automotive industry has ventured down a new road - into credit cards. J.D. Power & Associates, whose customer satisfaction data can make or break an auto model, recently completed its first scan of the card market - a survey of 7,200 cardholders that yielded ratings of 21 major issuers. The AT&T Universal Card came out on top, followed by two other nonbank competitors - Discover and Household International's credit card subsidiary. Jacksonville, Fla.-based AT&T Universal scored a 113, which Power describes as a weighted average of the "six dimensions comprising customer satisfaction": billing and payment quality, interest rate, credit and cash advance limits, point of sale processing quality, rewards, and fees. The industrywide average would be 100. Discover and Household Bank came in at 106. Three banks - Bank of New York, Bank One, and Citibank - also scored above 100. The results showed billing and payment quality is the "key differentiating dimension of satisfaction," said Andrew March, group director of J.D. Power. "Over the long run," Mr. March said, "the customers are saying to the issuers that these are the areas they need to focus on that are important and that will differentiate one issuer from another." Going against the grain of conventional credit card thinking, the survey showed that rewards and fees were the least significant factor in measuring customer satisfaction. Mr. March said this is not surprising because it was a retention study. "If it was an acquisition study, you might see interest rates as most important." Stuart Feldstein, president of SMR Research, Budd Lake, N.J., said that for the past five years rates, fees, and rewards, have been driving cardholders' credit card choices. J.D. Power wants issuers to believe that what makes people decide to hold onto and use a card has more to do with customer service and billing, Mr. Feldstein said. "I will contend that people make decisions on what cards to use and keep based on the features of the card," he said. Low-interest balance-transfer offers are driving attrition, Mr. Feldstein added, not how nice the bill looks or how accurate it is. "I know of nobody who changes their mind (about card usage) for that reason." When American Express Co. saw a decline in Optima cardholders a couple of years ago, Mr. Feldstein said, it was because the cards had fees, high interest rates, and no rewards - not because of customer service and billing, which are American Express strong points. "Customers do care about fees, rates, and rewards," Mr. Feldstein said. "That I'm positive about." Experts in customer satisfaction and retention strategies have pointed out that there are limitations in much of the research on the subject. "Satisfaction surveys are simply a poor litmus test for satisfaction," Frederick F. Reichheld, a director with Bain & Co., Boston, and an authority on customer loyalty programs, wrote in a recent paper called "The Satisfaction Trap." Bain's research has shown that 60% to 80% of customers who defected to a competitor said they were satisfied or very satisfied on a survey just prior to their defection. "Clearly, broad-based satisfaction surveys cannot be the only tool used to manage defections," Mr. Reichheld said. J.D. Power, based in Agoura Hills, Calif., mailed questionnaires in August to a targeted group of credit cardholders. There were 150 respondents on each of the 21 card issuers, which represent about three- quarters of the industry. The questions covered standard cards, gold cards, and the various value and rewards features. The 1995 study will be used to measure general customer satisfaction and as benchmarks within the three categories and for comparisons against competitors. The research firm arrived at its ratings using factor analysis, regression analysis, and indexing. J.D. Power plans to repeat the study annually and may look at the processing side of the business in the future, said Mr. March, who works at a company office in Westport, Conn. The firm also is marketing in-depth reports to each of the 21 issuers to examine cardholder behavior and segmentation. The analysis would show issuers their strengths and potential points of improvement. "The ultimate message is you should look beyond price or interest rate to retain those customers," Mr. March said. Warner Steffen, executive director of marketing in Unysis' U.S./Canada division, said this may be a message that credit card marketing executives may in fact overlook. "The survey's quite valuable from that aspect." And Stephen Szekely, vice president of Payment Systems Inc., said a number of people have attempted cardholder satisfaction surveys before, but they were not effective. "The biggest problem is that 98% of the people who have cards never have a problem, so satisfaction is not an issue." Power's survey sounds valid, he said, because it found those cardholders who believe the card should function effectively as a payment device with zero hassles. "That's real important" to about 40% of cardholders who are inert, he said. Another 60%, however, will respond to rates, rewards, and affinity programs. "AT&T has made a high-quality effort - people should be satisfied," Mr. Szekely said. Also, the company has made a point in its advertising to promote quality and customer satisfaction, he said, which customers are likely to respond to in such surveys. "If you emphasize rate," he added, "they'll feed it back to you." Robin Kirch, an AT&T Universal Card Services spokeswoman, said, "AT&T has had a long tradition of using leading-edge technology and customer service and we've incorporated that at Universal Card."

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