A comeback for credit cards

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A comeback for credit cards
A comeback for credit cards

The financial services industry generally and credit card companies in particular hunkered down in 2009, trimming marketing budgets and reducing — if not eliminating — customer acquisition programs. But now that the CARD Act — which legislated a number of consumer protections — is in place, and its accompanying reforms are known, many credit card companies have come out the gate in this quarter with renewed vigor, ready write a new chapter in their marketing playbooks.

Credit card-related direct mail increased 47% during the final quarter of last year, compared to the previous quarter, Mintel Comperemedia reported in January. However, the total number of mailed credit card offers sent in 2009 was 66% less than in the year before. Chase increased its credit card mailings by the largest amount — 87% — over Q4 2008. US Bank's mailings were up 64% over the same period of time, according to Mintel.

After the CARD Act went into effect on February 22, some card issuers rolled out new customer acquisition and retention programs. CARD Act aside, however, significant shifts in consumer behavior have taken place over the past year. Today, 54% of US adults say cash is their preferred form of payment, market research publisher Packaged Facts found in its Consumer Payment Trends in the US study. For credit card marketers, that requires not merely new program rollouts, but also entirely new thinking, advises Forrester principal analyst Brad Strothkamp.

"I tell credit card marketers, 'Don't bury your heads in the sand," says Strothkamp.

Forrester Research has found a significant shift around credit cards, he adds. It indicates that more people are using debit cards and that consumers will make less use of credit throughout 2010 and into the coming year. Consumers have become debt-averse and wary of credit card companies that aggressively worked to squeeze more profits from customers since the onset of the recession. Because of this, Strothkamp's advice is two-fold.

"Marketers have to spend time talking about why consumers should use credit rather than debit," Strothkamp recommends. "The other thing that is important is to put a positive spin on the new regulations. Tell consumers, for example, 'We fully comply with these new regulations and we agree this is the way to go.' The new regs provide more transparency and this is what customers have always wanted."

Strothkamp also suggests that credit card marketers study bank marketers' best practices.

"Banks have always spun regulations, transforming them into online security guarantees and so forth," he says. "That's no more than putting a happy face on a regulation, but today, the credit card industry can use regulations to their advantage, too."

ACQUISITION AND RETENTION: Chase

Chase was one of the few credit card companies that didn't significantly curtail marketing in 2009. In fact, Chase launched three major campaigns last year.

In August, the company launched Chase Sapphire, a premier rewards card that includes premium travel services and reward via Chase's Ultimate Rewards program. The following month, Chase launched Blueprint, which allows customers to customize how their purchases are paid off.

"We think [Blueprint] represents one of the most significant innovations in an industry that has not seen major changes since the introduction of rewards programs over 20 years ago," says Gail Hurdis, communication and public affairs spokesperson for Chase.

The launch of Blueprint was the most integrated effort in the company's history, Hurdis notes. The campaign debuted with major primetime cable and network television advertising and drove consumers to a direct marketing component: a dedicated microsite. Print ads in major consumer publications also drove readers to the microsite. Additionally, Chase communicated information about Blueprint to current customers through promotional vehicles such as banner advertising, direct mail, e-mail, and statement inserts.

Blueprint is available at no charge to 20 million customers using one of four Chase cards, including Ink from Chase, which was launched in October 2009. The Ink portfolio includes Chase's pay-in-full charge card, a first from issuers Visa and MasterCard, for small businesses. Initiatives promoting Ink inclued a microsite and other direct marketing in addition to mass and business trade media.

Other campaigns to promote Chase's array of offerings began in August and continue today across multiple channels, including the Web, events and direct marketing. Chase has also partnered with the Travel Channel on a multifaceted campaign to promote Chase Sapphire through product integrations.

ACQUISITION: Discover

Discover's Card Builder is an online tool that gives prospective card members the ability to choose their own credit terms, including reward preferences and card design. The platform, which launched in February, was promoted with a marketing campaign based on Discover's research of its customer base and focuses on relevance and giving customers the "best deal."

"Providing customization options continues to be a critical component in helping cardmembers manage their finances," says Anas Osman, VP of acquisition at Discover Financial Services. "We understand that people use credit in different ways and are seeking flexible options that allow them to choose features that are most relevant to them."

Within CardBuilder, applicants can chose various repayment programs, such as low introductory fee, low balance transfer and others.

An interactive chart displays the best offers available within each selection so applicants have a choice of terms.Once approved for a Discover card, card members gain access to financial tools such as the Paydown and Purchase Planners, as well as a spending analyzer. These value-add services are intended to help cardmembers better manage their credit and gain the knowledge needed to make smart financial decisions.

Capital One eliminated a similar online marketing program, CardLab, when the economy went south. Discover officials say, however, that CardBuilder is different from that and other competitive offerings. Osman stresses that CardBuilder is a tool, not a filter, that will evolve over time to meet customer needs.

Currently, Discover is promotive CardBuilder exclusively online. It's still too early to tell if the initiative will pay off in the long run, but Discover expects CardBuilder to be a success.

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