Ronald N. Zebeck used to believe impatience was essential in a businessman who hoped to achieve rapid growth and fat profits. Since the heady days of the General Motors MasterCard introduction, which Mr. Zebeck engineered while working for the auto company in the early 1990s, he has mellowed a bit.
Not every program is going to issue a million cards in its first month, as did GM and its partner, Household Credit Services, in 1992.
Mr. Zebeck, now with Metris Cos. in St. Louis Park, Minn., will be satisfied with steady, methodical growth, and his goals are admittedly less lofty.
"This is a marathon we're in, not a sprint," he said recently.
Metris, of which Mr. Zebeck, 42, is president and chief executive officer, was spun out last year from the catalogue marketer Fingerhut Corp. Aside from credit cards, it sells card enhancement services and extended warranties for jewelry, furniture, and consumer electronics.
The company sets itself apart from other card-issuing organizations by focusing on the low- and middle-income market.
Though still relatively small, Metris has made a splash.
"Metris has grown more rapidly than we assumed it would," said Joseph LaManna, an analyst with William Blair & Co. "It's management team is very ambitious and we expect the company to be a lot bigger than it is today."
Last year, its receivables grew by 197%, to $1.6 billion. They are currently at $2.1 billion and Mr. LaManna is estimating 1997 growth will be 49%, to $2.4 billion. Credit cards produce most of Metris' profits, but the card enhancement business is showing promise as a revenue source.
In less than a year, Metris forged comarketing partnerships with two of the top 20 card issuers, Bank of America and his old friends at Household.
Industry experts say that these two deals have Metris emerging as a meaningful alternative to CUC International, the dominant provider of fee- based enhancements like credit card registration.
Metris also offers purchase protection and insurance-like products. A new subsidiary called Metris Travel Services Inc. will soon market travel packages to cardholders. It is already handling the travel benefits for the Bally's Total Fitness MasterCard, Metris' first cobranded deal.
Metris can provide services to other credit card issuers because it is not competing with them, said Mr. Zebeck.
"We think we complement card issuers because we compete for a different customer," he said.
The Metris customer typically earns between $15,000 and $35,000 a year and has little or no credit.
"Everyone chases the college student, but no one is after the high school graduate who has been working for a couple of years," said Mr. Zebeck.
Metris also targets the Hispanic and Asian-American markets, and mature consumers who have had credit problems.
More than 50% of Metris' card customers have bought at least one other product from the company. Whereas most card issuers earn profits of about $40 per account, Mr. Zebeck said Metris' potential profitability is twice as high because of the extra products it sells to customers, priced as high as $49.
"A lot of card issuers look at enhancements as a nuisance," he said. "We see them as a way to boost revenues."
Metris therefore has big plans for its marketing partnerships with banks. While it is not doing so now, Mr. Zebeck said, Metris could leverage its relationship with Fingerhut - which owns 85% of Metris. For example, banks might market mortgages or personal loans to the 30 million people in Fingerhut's data base, to which Metris has exclusive access.
"Our customers need bank-related services, products that we are not providing," said Mr. Zebeck. "The whole notion of 'I can do it on my own' is changing. There is less competition in the industry and more partnerships."
The Fingerhut connection is helping Metris in more concrete ways already.
About 40% of Metris' customers came out of Fingerhut's data base, and each time Fingerhut sends out a catalogue, Metris gets a marketing benefit.
Also, Metris' relationship with Fingerhut entitles it to continual access to information about Fingerhut's customers that can be used in tailoring marketing approaches. It can know, for example, when it is appropriate to pitch an extended service plan.
Metris started out as a vehicle to retain Fingerhut's customers, but Mr. Zebeck soon realized that Metris could attract people who had no prior dealings with the retailer. Some 60% of Metris' customers fit that description.
"We wanted to ensure Metris would not be a monoline," Mr. Zebeck said. "We started in 1994 with the game plan to be a diversified financial company. In essence, when you look at us, we are an MBNA and a Compucard, and we put a warranty company in for free."
Although some observers - and potential competitors - speculate that Metris will eventually try to attract higher-income customers, Mr. Zebeck said Metris intends to stick to its original knitting.
The lower-income focus is what gives Metris its competitive advantage, he said. Metris offers conventional credit to people who just get offers for secured credit cards from other institutions.
"We get to Citibank's customers four and five years before Citibank gets to them," he said.
Metris accordingly must manage higher-than-average credit risk. Its chargeoff rates run around 10%, but it also prices for the greater exposure. About 80% of the card accounts carry an annual fee. Interest rates range from prime plus 6.45% to prime plus 14.20%. The average initial credit line is $1,700, below the industry average.
Mr. Zebeck said he has never been prouder in his career than to be associated with Metris.
Besides General Motors, his resume includes 10 years at Citibank working on the Choice card, and five years at Advanta Corp., where he developed one of the first no-annual-fee gold cards. He is also on the MasterCard International board.
"I am finally fulfilling a wish I've had for the past 15 years," said Mr. Zebeck. "I'm issuing cards to people who weren't getting them from the traditional issuers."