It's no secret that credit card issuers want to increase their penetration among un-banked Hispanics. In both the general and Hispanic markets, credit card companies rely mostly on direct mail for customer acquisition. (See “When direct mail is the name of the game,” page 27, Portada® No. 11, September/October 2004). Since most Hispanics internet users pay for ISP subscriptions with credit cards, on-line customer acquisition would be redundant in most cases. In the eyes of credit card companies, direct mail is the best way to target non credit card users.
According to Andrew Davidson, vice president of competitive tracking for Synovate, a Tarrytown, NY based research company, 5230.1 million credit card offers were received by U.S. households in 2004 (data from the Synovate Mail Monitor). One percent, or roughly 52 million, of these offers were in Spanish or promoted a Spanish speaking call center.
In 2003, 4292.6 million offers were received by U.S. households. “One percent of the offers were in Spanish, which gave us a projected mail volume estimate of 43 million according to the Synovate Mail Monitor,” explains Davidson. “Most of these offers were made by First Premier Bank, followed by Capital One.”
The industry as a whole spends approximately US $4 billion on direct mail marketing. Assuming that 1% of that is spent on Spanish-language offers, direct mail marketing to Spanish-dominant Hispanics cost approximately US $40 million.
Citibank, a heavy mailer
California Commerce Bank (100% owned by Citibank under the name of Banamex-USA) offers bilingual and bicultural credit card and money transfer services to the US Hispanic market. This year the bank dropped a bilingual CitiBanamex USA solicitation package for pre-approved credit cards. “Even Spanish-dominant Hispanics want to read the fine print in English” says Theodore P. Michaels, executive VP, Credit Cards, for California Commerce Bank, a subsidiary of Citigroup. Response rates for the campaign were twice as high as the average general market response rates (pre-approved credit card acquisition direct mail campaigns had a general market approval rate of around 0.4% last year).
Citibank has worked closely with data processors, list providers and demographic information provider Geoscape to identify potential customers based on language preference. It also got information from the Mexican Credit Bureau. The Mexican bank Banamex, also 100% owned by Citibank, gives Citi a strong link to the Mexican financial system.
Theodore Michaels says that one of the challenges of the Citibank campaign was to develop prospective customer lists based on language preferences and customers' needs and wants, as opposed to surnames. “It was difficult to find strategic vendors and bilingual telemarketers,” said Michaels.
Marketing non-approved credit cards has meant that Citibank has had to reject the vast majority of solicitors. In the long-term, these rejections can erode Citibank's brand equity with these customers. In order to counter the negative effects, Citibank is developing strategies to answer potential customers in a more positive way.
Wells Fargo follows suit
This year, Wells Fargo will offer lines of credit to Hispanic sub prime lenders for the first time. The financial institution has been very effective in promoting Wells Fargo money transfer products to Hispanics (see “Wells Fargo drops directly into the Hispanic market,” page 19, Portada® No. 12, November/December 2004).