Visa U.S.A. says banks seem to be improving their use of branches to sell credit cards.
Last month it began selling to its members the results of its second study of cross-sales through branches, a follow-up to one it did in 1998. The data in the second study, gathered throughout last year, showed a 62% increase in the number of card accounts opened through branches. The same banks were polled both years.
By Visa's calculation, the average bank opened 7.6 card accounts a month at each branch last year. And that figure, multiplied by hundreds of branches over the course of the year, represents a steady chunk of business, the card association says.
"That's actually a very good number," said Sarah Thompson, a vice president in its consumer credit card division. "It starts adding up."
To generate new accounts, issuers tend to rely more heavily on direct mail and telemarketing than they do on branches. But Visa said that according to its 2002 study, the average customer acquisition cost is $80 through a branch versus $100 across all channels. "That's also accompanied by fewer credit losses and lower attrition." Ms. Thompson said.
Accounts originated in branches can prove exceptionally strong in terms of credit quality, she said. Factor in the growing do-not-call lists and the industry's reduced usage of teaser-rate solicitations, and branches start to look even more attractive as a way to pick up the slack. "This is certainly an opportunity."
Between 35% to 40% of cardholders also have checking accounts with their issuer, according to Visa. The low figure speaks to the success of monoline companies - and to the opportunities for banks that have both cards and branches, Ms. Thompson said.
Visa would not specify which or how many member banks participated in the study, except to say that the number was somewhere between 10 and 50. Because most community banks sell cards as agent banks for bigger issuers, they were not included in the study.
The banks that did participate said they had boosted their numbers by training branch employees to sell cards, promoting cooperation between the branch and credit card businesses, and running in-branch promotions. Visa recommends that branches run at least three card promotions a year, including campaigns with holiday or back-to-school themes.
Card offers in the branch must be as good as the solicitations that customers get in the mail, Ms. Thompson said. Branch visitors should be able to select from an array of offers, but employees should be trained to push one particular card during a given period.
Visa came out with similar advice after the 1998 study, and Ms. Thompson said that the banks that followed it had improved their numbers. The highest-performing participant in the 2002 study posted 14.7 new accounts per month per branch.
Eric J. Rajendra, a vice president at Electronic Data Systems Corp. in Plano, Tex., who specializes in retail banking, said that branch employees who know their customers personally have an edge over remote channels that rely on automated data mining. People in the branches "can know pieces of information that may never be found electronically."
