Direct mail credit card offers have experienced a drastic drop over the past 12 months or so according to research analyzed by global research company Mintel Comperemedia who has deduced that the 260 million new credit card offers mailed to American homes last year represents only two-thirds of the market from the previous year.
Andrew Davidson, a spokesperson for Mintel Comperemedia, said to reporters that direct mail credit card offers have dropped to their lowest presence in the U.S. market since March of 2010. He also made sure to point out, however, that the period after that first low-point saw some of the biggest growth in direct mail offers, which leads one to, perhaps, assume, that the same cycle may be returning.
Indeed, Davidson’s optimism is related to three trends that can be followed from the previous cycle:
- Credit card applications tend to reflect movement in the stock market. The economy was in a recession so fewer offers were made. As things improve, he says, so should new direct mail offers, and there is already evidence of this as more and more people begin to look towards investments again.
- The Direct Mail strategy is a still one of the best ways for the financial industry to estimate the willingness of banks to lend more money. The Mintel Comperemedia team’s research indicates that well-designed direct mail campaigns can, in fact, successfully motivate a community of consumers to compare credit card offers, complete applications, or simply to become more interested in these products again. This will also quickly become more evident as the economy improves and consumer become more open to the idea of credit cards again.
- Because of the particular timing of this recovery, lenders can take advantage of the post-holiday downtime to work on new ideas, products, strategies, and rewards instead of simply reworking their existing (and often tired) business models. Most people have already chosen to be more conservative this summer so this lax period could be just what the industry needs before the back to school that leads into the big winter holiday season (and the spending that goes along with it).
In short, Davidson says,
Credit card direct mail volume will be significantly lower in 2012 than 2011. For credit card issuers this is a great time to be in the mail. The mailbox is less cluttered and it is easier to get consumers to notice your message.
Davidson’s team at Mintel Comperemedia has not commented, however, on whether or not credit card issuers themselves are the reason behind the slowdown in direct mail offers. One major example of this is the recent HSBC credit card portfolio purchased by Capital One, which came only after the innovative and popular credit card company first acquired ING Direct.
It was this merger that gave Capital One the funds to make such a purchase in the first place. HSBC American Unit was, at one time, a fervent believer in the direct mail marketing strategy, which is the way they used to inform potential customers about their Orchard Bank and Household Bank brand credit cards for people with bad credit card.
These were extremely popular and somewhat successful products that were designed to offer credit to people who may have faced a bankruptcy or other financial issues and might be having trouble getting approval for other cards. While this method was quite successful for HSBC in the past, though, Capital One has not let made notice about how they will market these cards. Although HSBC was somewhat aggressive in their previous strategy, Capital One may not have need of such ideas.