Credit card offers mailed to consumers tapered off sharply in recent months after a resurgence in the wake of the recession, indicating a shift in large-issuer strategies.
Issuers clearly are becoming more selective in mailing solicitations after the initial post-recession frenzy that peaked in June 2011. But they also are relying more heavily on in-branch marketing, experts say.
Direct mail inviting consumers to apply for credit cards in April hit a 25-month low, dipping to 260 million mailings, down 33% from 390 mailings a year earlier, new data from Mintel Comperemedia suggest.
The latest numbers bring card solicitations closer to a level last seen in the spring of 2010, when issuers pulled back on mailings and tightened credit standards in reaction to the recession, the data show. Chicago-based Mintel tracks monthly direct-mail volume in various categories through a long-running household panel.
The recession caused issuers to cut mailings to about 220 million per month during the first quarter of 2010, Andrew Davidson, Mintel senior vice president, tells PaymentsSource, a Collections & Credit Risk sister publication.
But issuers opened the floodgates later that year, and volume rose until it hit its most recent peak in June 2011 at 497 million mailings, Mintel says.
The surge began to abate last summer, and since then "issuers have adopted a more cautious approach," Davidson says. "With each month we are getting a clearer picture that the industry is cutting back on mailings and being more deliberate about sending offers."
Citigroup Inc. stands out among the issuers that hit the brakes hard on mailing solicitations after "dominating" mailboxes throughout 2011, Davidson says, based on Mintel's general analysis.
And it is unlikely that issuers are supplanting mailed offers with online advertising or social media activity, he says.
"Online advertising and social media are supporting traditional channels like direct mail rather than replacing them," Davidson contends.
But the largest issuers, which drive the most direct-mail volume, also likely are becoming more effective at cross-selling cards to customers through branches, Scott Strumello, an associate with Auriemma Consulting, tells PaymentsSource.
"Chase, Wells Fargo and Bank of America in particular each have a large enough footprint that they can cross-sell people one-on-one at the local level, and issuers in recent quarters have told investors this is their goal," he says.
Driving down marketing costs has also been a top priority among issuers whose revenues are under pressure from multiple directions, Strumello notes.
As issuers become more selective, they also are sending more offers to specific customer groups, including upscale households that tend to use cards heavily for daily purchases and pay off their balance in full each month, Strumello says.
Indeed, fewer consumers are revolving credit card balances, Federal Reserve Board data show (see story).
Still, issuers continue to target certain subprime, or higher-risk, borrowers with offers for low interest rates, Strumello says.
But credit card direct-mail cycles always tend to be cyclical, and large issuers seem to follow one another's moves as a herd, Davidson suggests.
"We will see direct-mail rates rise again, as this is likely to be a temporary lull in proceedings,” he says. “But at the moment, things are becoming more strategic."
For example, issuers are dangling richer prizes to consumers they deem likely to sign up for cards.
The average cash incentive to consumers who successfully applied for a new card during the first quarter was $167, up 40% from $119 a year ago, Davidson says. JPMorgan Chase & Co. has helped push that level higher, giving away as much as $350 to new customers, he notes.
And issuers are still pushing new products. "We're still seeing plenty of competition between issuers for customers through the mailbox," Davidson says.