Interest and reaction time analysis of credit card offers: Creating optimal offers

Creating optimal offers: without versus with taking into account the information processing behaviour of the total panel and segments

Beyond simply understanding customers for the sake of understanding, these data provide the direct marketer with three ways to increase the acceptance of credit card offers (or for that matter that which is being direct marketed to the customer).

New segments allow targeted offerings with more impact

These data reveal new segments in the population, and by so doing enable the marketer to create more focused offerings that say the ‘right thing’ for the specific segment. Rather than striving to send the same message to everyone, the marketer can now focus efforts on a more promising subset of the population. This target approach differs from the conventional approach, which first identifies an easy to find segment (eg by behavioural information or by geo- demographics), and then tries to fit an offering to that segment. Although the conventional segmentation identifies similar individuals, the similarity has nothing necessarily to do with the offering to people in the segment. The similarity may not be particularly relevant to the creation of an offering piece.

Repository of specific communications and offerings that have been tested The second way is to identify specific offerings to present to the customer in the target segment, with the concept that what is being presented is highly acceptable.

This will increase the probability of success, and may actually increase the dollar value of direct marketing efforts. What is very important here is that the database comprises empirically tested elements. The richness of the database is important, because it does not force the marketer to go an additional step to discover what specific statements might work with these newly emergent segments. The key marketing benefit is ‘actionability’ of the same data that were used to define the segments in the first place.

Table 7 Optimal credit card offers in terms of interest and in terms of a combination of interest and rapid processing time


Letters


Int.


RT


Best: Total
panel (Four elements)

With your application, you get an opportunity to win a day at the

Formula One test tracks

89

5

13

On acceptance of your application, participate in a competition —

25 winners get an all expenses-paid trip
for two to a Formula One Grand

Prix event in Japan

154

5

19

For every time you spend £500 or more on
your card, you will get a

chance of a lifetime to drive the Jordan race car at Silverstone

131

5

19

Special free renewal of secondary card membership

49

5

11

Sum

423

20

62


Best: Total
panel but quickly understood

Automatically receive a free gift

33

3

8

Take a Christmas repayment holiday

34

3

1

Year-end summary of spending

28

3

7

Friendly customer service

25

2

5

Sum

120

12

21


Best: Segment
1 (stuff)

With your application, you get an offer for cheap BA flights

60

11

12

Special free renewal of secondary card membership

49

10

9

Automatically receive a free gift

33

10

4

Transfer a balance of £500 for six months
or more and get 500 free airmiles

73

9

8

Sum

215

39

32


Best: Segment
1 but quickly understood

For sophisticated people

24

7

1

Premium insurance benefits, including travel accident insurance

63

5

2

Minimum credit limit of £3,000

30

7

4

Automatically receive a free gift

33

10

4

Sum

150

28

10


Best: Segment
2 (lifestyle)

With your application, you get an opportunity to win a day at the
Formula

One test tracks

89

12

12

For every time you spend £500 or more on
your card, you will get a

chance of a lifetime to drive the Jordan race car at Silverstone

131

11

22

On acceptance of your application you will be entered into a draw
for

tickets to the Monaco Grand Prix

103

9

11

The first Formula One Card

26

71

2

Sum

349

40

57


Best: Segment
2 but quickly understood

On acceptance of your application you will be entered into a draw
for

tickets to the Monaco Grand Prix

103

9

11

No annual fee Jordan team credit card

37

6

11

Minimum credit limit of £3,000

30

6

11

With your application, you get an opportunity to win a day at the
Formula

One test tracks

89

12

12

Sum

259

33

45

Accelerated communication of winning offers The third way is to identify those communications and features to which the customer responds too quickly — ie that do not take a long time to understand. It might well turn out that these shorter messages correspond to elements with low acceptance (see Table 7), but at least the marketer now understands the tradeoff between compelling messages and time needed to process the information. The ideal situation, of course, is to create an offering that is both highly acceptable and rapidly processed (so the communication leads to understanding and then action very quickly). As Table 7 shows, in some cases this is possible, but only for specific elements in an offer. The entire offer is generally highly acceptable, with a great deal of processing time to comprehend it, and somewhat less acceptable, with probably a lot less time to comprehend it.

Representative APR 391%. Average APR for this type of loans is 391%. Let's say you want to borrow $100 for two week. Lender can charge you $15 for borrowing $100 for two weeks. You will need to return $115 to the lender at the end of 2 weeks. The cost of the $100 loan is a $15 finance charge and an annual percentage rate of 391 percent. If you decide to roll over the loan for another two weeks, lender can charge you another $15. If you roll-over the loan three times, the finance charge would climb to $60 to borrow the $100.

Implications of Non-payment: Some lenders in our network may automatically roll over your existing loan for another two weeks if you don't pay back the loan on time. Fees for renewing the loan range from lender to lender. Most of the time these fees equal the fees you paid to get the initial payday loan. We ask lenders in our network to follow legal and ethical collection practices set by industry associations and government agencies. Non-payment of a payday loan might negatively effect your credit history.

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