The biggest problem a cardholder might have with a Diners Club membership could be canceling it.

The specialty card has been placing particular emphasis on retaining its affluent cardholders, rather than acquiring new accounts, in an attempt to cut costs and keep pace in an increasingly competitive industry.

Citicorp's Diners Club Inc., Chicago, has formed a department to look after possible defectors in its card base. Started less than a year ago, the retention department at Diners Club monitors members and offers them incentives before they leave.

"We decided to formalize the program. We've always been interested in the dynamics of retention," said Walter Sanders, vice president of corporate affairs for Diners Club. "Often we're incredibly successful in converting someone who calls in; we reiterate the many benefits to them."

Mr. Sanders, who would not specify a percentage, said that the reconversion rate is "higher than the industry norm."

Randy Petersen, editor and publisher of Inside Flyer magazine, said that Diners Club's retention efforts are among the most extensive in the industry.

"What's unique about them is that they don't wait to lose a customer to start retention efforts. They watch turnover and spending that might point to a retention problem in the future," Mr. Petersen said.

"There is a better chance of maintaining a customer while the account is active than to get him back once he has canceled," Mr. Petersen added. "With other cards, the retention starts when a member has canceled."

As part of its retention process, Mr. Sanders said that Diners Club monitors spending levels and the timing of reward points redemption. He added that the process continues when a customer calls in to cancel a membership and can last up to 90 days after the card has been canceled.

"We understand the retention dynamic and we'll work hard to make sure we keep the right kind of card member," he said, alluding to frequent business travelers.

Analysts say that a customer retention program is indispensable in the credit card industry, and the Diners Club program is in many respects not unusual. However, consultants say it scores high in its efforts, which are seen as a costly.

"More and more people are using the back end, the attrition end, to source and get back relationships," said James Accomando, president of Accomando Consulting Inc., Fairfield, Conn. "Diners Club is a very pricey product, so they will watch the back door very closely."

Mr. Accomando, who has worked as a consultant for Diners Club International EMEA, said that the high value of the rewards program could drive the card's price up and hurt its competitiveness.

"Because their customer base is shrinking and attriting, they try to offer the best in airline benefits and travel programs and restaurant dining," Mr. Accomando said. "In the long term, it tells you that their prices will go up."

Diners Club, according to Faulkner and Gray's Card Industry Directory, had a 1995 charge volume of $22 billion. It reported 6.8 million cardholders and a 2.8 million merchant acceptance base worldwide.

This works out to about 33% to 50% more charge volume than the standard MasterCard or Visa user, or about $3,200, according to Robert B. McKinley, president of Ram Research Corp., Frederick, Md. He said that the average charge volume for Visa and MasterCard is about $2,000 per card.

Mr. McKinley also pointed out that the voluntary attrition rate in the industry for the past five years has been about 8%. The attrition rate for Diners Club was not available.

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