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Credit reality check

Posted in Direct Marketing February 25th, 2008 by Andy Snuggs

The debacle at Northern Rock, Egg’s controversial withdrawal of customer credit cards, lenders changing their terms from 30 days to 14 days – It’s not good news for consumers seeking credit, which made me wonder; just how are credit card companies enticing customers during the ‘crunch’.

Rather than strive to be seen as set apart from the tumultuous market, credit card companies, through rate-related offers, have succeeded in commoditising the market to a point where cut-through and points of difference are barely distinguishable.

In terms of marketing, card companies need to have a far better balance of acquisition and retention/development. Because at the moment they’re simply not delivering programmes that engage customers - we still have this generic ‘scatter-gun’ approach to offers and benefits which don’t take into account different customer types. Look at Barclaycard for a better example – the Oyster card integration adds functionality to the card that gives higher value to the consumer.

What card companies need to do is segment their customer bases and build individual offerings in order to promote differentiation. Sorry to use the same example but Barclaycard has recently partnered with Sky in a step towards further engaging their audience through linking card usage to a passion or strong interest (such as Sky = entertainment).

It highlights what the current situation ultimately needs: A great deal of enticing the customer with more meaningful card functionality, more passion-based partners & essentially, more focus on maximising income from the best customers rather than a generic ‘catch-all’ approach.

This means moving away from mass mailing and utilising the breadth of media channels available to marketers. I believe that Head of Brand at Capital One, Justin Basini is trying desperately to move his brand out of the commoditised market by utilising integrated campaigns and targeted marketing. If others don’t follow suit it’ll only add to the danger of financial turmoil instigated by consumers who are not receiving the right message through the right medium.