Sears Launches Mailing for Co-Branded MasterCard

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Sears Roebuck & Co. this week launched a direct mail marketing effort promoting a new co-branded credit card that will carry the Sears and MasterCard logos. The company is seeking to generate some incremental revenues from certain segments of its customer base.


Sears, Hoffman Estates, IL, mailed about 6 million "welcome packages" to certain of its cardholders explaining the benefits of the new card with a welcome letter and a pamphlet. The cards themselves, which are MasterCard Gold cards, will be mailed within the next few weeks.


The move to direct mail is a departure for Sears, which traditionally markets its credit cards through instore sales and, to a lesser degree, its Web site, www.sears.com.


The welcome packages and cards are being mailed to the 10 percent of Sears cardholders who are inactive or who traditionally pay their balances in full every month.


"We're thinking that those two groups of people are looking for a more relevant credit card product rather than our regular store product," said Judy Antonicic, a spokeswoman at Sears' credit services division.


Those customers also do not generate as much revenue for Sears as its higher-volume customers do, especially those who carry monthly balances and have to pay interest. Sears last year launched a new card for those high-volume customers, offering a Sears Premiere card to any customer that spends $600 or more in a 12-month period. The company on May 1 launched a loyalty rewards program for its 13 million Premiere cardholders. That rewards program also was promoted through direct mail.


Although the company does not traditionally use direct mail as a customer-acquisition tool for its credit cards, it could reconsider that strategy based on the results of the test mailing of the co-branded Sears MasterCard Gold card, Antonicic said.


"I'm sure that's a possibility," she said. "We'll probably have more story to tell once we see some results."


She said Sears was planning to mail the same basic creative package to all recipients of the test mailing. The company will offer different credit limits and interest rates to customers based on financial information it has about those customers. The card has no annual fee.


Customers who receive the card will have to call a toll-free number to activate it. In addition to measuring the activation rate, the company also will closely monitor the usage of the card -- measuring not only whether customers use the cards but also how much they spend and whether they carry a balance.


Sears is handling the marketing of the card, although Antonicic said the company worked closely with MasterCard to establish the card's features.


About three years ago, Sears tested another co-branded credit card with MasterCard, which it offered to 100,000 accounts. That pilot program is still considered to be in a test stage, although Antonicic said that it could be expanded, based on the results of the more recent effort.


"That was a very different program," she said. "We weren't able to do the amount of segmentation of our database that we can do now. This is a much more carefully designed program."
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