The number of direct mail solicitations keeps going up, while response rates continue to decline, a consumer survey revealed.

The first quarter of 1995 yielded 723.2 million solicitations with a 1.2% response rate, said BAI Mail Monitor, a Tarrytown, N.Y.-based firm that tracks direct-mail credit card offers.

This follows a record-breaking 1994, when more than two billion solicitations were sent out, receiving a tepid 1.6% response rate.

Historically, response rates have hovered around 2% to 2.5%.

"Clearly the level of competition is still increasing," said Robert Skolnick, executive vice president of the market research firm.

He said the onslaught of offers would probably continue throughout the year. Some bankers have predicted as many as three billion pieces will be sent out by the end of 1995.

"It puts more pressure on issuers to make their mailing programs more efficient," said Mr. Skolnick. "Issuers must take a more segmented approach to assure that the responses they get are from the people they're looking for."

Sending so much mail is an expensive proposition for issuers. The payoff depends on cost structures of the banks and their various products, said Mr. Skolnick. For example, cards with higher interest rates can afford a lower response rate.

"With heightened targeting, it's still possible to make profits," he said.

Bankers must focus increasingly on targeting smaller segments of the population "to maximize the quality of the response," he added.

Mr. Skolnick said cobranded offers underperformed noncobranded, attracting only .09% of solicited consumers.

"Issuers need to pay attention as they develop those programs," he said. "They must have a compelling value proposition that is clearly communicated."

He said low-rate cards don't necessarily attract a higher response rate. "I have never seen great rate sensitivity in the general population." He said surveyed consumers say rates are critical, but their behavior doesn't reflect that attitude.

Although the percentage of responses compared with pieces mailed has been low, the actual number of responses is still very high on a historical basis, said Mr. Skolnick. "Many new cards are being acquired, and direct mail is continuing to generate the bulk of new accounts by the millions."

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