Response Rates for Credit Up Slightly

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The response rate for credit card offers in the third quarter improved slightly over the low level of the second quarter, but remained below 1 percent, according to the most recent Mail Monitor survey from BAIGlobal, Tarrytown, NY.

Industry insiders blame a number of factors, including lack of differentiation among offers, a flooded marketplace and the booming economy, which has reduced much of the need for consumers to secure additional credit cards.

Although the third-quarter response rate of 0.9 percent was better than the 0.6 percent rate in the second quarter, it was considerably lower than the 1.3 percent rate of the third quarter of last year.

Credit card marketers made some strides in reducing the flood of offers in the marketplace, however. The volume of mail sent in the third quarter decreased to 710 million pieces, from 817 million in the second quarter, and lower than the 811 million pieces mailed in the third quarter of last year.

"In the past, we had seen a decrease in response rates in the second quarter, but usually there is a rebound in the third quarter," said Julia Beaver, vice president of competitive tracking services at BAIGlobal.

She also said that, traditionally, when mail volume drops off, as it did in the third quarter, response rates tend to increase because of the reduction in clutter.

The study also noted that two-thirds of the mailings in the quarter were for platinum-level cards, which have lost some of their cachet among consumers.

Beaver said that customer acquisition rates for 1999 are likely to fall below those for 1998 and predicted that the challenge for issuers to expand their cardholder base will continue into next year.

Others in the industry supported the study's conclusion that consumers have been unresponsive.

"There's a great deal of offer fatigue in the market," said Dom Cimei, senior vice president and creative director at Marketing Resources of New York, a credit card marketing firm in Orchard Park. "It's getting harder and harder to get a response."

Marketers began tweaking their offers in the fourth quarter, however, with an emphasis on targeting online shoppers. Included in these offers were co-branded affinity cards linked to Web sites and other cards, such as Blue from American Express, that are designed to facilitate online shopping.

Only about 5 percent of credit card offers are made through online solicitations, Beaver said. Although the Mail Monitor survey does not measure online offers, BAIGlobal concluded that the low level of response to direct mail offers was not caused by any increase in online solicitation.

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