Discover goes for wallet share: customers encouraged to spend

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Wednesday, Mar 10, 2010 •  Posted by


Discover has certainly been busy since the start of the New Year. On January 4, the credit card issuer announced the launch of a national sweepstakes called, “It Pays to Discover Everyday Giveaway.” Every purchase made with a Discover card, through the end of 2010, will qualify for a chance to win up to $1 million. Cardholders will also earn extra sweepstakes entries by using their Discover card in targeted categories such as restaurants, salons & spas, and dry cleaners.

In January, Mintel Comperemedia witnessed the sweepstakes campaign as a direct mail insert, with customer communications promoting a 0% teaser rate for purchases. The communication represents a multi-pronged effort to drive up share of wallet for new charges, ahead of the next phase of CARD Act regulations.

Some communications I’ve seen promote a 0% purchase APR on all new purchases for seven months. Discover’s message is that “this promotional APR is just another way that Discover helps you stay in control.” Other communications also promote a seven-month introductory period but only for purchases made between January 15 and March 15 in specific categories of spend.

Many card issuers have yet to reveal how they will adapt their marketing campaigns in the post-CARD Act environment. The Discover communications state that any payments above the minimum amount due will be applied to balances with high rates prior to balances with low rates. This suggests that Discover is ahead of the curve in terms of CARD Act compliance.

Discover’s high penetration among the wallets of US cardholders means that a grab for wallet share represents a threat to most other players. Discover cardholders tend to use their cards more and are more satisfied than other cardholders due to the card’s cash-back program and its long history of customer service. This latest campaign builds on Discover’s strong reputation at a time when other issuers are holding back in their marketing and sweepstakes campaigns.

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Norwegian Cruise Line débuts Epic ship for solo (and group) travel

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Friday, Mar 5, 2010 •  Posted by


It’s time to hit the open seas, solo. Norwegian Cruise Line’s Epic—with space dedicated specifically for solo travelers—had its first successful sea trail on February 14, 2010 (a day, ironically, dedicated to those in loving pairs…)

Norwegian Epic is considered the company’s largest and most innovative ship to date, and it continues to create excitement within the world of cruising. The new ship houses 128 “ultra modern studios” that will be targeted towards solo travelers and will include a special common area for those traveling by themselves. The rooms are expected to be priced at $799 for a 7-day cruise, a price point lower than what a single traveler would have to pay while staying in a double occupancy room.

Considering millions of adults travel by themselves each year (some estimates say 35 million), it is surprising the cruise industry hasn’t reacted sooner to this potential revenue source.

Do you think this will prove successful for the company? If Norwegian succeeds in attracting more single travelers, how quickly can the competition react in creating accommodations for those individuals interested in sailing the open seas without a travel companion?

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HSBC increases Orchard Bank email marketing, challenges First Premier

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Thursday, Mar 4, 2010 •  Posted by


Based on preliminary January results, HSBC is on track to become the leading acquisition emailer, toppling First Premier from the spot.

This has only occurred in one other month in the past three years, when Chase took the highest share of acquisition email last July. This latest shift in the pecking order is more significant as HSBC is using its Orchard Bank MasterCard to compete head-to-head with First Premier.

Subprime issuers, particularly First Premier, have been able to integrate email into their acquisition strategies by offering credit to consumers who can’t get it elsewhere.

HSBC began ramping up its email marketing efforts to subprime consumers in Q4 2009 as the economy began to show signs of recovery. The issuer’s January offers, for its Orchard Bank MasterCard, target consumers looking to build or rebuild their credit. Some emails encourage applicants with less than perfect credit histories to apply. The emails promote free online bill pay, online account access, reporting to three credit bureaus and fraud protection. HSBC promises a decision within 30 seconds.

First Premier’s emails continue to focus on the Centennial Classic MasterCard. Many show a photograph of the card along with a ball-and-chain. Some emails promote a low APR on purchases, online credit education and 24-hour account access by phone. First Premier also promises a decision within seconds.

HSBC’s email ramp up means more competition in the subprime space. This can only be a good thing for consumers looking to establish or rebuild credit as it means more choice and potentially better terms.

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Banks address overdraft protection in direct marketing

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Wednesday, Mar 3, 2010 •  Posted by


In the last two months, I’ve seen a surge of direct mail pieces referencing overdraft changes and/or fee options for customers. With the implementation overdraft legislation on tomorrow’s horizon, banks are starting to inform customers of upcoming changes. They’re also trying to encourage them to add overdraft protection to their accounts.

How fees are mentioned in the mail
Bank of America and Chase both announced last September that they would make changes to how overdraft fees are assessed. Bank of America used statements to communicate the change to its customers. Text was included on the front page of the statement and read, “We recently made changes to our $35 Overdraft Item Fee.”

Chase’s changes to overdrafts are expected to take place in the first quarter of this year. However, last March, Chase began including “reminders” on customer statements about how insufficient funds and overdrafts worked. Chase is currently encouraging customers to “get peace of mind” with overdraft protection by linking the checking account to a credit card or savings account.

TD sent out notices entitled, “Important Information Regarding Your TD Bank Statement.” Beginning in February, if customers incur an overdraft fee, it will be clearly indicated on the statement.

And finally, M&T is offering a $25 cash incentive to customers who establish overdraft protection on newly opened checking accounts.

Banks use email to inform customers about overdraft utilization
Banks have been reserving email marketing to inform customers that an advance was made to cover an overdraft. As of yet, I haven’t seen banks using email to communicate overdraft protection changes.

Promoting overdraft protection on the website
Citibank promotes overdraft protection through its line and loans product on the homepage of its website. The company also featured overdraft protection on its homepage and the checking section of its website.

Other banks promote overdraft protection through their customer service sections. Wachovia provides a “request overdraft protection” link on its customer service page. Key Bank does something similar with a link entitled, “How can I avoid overdraft and non-sufficient funds fees” in the frequently asked questions section on its customer service page. USAA promotes free overdrafts on its checking through the product section on its website.

Looking forward
As the deadline for the Federal Reserve’s changes approaches, I expect to see more customer notifications on the changes, but also more marketing that encourages customers to sign up for overdraft protection.

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