Study: GM Card in Reverse, AT&T's Slowing Down

In his latest consumer survey, consultant Bruce Brittain tracked two of the strongest cobranded cards on the market, finding that the AT&T Universal card had had slow growth and the General Motors card a portfolio decline of nearly 15% in the past 12 months.

Mr. Brittain of Atlanta-based Brittain Associates Inc. last measured the two programs a year ago and found that since then about 500,000 households had dropped the GM card, while 100,000 had picked up the AT&T Universal card.

Interviews with 6,000 households from March 15 through April 15 indicated that only 3.5 million households claimed ownership of one or more GM cards. That was down from four million in his 1994 survey.

"Our finding on GM would help explain why they're cranking up a huge new advertising campaign," said Mr. Brittain. "I see a definite link."

General Motors Corp., which recently kicked off its biggest advertising blitz since launching its card in 1992, said it has more than 12 million cardholders in its portfolio.

Howard Adamski, spokesman for Household International, Prospect Heights, Ill., which issues the card, said GM's ad campaign is designed to "reinforce the intention of the card - to sell cars."

Mr. Brittain's numbers "don't square with us," he said. The program grew by 1.1 million accounts in 1994, with receivables rising from $5 billion in March 1994 to $6.7 billion as of March 1995, said Mr. Adamski.

"My numbers don't track how many accounts they ever put on their books," said Mr. Brittain; "they track how many people got the card and know they have it. I'm not calling them liars; I'm just saying we're counting different stuff here."

Mr. Brittain speculated that the reported decline in households claiming to have the card may reflect the 350,000 to 450,000 cardholders who said they had redeemed their rebates to buy a new car and no longer use the card.

He said there will always be a discrepancy between his study and card company numbers. He pointed out that his study is more concerned with trends. "We ask the same questions every year in the same manner, so it remains consistent - like a chemistry experiment."

Steve Szekely, vice president at PSI, a Tampa, Fla.-based research company, said the study probably reflects a decline in use rather than penetration.

The proliferation of cards that people carry makes it difficult to get accurate inventory from consumer research, Mr. Szekely said. "The turnover of cards in the wallet is so enormous, it's very hard for consumers to keep track," he said.

"I don't think it's hard at all in terms of tracking meaningful numbers of cards in the population," said Mr. Brittain. He defined "meaningful" as representing consumers who know they've got the card. If a consumer doesn't know he or she has a card, he said, that's as good as not having it.

Mr. Brittain said AT&T was having better results with its portfolio, "doing a good job targeting direct-mail candidates."

With 4,000 households interviewed, Mr. Brittain interpreted this year's results as showing that growth had decreased from two to three years ago but was still 100,000 new accounts. His study found nearly seven million households that claim to have one or more AT&T card.

Bruce Reid, an AT&T spokesman, said the program had grown by 3.2 million accounts in 1994, to a total of 15.6 million. He said receivables grew by $3 billion, to $12 billion, in 1994.

While he disputed the indication of slower growth, Mr. Reid agreed with the study's finding that more consumers have revolving balances, with those balances up 35%.

Mr. Brittain attributed this to the Something Extra program, which gives consumers rebate points for balances.

He also said AT&T's superior customer service enabled it to retain customers even though "the card's not terribly competitive in terms of what it offers in value added" enhancements.

His study found that the GM revolvers had balance increases of 25%.

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