JUNEAU, Alaska-Quality data mining-combined with a particular Alaskan consumer behavior-helped True North FCU to generate a 9% response on a direct mail campaign and a 5% increase in outstanding credit card balances.
True North periodically does organic campaigns in concert with PSCU, its St. Petersburg, Fla.-based processor, and most recently did so with PSCU's MoPRO (Member-owner Payment Revenue Optimizer) solution. That allowed True North to groom its data according to specific criteria within its portfolio and then reach out specifically to those borrowers.
Members received an offer for 4.99% APR on cash transactions, including balance transfers, for 18 months.
"One of the caveats for True North is that our members use our credit card differently, I think, than the general credit card," said Bill Peters, VP of corporate development at the 10,000-member, $112-million credit union. "True North has a history of running special promotions where we will offer a lower rate for a specific period of time-say 12 or 18 months-so our membership has adapted to keep an eye out for those type of offers."
When those offers come around, members use that opportunity to transfer high balances from other cards that offer them mileage on Alaska Airlines, for instance, freeing up that space to accumulate more miles.
"I think to some extent it's a behavior that might be inherent to people that live in Alaska," quipped Peters.
While True North's card is used for its purchasing power-the standard rate at the CU is 9.90%-Peters added, "I think our members will use it more frequently as a balance consolidation card than they will just for day-to-day purchasing."
True North had more than 2,300 unsecured credit card loans on its books for a total of $7.3 million as of its December 2011 Call Report, an increase of about $300,000 since its June 2011 Call Report. When the credit union ran a similar campaign in March 2011, it received a 1.59% response (12 responses out of 753 letters mailed), compared with 48 responses out of 520 letters mailed last fall.
Member Behavior Identified
Peters explained that PSCU helped True North to identify particular member behaviors, including instances when members had not used their card for 60 days or more, and members with low balances and higher availability of credit. Additionally, the CU targeted members with high-B or A-level credit, generally with credit scores of 680 or higher. In addition, members with less than $500 available or balances of more than $15,000 were excluded.
Peters added that while response levels vary for each direct mail campaign, the credit union did not expect to see a 9% return. "We typically target the 2% return," he said. "Normally a direct mail campaign is not going to have a huge response."
He credited PSCU's specific data mining strategies for the increase in response levels.
But, he added, "certainly, we don't anticipate that they're all going to be a 9% return."
