Payday Express Tests Bill Insert Program

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Payday Express, Chicago, which operates a chain of outlets that provide two-week cash loans for up to $300, is testing a direct mail, utility-billing insert program just as consumers' need for money is likely to increase because of holiday spending and rising heating costs.

Payday Express last month began placing coupons inside the utility bills of about 1.4 million Chicago-area residents. The campaign will continue for three consecutive months, for a total of about 4.2 million pieces.

"I think the most interesting thing about it is that it gets right into their hands," said Frank Contaldo, CEO of Payday Express's parent company, Sonoma Financial Services. "They've got to pay their bills."

This marks the first time the company has tried mailing statement inserts and is the largest mailing it has ever attempted. In the past, Payday Express has mailed coupons in co-op envelopes like Val-Pak and Money Mailer, but never more than 250,000 at a time.

The coupons offer $10 off on a loan of $100. The company, which has 43 locations in the Chicago area, normally charges $20 for a two-week loan of $100.

Contaldo said it was too soon to gauge the success of the campaign. Although marketers generally mail coupons expecting them to be redeemed right away, customers tend to hang onto Payday Express coupons until they need them, he said, which is why Payday Express coupons carry no expiration dates.

"People aren't going to say, 'Gee honey, I just got a coupon for $10 off on a loan. Let's go use it,' " he said.

Contaldo said part of the strategy for placing the coupons in utility bills is to remind people that they might need cash at a time when gas bills might start rising as temperatures drop.

"Especially in the holiday period, people might find themselves a little bit short," he said. "Not necessarily because they can't make a gas payment, I don't think, but just because everything in general kind of creeps up on you. A $100 or $200 or $300 bridge basically helps you get by until that next paycheck."

In addition to the high degree of likelihood that the envelopes would be opened, Contaldo also said it was probable that the person opening them was the head of the household, which is his target market.

The company has spent most of its capital during the past few years on opening new stores, but now is ramping up its marketing efforts, Contaldo said. In addition to the new mail efforts, the company also is boosting its spending on radio.

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