment with the agency and printers.
118 Asian Journal of Management Cases 17(1)

• Novel ideas result in better and confident planning. Being the eleventh player in the Pakistani
credit card market, it was difficult to come up with a novel loyalty initiative. Alliances discussed,
in these cases, were adapted from those of other banks in different regions and Pakistan. This
made it difficult for the credit card team to win approval for their ideas from internal and external
stakeholders, including customers, for whom the ideas were just another credit card offer.
• No proper yearly plan was followed by the new team and ideas were either copied or developed
without critical thinking. This disturbed the momentum and also team confidence, leading to fail-
ure in executing the alliance initiatives.
• Alliances were dependent on the number of active credit card users. The more active users there
were, the more viable and stronger the alliance proposition would be. In this case, the journey
from 0 to 50,000 credit cards was full of excitement and positive results. However, this was fol-
lowed by a decline of credit card usage in the overall credit card market in Pakistan, due to rising
interest rates, service orientation, misleading information given by sales team to achieve their
targets and a rising percentage of cut cards, which affected the spending and alliance initiatives to
a considerable extent.

Since the credit card business was not related to the conventional banking system, it was even more
challenging and time-consuming. The credit card team developed a comprehensive alliance framework
that was equal to any foreign bank but how successful were the alliances initiatives? Was there any room
to amend the alliance strategy? Which alliance initiative turned out best for credit cards? How could
the challenges be addressed? These explorations remained to be answered. The lack of alliances raised
many questions for higher management, which were related to the brand proposition, interdepartmental
coordination and financial constraints. Answering these questions would provide a chance to reshape the
bank’s presence in the credit card market of Pakistan.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of
this article.

Funding
The authors received no financial support for the research, authorship and/or publication of this article.

References
Hoffmann, W. (2005). How to manage a portfolio of alliances. Long Range Planning, 38, 121–143.
Sampson, R. C. (2005). Experience effects and collaborative returns in R&D alliances. Strategic Management
Journal, 26(11), 1009–1031.