Read Me, Please

By Kate Fitzgerald

More color. More foil. More windows. More excitement.

That's what credit card issuers are doing to get American consumers to open
their direct-mail solicitations in an era of mailboxes overflowing with
marketing pitches.

"The high volume of mailings, the downturn in responses and consumer
fatigue
with a never-ending stream of offers is causing credit card marketers to be
more selective with their mailings, and to make each package as memorable
as
possible," says Mark Creighton, president of Dallas-based Integrity
Business
Services Inc., a consulting firm specializing in credit card marketing.
"Whether it's with special paper stock, odd-sized envelopes, see-through
cards, unusual colors or magazine layout-like brochures, credit card
issuers
are spending more money on the pieces they mail so they will get noticed."

Although credit card direct-marketing trends tend to run in cycles, experts
agree that in today's environment, it is unlikely any mail campaign will
succeed using plain, letter-sized envelopes and simple letters on white
paper.
Some of the devices now being used to get consumers' attention are not new,
such as secondary windows on the front of the envelopes touting low rates
and
rewards. But veteran credit card marketing observers agree that never
before
have issuers used so many different devices all at once, resulting in
complex,
colorful packages stuffed with stickers, charts, photographs and tools to
calculate interest rates.

The card industry mails about 3 billion solicitations a year, but response
rates hit a rock-bottom 1% last year, according to Tarrytown, N.Y.-based
BAIGlobal, a research firm that tracks card marketing trends. Meanwhile, it
can cost $100 or more to book an account. Plus, the U.S. Postal Service
early
this year raised postage rates. First-class postage is up 3%, and
third-class
or standard rates for presorted mailings went up 6% to 11%.

In order to make headway in such a tough environment, some bank card
issuers
not only are turning to more attractive packaging, but they are doing so in
concert with broader brand-building strategies. Their goal: to make
consumers
think they are getting more than just another Visa or MasterCard. Citigroup
Inc.'s Citibank unit pioneered this strategy years ago. A new player at
this
game is Falls Church, Va.-based Capital One Financial Corp. Cap One not
only
mails heavily but sponsored this year's Citrus Bowl post-season college
football game and has launched a national brand-building advertising
campaign.

"As the cost of customer acquisition goes up, credit card issuers are
starting
to realize the importance of their relationship with the consumer, and that
leads them back to establishing stronger connections to their brand," says
Max
Goldberg, a principal with Blue Dog Ventures, a Los Angeles-based
consultancy
that has worked with several major issuers. "You're starting to see the
issuer's name appear more prominently on the envelopes of direct mailings,
and
issuers' names are playing a bigger role inside the package as well."

Recent examples of issuers displaying their names boldly on envelopes
containing direct-mail offers include Bank of America, Chase Manhattan, and
Fleet. American Express Co. and Morgan Stanley Dean Witter & Co.'s Discover
Financial Services continue to prominently display their brand names on
mailings, as they always have.

Discover, some observers note, is steadily taking on the appearance of a
bank
credit card in its mailings, with limited-time warnings posted on the
outside
of its envelopes, and rate-slashing announcements inside. "After years of
cultivating an image that was very sturdy and reliable and staid, suddenly
Discover is using silver paper for its envelopes and louder messages that
look
a lot like MBNA's mailings," says Carolyn Klucha, an account supervisor at
Jacksonville, Fla.-based Husk Jennings Advertising, which handles a variety
of
direct-mail assignments for major credit card issuers.

A new look for Discover's direct mail is not all that surprising
considering
that David Nelms, its president, served as a top executive at MBNA Corp.
and
has brought other MBNA veterans to Discover.

MBNA itself, which relies heavily on affinity card programs, rarely
emphasizes
its name on mailings and has made minimal efforts to promote its brand. It
does, however, play up its name on the outer envelopes of some direct-mail
solicitations, such as those for the MBNA Platinum Plus MasterCard.

Bank One Corp.'s First USA card unit also has a substantial number of
cobranded and affinity cards, but similarly lacks a concerted
brand-building
effort. However, the issuer seems to be working to reverse directions for
its
First USA-branded cards. This year, a series of direct mailings for its
First
USA Titanium Card features four-color magazine-style layouts in brochures
accompanying the offers. (Neither First USA nor MBNA would comment on
branding
strategies for this story).

But the strategy of emphasizing issuer brands in direct-mail packages has a
downside. "Over the years, consumers have told us in focus groups that they
don't always trust banks, so there is a risk in touting the bank name on
the
outside of a mailing, too," says Michele Turkel, president of Scarsdale,
N.Y.-based Turkel International Consulting.

Turkel advises issuers to strike a balance between promoting their names in
an
appealing manner, along with interesting graphics and competitive offers.
Mailings aimed at retaining customers ought to make positive use of the
issuer's name to reinforce the relationship, she says.

Many of the devices being used to make direct mailings more interesting are
fairly inexpensive, says David A. Swanson, a vice president with the Earth
City, Mo.-based direct-marketing firm Relizon Co., a long-time agency for
various credit card marketers.

"A lot of inexpensive tweaks are being used to make mailings stand out,
like
adding a secondary window where an intriguing offer can peek out beside the
recipient's name, and these can be quite effective if they are done
creatively," Swanson says.

The biggest trend cutting across nearly all credit card marketers'
direct-mail
campaigns now is a heavy reliance on colorful or foil stickers. Prospects
are
urged to peel them off and apply them to a specific place on the reply
letter.
A tactic used heavily by the magazine industry, reply stickers have caught
on
with credit card marketers who are trying to get consumers to examine their
offers more closely.

Although stickers are not a new tactic either, Swanson says the colors,
size,
and quantity of stickers currently appearing in direct-marketing packages
are
unprecedented.

"The stickers are designed to get consumers involved with the direct-mail
piece, so they turn it over and really examine it, and when they work with
the
sticker they seem to be more likely to reply," Swanson says.

Capital One clearly leads the industry in the diversity of its mailings,
with
colorful envelopes ranging from letter-size to square shapes, with some
mailings as big as a Federal Express standard overnight envelope on heavy
card
stock, masquerading as urgent deliveries. Among its unique recent offerings
were loud offers peeking through secondary windows of the envelope touting
a
free craft organizer with a card devised for needlework hobbyists. Capital
One
is also circulating a five-inch, cardboard slide rule-style "Savings
Calculator" to help consumers determine their savings through balance
transfers to its MilesOne credit card.

Capital One, the industry's ninth-largest issuer and one of its biggest
mailers, sometimes does not advertise its name on the outer envelopes of
its
direct-marketing packages even though it has a big branding effort going in
other areas. The fast-growing issuer mailed a variety of offers to the same
households in late 2000 and early 2001, according to an informal CCM survey
of
card mailings received by Thomson Financial/Faulkner & Gray employees.

Industry experts say Capital One is attempting to offset the potentially
brand-undermining effects of a constant stream of diverse, sometimes
conflicting direct-mail offers, with its TV campaign featuring pirates and
Vikings, themed: "What's in Your Wallet?"

"Capital One started out as a credit card marketer using direct mail, and
it's
been so successful that it's trying to become a broader provider of
financial
services to America's households," says Creighton. "Their direct-marketing
program doesn't allow much brand-building opportunity, so they're trying to
overcome it by reverse-engineering a brand identity through TV."

Capital One says the quality of its credit card offers is driving a
positive
brand image, and there are no negative effects from sending multiple offers
to
the same households.

"We have a rigorous test-and-learn strategy so we're always testing offers,
which means we may send multiple offers to one household to get the right
offer to meet an individual's needs," says Diana Sun, Capital One director
of
consumer affairs.

Last year Capital One did 45,000 different credit card tests to drill "down
into small niches to see what works," she says. In the process, Capital One
is
adding approximately 27,000 new customers per day, according to Sun.

Some experts question the long-term effectiveness of constantly hitting
consumers with offers packaged differently: "Flooding mailboxes with
packages
screaming about new offers and rates works if you're finding new customers,
but retaining them is a different game," says George Yacik, vice president
with the financial-services research firm SMR Research Corp., Hackettstown,
N.J. "Ultimately, you're playing a dangerous game if you're constantly
throwing out different offers and cutting prices."

Online bank and card issuer Juniper Financial Corp., which launched a
platinum
MasterCard last October as its first product, is taking a completely
different
approach to developing products and brand identity. The Wilmington,
Del.-based
firm is head by a team of former First USA executives ("Dick Vague's New
Venture," January), and its mail strategy is to stick with a consistent
look
and feel.

No Surprises

Juniper's initial mailing, contained in a translucent vellum envelope, was
decorated with muted blue and green tones, and a soft-sell come-on headline
of
"Hello." Inside, the mailing continued the color palette of soft colors and
a
low-key description of its offer, including no annual fee, a low interest
rate
and a heavy emphasis on customer service. Juniper lets customers request
notification by e-mail, regular telephone or cellular telephone when they
are
nearing credit limits or billing due dates, a purported industry first.

Juniper's Web site, developed by the prestigious Palo Alto, Calif.-based
industrial design firm of Ideo, contains light colors, a great deal of
white
space and artistic touches designed to create a sense of relaxation and
peace.
Women are prominently featured in photos on site, although company
executives
claim the Juniper Platinum MasterCard is not aimed specifically at women.

"Our goal is to build our brand around a customer experience that's very
straightforward, with no surprises, and no hidden terms or conditions,
because
we think this is what consumers are looking for," says Ben Brake, Juniper's
director of marketing. "We used a see-through envelope as one way to
symbolize
that this offer was different from the others in the mailbox, that you
could
see what was inside it, and nothing was hiding in there."

Marketing agency Rapp Collins Worldwide, New York, helped devise the
creative
appearance of the direct-mail materials, based on research into what
consumers
say they want from a credit card. Brake won't say specifically what the
surveys found, but implies consumers are tired of penalty fees. "We don't
want
to penalize folks for using our card, and we want our brand image to stand
for
that," says Brake.

Since its launch, Juniper has attracted more than 100,000 accounts and more
than $100 million in outstanding balances. The company is still in a
startup
mode but currently employs 300 people, and plans to continue
direct-marketing
efforts by targeting carefully selected households with a consistent brand
message.

Most industry experts say Juniper's approach could be a winner.

"Whether they admit it or not, Juniper is appealing to women with the look
and
feel of its direct-marketing materials and its Web site, which is smart
because women hold so much sway in household spending with credit cards,"
says
consultant Turkel.

Juniper's emphasis on customer service is another bright idea that borrows
from an MBNA tactic, according to Yacik. "MBNA has always prided itself on
superior customer service, and although it doesn't emphasize its brand in
its
direct mailings because it has so many cobranding and affinity
relationships,
customer service does seem to be helping them maintain market share," he
says.

Referring to First USA's earnings crisis in 1999 that stemmed in part from
customer-service problems, Creighton of Integrity Business Services notes
that
First USA "learned firsthand that customers don't want to be stuck in
voice-mail hell, that people are saying 'take are of me.' So building a
credit
card brand around that idea seems to be a good idea right now."

But Juniper's strategy also carries a certain amount of risk, says Swanson.
"Juniper is making a very strong brand promise with its talk about not
surprising anyone, and making the experience very positive, now they have
to
deliver," he says. "If they don't make good on these promises and show they
are the best of the breed in taking care of people, it will backfire."

While somewhat risky, Juniper's strategy is reflected in its mailings more
clearly than are those of many other issuers. And in today's market,
getting a
distinct message across in a small package is more critical than ever.

ISSN 0896-9329; Issue 12; Volume 13; Page 30

Copyright 2001 Thomson Financial Media