If yours is a typical American household, you get a couple of credit-card solicitations in the mail every week, most of which end up in the trash. After all, with two or three cards in your wallet and an average credit-card balance of $1,800, what possible use would you have with another piece of plastic? Issuers successfully exploited business relationships like the huge customer portfolios of AT&T and General Motors to give co-branded cards a respectable portion of the $700 billion U.S. general-purpose credit-card market. But when instituti ns as small as Norwalk, Conn.-based Stew Leonard's ("The World's Largest Dairy Store") are issuing co-branded cards, it's a good sign that market has matured.
A typical credit-card issuer will purchase consumer financial profiles from a credit bureau, pull 5-to-10 million names and send out a morass of pre-approved mailings, counting on brand appeal, teaser rates, some print or telemarketing to support them and get the standard low response rates.
In a market where the two leading brands (Visa and MasterCard) are at absolute parity, marketer of the year MBNA stands out for continuing to demonstrate what every marketer knows, emotional affiliations are a more potent differentiator than sterile numbers, even in a category as competitive as financial services. That's particularly true as a category gets more competitive. Even as the techno-babble hyperbole grows in their shifting marketplace, telecom marketers are all trying to be warm and fuzzy because technology can always be replicated. It's more difficult to reverse-engineer a good marketing strategy.
With that in mind, MBNA has become the third-biggest issuer of Visa and MasterCard by tapping into a more powerful consumer driver than annual percentage rates or even credit limits. The Delaware bank has doubled industry growth rates of 20% by tapping into the affinities that compose our personalities.
If you're an NFL fan, MBNA has Visa cards bearing the logo of each of the 30 teams (plus one with the NFL shield, which surprisingly ranks ahead of a few teams), alumni and charitable groups, professional organizations (including the International Society of Poets MasterCard). Even Rexall Drugs SDV Vitamins and animal-food king Purina, whose card bears a photo of the owner's pet, have licensed their names and databases to MBNA.
"It's kind of basic marketing, but I think we"ve shown that we do it better than most of the industry," said John Cochran, vice chairman and chief marketing officer, who carries MBNA's Baltimore Orioles and Cal Ripken Jr. cards in his wallet. "You find an audience with a strong common bond and market to them through that."
Underwriting Cochran's "basic" effort are 6,500 people and an overall marketing budget of $600 million, an in-house ad agency that spends $100 million a year developing creative and buying media, and the largest telemarketing organization of any financial institution, around 4,000 people. Telemarketing, customer service advertising, backroom processing, even the manufacturing of the cards themselves are processes that the rest of the industry farms out. MBNA does it all in-house.
The second part of MBNA's marketing equation, and one that is equally responsible for its success, is backing its 4,000-plus affinity organization program with a culture of customer service to produce unprecedented loyalty. In a business where attrition is as close as the next good offer, or the next dissatisfied customer. MBNA also sends employees to affinity organization functions and trade shows, building relations and also allowing it to cast a net for new business within the group.
A testimony to its marketing genius is MBNA's more recent notion: If you don't belong to an affinity group it can market to, it'll create one, or at least find a niche that will allow the firm to make a card for you. Thus was created the "Don't Mess With Texas" MasterCard, based on a slogan for an anti-litter campaign that has 350,000 cardholders. Or the I Love New York card. And then there are the Visa and MasterCard cards for people with common surnames.
Outside the affinity world, MBNA has also innovated. Playing off credit cards" long-standing aspirational pitch, it pioneered Gold Card marketing. Now facing a competittive gold-card market, MBNA went for snob appeal by launching premium Visa and MasterCard Platinum cards that offer credit lines up to $100,000. A marketing budget in excess of $32 million in the first quarter alone has netted more than a million customers, most of them new. Now MBNA is starting to market the Platinum offer against its affinity card databases.
The flip side of selling cards into affinity groups is that the organization is asking the affinity of its membership not just to a credit card, but to the group itself. That's made high standards of customer service a prerequisite.
"It's one thing for a customer to call a credit-card service bureau and complain, it's another to have a member call their organization and complain," said Cochran. "One call like that can kill a program. Around 40% of our base is acquired by telemarketing, but telemarketing has a bad connotation. So for us to go pitch an affinity group and assure them that a credit card would not backfire, we"ve always wanted to say, "We do everything in-house." That is very reassuring. Other than that, it just lets us do things more quickly, and with the different portfolios we"ve got, that is always important."
It also allows MBNA to make money off tiny portfolios. The Montana Dental Association may only have 500 members, but around 300 carry MBNA cards.
"(MBNA may) have $27 billion in outstandings, but what separates them is an amazing ability to niche market," said Jim Accomando, a former MasterCard and GE Capital marketing exec who now runs a credit-card consultancy in Fairfield, Conn.
"They are by no means the low-cost provider, but they proved that doesn't matter when you are tapping the power of their affinity associations and providing service that always errs in the customer's favor. So instead of the lowest APR, you'll get your calls answered in two rings or less. That is more meaningful to a lot of customers."
So while it may seem kind of hokey that everyone answers the phone, "MBNA at your service," instead of hello, it's part of a genuine customer service culture that pays off, for example, in the highest loyalty telemarketing response rates in the industry. Considering that its affinity pitch makes customers automatically more inclined to accept a telemarketer's call or open the seventh direct-mail credit-card solicitation of the week, a customer-oriented culture is a devastating complementary weapon in MBNA's arsenal.
"It's one of those things that every company talks about, but really, inside MBNA, the culture is completely service oriented," said MasterCard president/ceo Gene Lockhart. "They really like that message to think like a customer, and as result, they are one of the most impressive companies in the business."
MBNA develops the kind of employee necessary to deliver high-quality service through a series of standards and incentives that are demanding, yet clear. Everything is measured. Everyone, not just customer service agents, are measured on how many rings it takes before they answer the phone. Hallways at MBNA's Delaware headquarters are lined with scoreboards giving the numbers for the year, the week or even the day.
"They'll be a report on your desk before you go to lunch letting you know how you are doing that day." said Michael Auriemma of Auriemma Consulting, Old Westbury, N.Y. "But the incentives there are so great and objectives so clearly spelled out that it does amazing things for employee productivity, because you can move up very quickly."
Everything is measured, yet the reward for meeting or exceeding that measurement is clearly spelled out. So disciples buy into the MBNA promise of hard work equals reward, knowing there will be a minimum of office politics to interfere with career advancement. Insiders say that's produced a family environment and, well, an affinity for marketing affinity cards.
"They probably have the lowest attrition rate of employees and customers in the industry, and those two things are obviously connected," said Accomando. "Everyone is 100% incented to meet customer satisfaction goals. It all boils down to a formula of recognition and reward. You really have to buy into their way of doing things to work there, but there is great job security. And if you didn't buy into their way of doing things you really wouldn't want to work there very long anyway."
Copyright ASM Communications Inc., 1996 ALL RIGHTS RESERVED
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