Direct Magazine reports today: Subprime Woes Cause Credit Card Mail Decline.
"Credit card direct mail volume declined during the fourth quarter, as issuers were strained from the fallout of the subprime mortgage crisis and unsure about the economy, according to Synovate."
Well, this news comes as no surprise, right? Card issuers rely on consumer credit data from the credit bureaus to make decisions as to who is pre-approved for their card. And, typically, the sweet spot, the perfect target, are those consumers who are a tad stretched financially, hence have a need for more credit. Yet, that consumer still must have the ability to pay their monthly bills.
As more and more consumers are stretched to the point where they can no longer even pay their mortgage, there are fewer qualified (and needy) consumers to market credit cards to.
But, don't feel too sorry for the credit card companies...
I was floored by this fact from the article: "Overall credit card mail volume for the year was 5.2 billion, down almost 10% from 5.8 billion in the previous year."
OK, that's 5.2 BILLION pieces of mail!
I've been in the direct mail business for a long time. Yet, these types of numbers continue to astound me. I know that the credit card issuers employ lots of smart marketers who have the targeting down to a science. Yet, I can't help but think that this mail volume could be reduced significantly. Any ideas?
8 comments:
Interesting to me was the inference that the mail declined solely or mostly due to the credit crunch and not declining response rates.
-- Ron Shevlin
You have a point, Ron. And, declining response rates could also be partially a result of the economy. Perhaps consumers are wary of taking on more debt in these times.
Suzanne, I believe that the declining response rates were developing long before the declining economy.
Bottom line. The target market for credit card offers is saturated and can withstand only so much mail. That point was passed some time ago.
Ted Grigg
I'd have to agree that over 5 billion pieces is saturation point...
Suzanne
Some issuers are worse than others when it comes to junk mail! But any decline is great!
We'd love to get your feed back. We recently started a poll on the Worst / Best Credit Card Issuer. Feel free to stop by and give us your opinion.
I'm sure I'm not the only one to see countless ads online and in my email for credit cards. I think the credit card companies are having much more success get applications from online applicants due to the number of affiliates advertising online for them.
Daniel-you make a great point. And, you know what--as a consumer I'd rather shop for my own card then be bombarded by a ton of direct mail. This, coming from a direct marketer, says a lot.
The challenge, of course to the online approach is that the credit card issuer cannot pre-qualify the applicant first (like they can do with direct mail). So, I'm sure that the conversion rate through this channel is much lower, simply because a lot of the people asking for credit are those that don't qualify.
You can bet your life that the credit card companies are trying each and every channel to see what works.
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