Despite uptick in offers, Canada’s cards hold response rates

Synopsis: A study from Tarrytown, N.Y.-based market research firm BAIGlobal finds that both credit card volume and customer response are sagging. These are unusual findings, according to the company, because, normally, less volume reduces mail 'clutter' and, therefore, response rates rise....

Synopsis: A study from Tarrytown, N.Y.-based market research firm BAIGlobal finds that both credit card volume and customer response are sagging. These are unusual findings, according to the company, because, normally, less volume reduces mail ‘clutter’ and, therefore, response rates rise. Julia Beaver, author of the study, blames the results on diminishing differentiation and competition in the marketplace, as well as an increase in retention efforts among the various credit card companies. However, opinion about the state of the credit card industry in Canada is mixed. Luce Veilleux, VP of marketing, card services with Royal Bank in Toronto, says the influx of ‘monolines’ (American-based firms that engage primarily in issuing credit cards) has augmented competition and volumes north of the 49th parallel. On the other hand, Markham, Ont.-based Amex Bank of Canada reports that mail volumes and response rates haven’t changed drastically.

One year later: In direct contrast to the previous year, 2000 saw credit card mail volume hit an all-time high, according to BAIGlobal’s annual study. There were more than a billion solicitations sent to U.S. consumers during the fourth quarter alone, reports Andrew Davidson, VP of competitive tracking services. Cluttered mailboxes resulted in response rates dipping further, as households typically received more than three offers each month throughout the year. The change in volume is attributable to several trends, according to BAIGlobal, including aggressive marketing campaigns from monoline companies, a growth in direct mail targeting consumers with low or no credit rating, the emergence of products with Internet-related features and the resurgence of Gold cards.

In Canada, however, the market remains quite different, says Trevor Van Nest, director of marketing for acquisition at Amex Bank of Canada.

‘There are hundreds of more banks and therefore hundreds of more value propositions in front of Americans,’ he explains. Despite an increase in mailings here, says Van Nest, Amex hasn’t seen a change in response rates, thanks to a strong brand image, as well as the introduction of new products. ‘We’ve doubled the number of our cards in Canada, so we’ve started to meet the specific needs of different segment populations.’

Neil McLaughlin, senior manager of retail cards for Royal Bank, agrees that Canada hasn’t experienced a decline in response rates. But he warns that the future of the industry depends on how credit card issuers react to increasingly fierce competition from American monopolies.

‘They’re flooding the market with low-rate offers and high credit limits,’ he explains. ‘They’re mailing the phone book, and that’s not an exaggeration. So, if a company like MBNA decided to change tactics, get targeted or fold up shop, it would have a huge impact on the industry.’

HBC Rewards package to consume Gen Z program

Last year’s headline:

Zellers freshens up Gen Z

Synopsis: Zellers relaunches its Generation Z loyalty program, targeted at tweens ages six to 14. The Gen Z catalogue sports an updated look and new incentives aim to keep Zellers top-of-mind with kids. For instance, members are now able to borrow points from Mom to win rewards, and can check their status at www.gen-z.com. Gen Z’s 1.3 million participants, who collect the same number of points as their parents whenever mom or dad spend cash at Zellers, can choose among cool rewards like go-carts, dirt bikes and cell phones. Gen Z is recognized as Canada’s largest loyalty program for kids and teens under age 17, according to Curtis Khan, senior marketing manager for Club Z. Through the program, Zellers hopes to bolster its position as Mom’s store by fostering a pleasurable shopping experience for her and the kids and, in the long term, encourage young members to become lifetime Zellers shoppers.

One year later: According to David Strickland, SVP of marketing for Zellers, Gen Z, whose membership numbers have remained fairly consistent over the past year, will be rolled into the new HBC Rewards program recently announced by parent firm Hudson’s Bay Company. Gen Z’s Web portal, which receives 419 visitors per day on average, is now only accessible via a link to www.hbc.com, in order to drive sales back to the parent site.

Canada’s largest loyalty scheme, according to Hudson’s Bay Company, will give away 50 points for every dollar spent at any of the company stores, including Zellers, The Bay and Home Outfitters and on the Web site. Customers can choose from 600 gifts showcased in a catalogue attainable in-store or online. Zellers’ 6.5 million Club Z members are automatically enrolled in the plan, as are The Bay’s 850,000 cardholders.

However, Strickland concedes it will be some time before Gen Z-ers can pluck toys from the glossy book, since HBC Rewards requires extensive organization and collaboration between the two separate divisions.

‘Introducing HBC Rewards throughout the whole company seems simple, but it’s not,’ he says, adding that he can’t pinpoint when the initiative will be fully operational.