Credit Card Switcheroo

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 09-Dec-2004 07:32 AM
The New York Times reported that some MNBA Corp. customers had a surprise in store for them: The company switched their credit cards from Visa to American Express after it gained approval to partner with American Express. According to the story, the switch—similar to phone company "slamming"—is not illegal.

It sure doesn't strike me as the way to win customer loyalty. Major issuers, like the University of California Alumni Association, were surprised to find that their members' cards were switched over.

The story notes that American Express is not accepted by the same merchants that accept Visa and MasterCard (because American Express typically charges merchants more per transaction).

The story said the customers received opt-out notices, meaning that, unless they responded and said no, the AmEx cards would be shipped to them. Well, many customers didn't respond. Surprise. Surprise. Boy, would I be angry.

Graham Hill
Guru
Member

Posted 16-Dec-2004 11:09 PM
Gwynne

This sort of thing often happens when a product manager with a numerical target to meet, for example, the number of customers who have taken up a new partner AMEX card, thinks up a marketing campaign and then looks for target customers with which to hit that target.

From a short-term financial perspective it may appear to make sense in terms of responses to the marketing campaign and campaign ROI, but from a longer-term relational perspective it almost certainly does not.

That this has publically hurt a major co-branding partner and been splashed on the news in such a negative way just goes to show how innocuous campaign decisions made by someone in marketing can have serious reputational consequences for MBNA as a whole.

That sad thing about this whole affair is how poorly thought through this particular marketing campaign seems to have been. A company like MBNA should know better than that.

Graham Hill
Independent CRM Consultant

Ugur Ozmen
Member

Posted 17-Dec-2004 04:58 AM
For sure Gwynne should be angry. This "unless they responded and said no, our offer is done" type of approach became videly accepted.
Some credit card companies are charging a monthly amount for an assistance service that you haven't any idea about. If you don't check your statement line by line, you don't discover it. When you phone them to ommit this charge, they ask you "why you do not accept such a good offer?" Your phone bill may exceed their monthly charges.
As Graham mentioned this is a short-term financial perspective, but still used by many companies.