Damark Eyes Membership Expansion With Capital One Deal

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Following favorable results from a national test targeting each other's customers, Damark International and Capital One Bank have teamed for a strategic marketing partnership.

The pact, which became effective last month, calls for Damark, Minneapolis, to handle outbound teleservices programs to solicit Capital One's 13.6 million cardholders nationwide and for Capital One customer service agents to provide Damark membership as an upsell for customers through inbound calls.

"The programs are being sold in two ways," said George S. Richards, senior vice president, marketing, Damark. "Capital One service representatives are selling on inbound customer service lines. If a cardholder calls in with a general account question the service representative would present the opportunity to join one of the programs. Additionally, we are handling outbound telemarketing calls to the Capital One cardholder base."

Damark offers some 400 products ranging from housewares and gifts to automobile products and computers. While most of the offerings will be the same for Capital One customers, the Damark catalogues will be tailored with offerings such as Capital One Edge and Capital Interiors.

Richards said Capital One Edge is a redesign and specially branded version of Damark's Prefered Buyers Club catalogue, while Interiors is a redesign and repackaging of Essentials for the Home.

"The opportunity with Damark is very exciting for us because we always like to offer our customer valuable products," said Diana Don, a media spokeswoman with Capital One, a Falls Church,VA-based company that ranks as one of the country's top 10 credit card issuers. "We had been testing the program for awhile and it has gone really well. The response rate was very favorable and that is why we are committed to continuing an arrangement with Damark.

"We both have a wide variety of customers," Don said. "Our customer base is very attractive because we have all different types of products and with high risk and low risk we hit all segments of the population." The company provides some 5,000 different product combinations for Visa and Master Card to consumers. Although the company would not disclose call volume, Capital One said it deploys an estimated 3,000 customer relations agents throughout four call centers.

For Damark, the deal provides a huge boost in its universe of prospects but agrees that other issues beyond the customer base made the deal appealing. "A number of things make it a good fit," Richards said. "The two companies are information based direct to consumer marketing companies whose approach to selling goods and services are consistent with each other. We are both interested in selling programs whose value proposition is based on being highly individualized and relevant to the customer.

"Secondly, both provide uniquely compelling benefits," he added. "One of the principal reasons this relationship works is because both companies are committed to this basic marketing approach and the leveraging of consumer level information."

Richards said the mix of inbound and outbound calls will be up to the respective companies. "Neither of us has in mind what an optimal split would be. We are going to monitor it on an ongoing basis. My general belief is that we are going to continue to make presentations to consumers for as long as they accept them with some regularity. We provide highly individualized relevant products that are uniquely compelling to customers. When the program stops meeting those two key criteria we will change our marketing approach."

In the meantime, Damark has high expectations for membership growth with the deal and is looking at such partnerships as a business development strategy.

"A growth rate I would like to continue is 40 percent on a full year basis," said Richards. "We will grow by virtue of these agreements, which permit us to market our membership services programs and by continuing to market through our Damark house file. The strategic relationships are a big piece of the company's strategy moving forward in order to move beyond the direct to consumer channels we have used to this point." Richards said the company announced a program with Wachovia earlier in the year and that the company also has a private label deal with Visa.

Damark's own house lists maintains between 5 million - 6 million names and those members are hit annually through 166 million catalogs issued in 99 different versions. Between Damark's house list and Capital One's sweeping customer base, cross-over is likely but Richards said the pact has addressed that issue. "At this stage we are not permitted to talk specifically about cross-over but we are doing the obvious things like suppressing folks from one list when they sign on and some of the less obvious things like maintaining simultaneous promotion history databases," Richards said.

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