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Credit card companies want people to spend more, do more with cards they already have
Chicago (February 14, 2008)-Credit card issuers are changing their tune. Instead of using direct mail just to lure in new customers-as has been done in the past-they have begun using it more to connect with current cardholders.
Mintel Comperemedia reports that the number of credit card direct mailings sent to non-customers dropped 11% from 2006 to 2007. However, "loyalty" credit card offers, sent only to current customers, increased 16% during that time. Loyalty credit card offers encourage cardholders to use their cards by advertising services and benefits such as balance transfers, convenience checks and bonus rewards.
"With direct mail response rates stagnant and the credit market under pressure, credit card companies are realizing that blanketing Americans with unsolicited offers won't work," comments Lisa Hronek, senior research analyst at Mintel. "Leading issuers are restrategizing and looking back to customers they've already won. They're getting more specific with direct mail offers and focusing on what their clients actually want from their cards."
As companies look into what makes people spend on their credit cards, they have changed the focus of their loyalty mailings. In 2005, the majority (56%) of credit card offers sent to current cardholders advertised balance transfers or convenience checks. But by 2007, these types of offers lost out to direct mail pieces promoting non-card products, such as bonus points or rewards. In 2007, 57% of direct mail sent to current customers advertised such non-card products.
Both balance transfers/convenience checks and non-card promotions can get cardholders spending to accrue a balance. However, the transactions for balance transfers and convenience checks are a one-time deal; they may not encourage the cardholder to keep spending. Much more effective at increasing usage are non-card promotions such as bonus points or online incentives. These encourage cardholders to use their cards repeatedly to achieve a desired reward.
"Credit card companies have realized they must constantly engage cardholders to keep them loyal and interested," states Hronek. "By truly focusing on clients' needs and desires, issuers can almost ensure greater card usage. Emphasizing loyalty over acquisition is a new frontier for credit card direct mail marketing, but it will prove profitable in the competitive market environment."
Mintel Comperemedia provides competitive intelligence for businesses looking to advance and improve their direct marketing strategy. Tracking direct marketing (including mail, email and print advertising) targeted at consumers, small businesses and insurance agents, Mintel Comperemedia offers a unique perspective on everything from banking trends to insurance trends to credit card statistics. For more than 38 years, Mintel has provided insight into key worldwide trends, leading the industry for consumer, product and media intelligence.
Joanna Peot
Public Relations Executive
312-628-7946
jpeot@mintel.com