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Mailings Up, Response Rates Down for Credit Card Offers

Credit card issuers sent a record 3.54 billion direct mail pieces in 2000, but response rates sunk to an all-time low of 0.6 percent, according to research released yesterday by Mail Monitor, the mail tracking service of market research firm BAIGlobal, Tarrytown, NY.

Stand-alone direct mail was the vehicle used most frequently to solicit new accounts, accounting for 68 percent of all card applications. Financial statement inserts accounted for 9 percent, retail take-one brochures for 9 percent, phone for 7 percent and online for 5 percent.

The increase in card offers led to high mailbox clutter, which drove response rates down from 1 percent in 1999. Also, the high existing penetration of credit cards lowered response rates. Seventy-five percent of households have a general-purpose card, according to Inside Track, a BAIGlobal service that tracks card usage.

Direct mail applications dropped from 29 million in 1999 to 22 million in 2000.

“As the volume increases, households are receiving well over three offers each month,” said Andrew Davidson, vice president of competitive tracking services at BAIGlobal. “Some issuers are scaling down direct mail in an attempt to increase response rates. Many are trying to differentiate by going after the sub-prime segment or by offering gold cards.”

Seventeen percent of solicitations in 2000 were gold-card offers, compared with 4 percent in 1999. Twenty-six percent of credit card solicitations in fourth quarter 2000 were targeted to the sub-prime market segment, compared with 4 percent for the same quarter in 1999.

Another factor prompting the increase in volume, BAIGlobal said, was an increase in solicitations from monolines, which are firms that engage primarily in issuing credit cards. Direct mail from these firms accounted for more than half of all offers in 2000.

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