Credit card offers less likely to come through the mail

Junk mail is an annoyance to millions of Americans.  But such mail in the form of credit card offers may soon have a smaller presence in U.S. mailboxes.

That is because although credit offers that come in the mail have surged in recent years, their effectiveness appears to have waned.  Market research firm Synovate reports that since the early 1990s, the volume of credit card solicitations mailed to American households surged more than sixfold, with credit card companies mailing over 6 billion offers per year.  However, only three out of every 1,000 offers generated responses in 2005, a marked declined from about 28 per 1,000 in 1992.  Bank of America acknowledged that direct mail generated 23 percent of its credit card sales in the second quarter of 2006, down from 30 percent in the same period a year earlier.

Leading card issuers are now reconsidering their marketing strategies and moving away from direct mail.  Instead, they hope to offer more credit cards through bank branches, the Internet and even ATMs with the aim of increasing the effectiveness of their pitches and lowering costs.

This strategy already seems to be cutting mail volumes.  Following steep advances in 2004 and 2005, the number of credit card mail solicitations dropped unexpectedly by about 20 percent to 25 percent in the first quarter of 2006, notes Synovate.

In addition to the costs of sending credit offers by mail, broader factors also appear to be having an influence.  Some U.S. households receive hundreds of credit card offers each year, and many consumers already carry several credit cards.  Meanwhile, banks are struggling to tap new customers in what some perceive as a saturated market, and they are eager for marketing venues in  which they can use existing connections to attract potential customers.

Mail still works

Synovate explains that direct mail remains the most-effective marketing venue for credit card issuers, generating more than 60 percent of applications for new cards in 2005.  That effectiveness is not likely to disappear anytime soon, especially as credit card companies become more sophisticated in their targeting techniques and mailings thin out.  With mailed credit card offers down by up to 25 percent in 2006, Synovate reports that response rates to solicitations have risen “substantially.”

Neither American Express nor Capital One, two of the biggest users of direct mail promotions, have an on-the-ground banking presence that would enable them to easily sell credit cards through bank branches.  Capital One reported that its direct-mail volumes have not changed.  Meanwhile, American Express states that direct mail remains a major part of its strategy, although American Express said mailings have become more targeted.  Also, American Express indicated that it is increasingly utilizing “nontraditional” outlets to push its credit cards, such as at nightclubs, restaurants and other hip venues frequented by young, urban professionals.