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Lisa Hronek Archive for May, 2010
Can Barclaycard become an established US brand?
Day two of Card Forum in Orlando, Florida and Joe Purzycki, Chief Operating Officer for Barclaycard US, takes the field with “Enhancing Every Step of the Customer Experience.”
His Keynote Session focused on how an effort to create the ideal customer experience has been fundamental to the growth of Barclaycard in the U.S. over the past ten years. It is a fascinating story which takes us from the launch of Juniper in 2000, to its acquisition by Barclays in 2004 and its subsequent break through into being one of the top ten card issuers in the country. At the same time Barclaycard is now consistently one of the top ten acquisition mailers in the US, according to Mintel Comperemedia.
Barclaycard’s strategy has been to focus on co-brand and affinity partnerships, which is not surprising given the background of its senior leadership. Joe managed co-brand and affinity operations at both Chase and MBNA prior to joining the company and has therefore been a key player in this segment for two decades. The company now has more than sixty partnerships including U.S. Airways, Barnes & Noble and L.L. Bean.
The question on my mind though is whether we will start to see Barclaycard emerge as a brand in its own right. Many US consumers are unaware of the company, but in the UK, where it was launched in 1966, the brand is synonymous with credit cards. Joe showed the recently launched Barclaycard “Rollercoaster” ad:
He also showed the much acclaimed 2008 “Waterslide” ad:
Both ads aired in the UK only, but they were also launched on YouTube and Facebook (Waterslide has received more than 500,000 hits on YouTube). Both promote the use of contactless payments as they follow an inner-city commuter on his imaginary route to work via waterslide or rollercoaster. The Waterslide ad was subsequently launched as a game on the iPhone and has reportedly attracted 10 million downloads worldwide.
In March, Barclays quietly broke ground on a new 18,000 seat basketball stadium in Brooklyn, New York that will provide an alternative to Madison Square Garden. The stadium, named the Barclays Centre, cost the British bank $200 million. The move demonstrates a clear intent to build the Barclays brand slowly and steadily in the coming years. It is a smart move as it sends a clear message that Barclays is here to stay. I wouldn’t be surprised if the company was eyeing up an east coast retail bank too and then, one day, we may see offers in the mail for a Barclaycard branded Barclaycard.
Examining the economists who examine the economy
I attended the Chicago Federal Reserve’s “Future of the Financial Services Industry” conference last week. A number of interesting presentations, but I had to keep looking at the cover of the program to make sure it was the future we were supposed to be talking about. In typical economist fashion, most of the discussion revolved around what had been done wrong in the past.
That aside, most of the topics that were presented revolved around the fate of the Government Sponsored Enterprises (GSEs)—particularly Fannie Mae and Freddie Mac—and, a related topic, what was to become of the securitization markets. Fed Chairman Ben Bernanke said that securitization would make a comeback, but that transparency, liquidity, and incentives reform are all needed. As regards the GSE’s, he stated that the biggest problem is unintended consequences due to the implicit guarantee. Because of this they are insufficiently capitalized and therefore, unsustainable. His answer is to privatize them, perhaps with a “deep backstop” provided by the government.
In a more “freemarketarian” manner, Alan Greenspan addressed both issues—saying that securitization should be allowed to “flourish” since it is not the primary issue in our current situation (but rather how it was employed). He also stated that the GSE’s should be broken up.
Austen Goolsbee (a U.C. economist who currently serves on the Council of Economic Advisors and as Chief Economist for the President’s Economic Recovery Advisory Board) made the statement that the way things are currently structured, we are basically “encouraging households to speculate in the derivatives market.” His suggestions included:
• Eliminate the tax advantages of second liens
• Don’t encourage mortgages that are prepayable
• Charge higher fees to refinance
There seems to be a consensus that securitization is good and should be encouraged (the question is how and how much?) and that GSE’s are bad and should be discouraged (again, how and how much?).
One thing is for sure, since the government is currently involved in 90% of US mortgages, and 95% of mortgage originations go straight to Fannie and Freddie, a break-up won’t be happening any time soon.
The Future of Payments: Card Forum kicks off in Florida
This week, credit card executives have descended on steamy Orlando, Florida to discuss “What’s Next in Cards and Payments.” The 22nd Card Forum and Expo has attracted 450 attendees, up from last year, which is yet another positive sign of economic recovery.
In Sunday’s Keynote Session, Chris McWilton, President U.S. Markets at MasterCard Worldwide, spoke of the future of electronic payments and outlined some opportunities for the industry, including online budgeting tools, combo debit/credit cards and setting parental controls on spending. He also spoke of the growing appetite for mobile payments (the American Red Cross received an amazing $37 million in text message donations for Haiti), reloadable prepaid cards for the unbanked, and relationship-based rewards.
His address showcased two recent MasterCard innovations. MasterCard inControl allows cardholders to set up alerts and parameters to define how their cards are used, like creating pre-set spending limits for a teenager or setting up instant email alerts to better manage bugets. MasterCard MarketPlace offers customized discounts on hundreds of popular brands using preferences set by users and data mined from their previous purchases.
These innovations seem spot-on in terms of meeting the needs of the current environment, although MasterCard is not the first to market these solutions. Chase’s Blueprint and Bank of America’s Add It Up program are two innovations that spring to mind and there are others. However MasterCard is doing all it can to provide additional value so it can win some major portfolios coming up for renewal soon.
Medicare enrollment direct mail on the rise
Acquisition mail for Medicare increased for the October 2009 to March 2010 period by about 24 percent over the same period a year ago. Medicare mail has been the largest driver in a steady increase in health insurance mail that has grown at an average annual rate of 5 percent each quarter since second quarter of 2007.
Estimated mail volume
Two companies that continue to lead the list of largest mailers are Humana and UnitedHealthcare. These two companies accounted for almost 50 percent of the mail sent out for this year’s enrollment period. Humana was the leader with 26 percent of the mail, which was a 12 percent increase over 2009. Close behind, UnitedHealthcare increased its mail by a remarkable 42 percent over 2009, contributing almost 21 percent to this year’s total.
Kaiser Permanente came in a distant third with 4 percent of the total mail sent out for 2010 enrollment. There were several other companies close to Kaiser Permanente in this ranking, but Kaiser Permanente is significant in that it increased its mail volume by 87 percent over last year.
Innovative mail campaigns
Humana’s largest campaign was a letter with a flyer and a brochure. The white envelope features a yellow post-it with a checklist—Service, Savings, Valuable Extras—and a prompt to “Look inside!” The letter goes into detail on how Humana satisfies these needs and that the reader will get more information when they call for the Humana booklet. The flyer is interesting with one side for those that have an existing Medicare supplement plan and the other side is for those that do not.
One of AARP and UnitedHealthcare’s largest campaigns was a multifold one piece with the recognizable red wave. The headline on this piece asks the reader if they are “Expecting changes in [their] health insurance benefits in 2010?” Inside the AARP name is prominent in many of the callouts and bolded statements.
Kaiser Permanente sent a picturesque one piece mailer for one of its largest campaigns. With half of the printable area taken up by three pictures, the text presented uses bullet points and plenty of white space. This campaign really stands out from most of the mail that is sent into the Medicare market space by the simplicity of text presented.
It will be hard to tell in which direction health insurers may modify their Medicare mail strategies for next year. Will healthcare reform prompt them to increase mail volume to explain changes to their products? Or, will they continue to pursue the strategy of the past several years that increases mail volumes in an effort to increase market share?
It is certain that the replacement of the Optional Enrollment Period with the Annual Disenrollment Period is going to have an impact on the amount of mail and type that is sent out at the start of next year.