Advertising credit products and loans.

• Author: Turner, Jim
• Position: Direct Mail Essentials - Direct mail is most effective when selling loans

While direct mail is effective for advertising many types of financial services, it pays off the most when selling loans.

Credit cards and home-equity credit are the most frequently promoted products in bank-sponsored direct mail. (Among regional banks using direct mail, 32 percent use it to promote credit cards; and, 88 percent, home-equity credit, according to the 2000 "Bank Marketing Survey Report" published by the ABA.) The reason is that these products have high profit margins and enjoy high response rates.

Credit Cards: These are the perfect products for selling by mail. The product is easily explained in a single mailing, and the response device--the application--fits easily into the mail package. A single mailing to the consumer can complete the sales cycle. When approved, the product itself--the card--can be delivered by mail.

To sell credit cards, banks target consumers with the appropriate income and desirable spending patterns. For example, solicit middle-income households with several children, as they are more likely than a higher-income single person to carry a card balance.

Home-Equity Credit: This product has a high profit margin and can be targeted precisely. You can easily find lists of homeowners (eliminating renters) and further refine these lists by making selections based on income or home value. Depending on the state and county you are mailing to, you may be able to purchase lists that identify further information based on public property-tax records, such as any existing home-equity credit loan on the home or perhaps the first-mortgage balance.

Home-equity credit can be sold with a variety of offers: a teaser fixed rate for a period of months before going to a variable rate; a rebate of interest expense (for example, first month's interest free up to a specified amount) or simply a competitive fixed or variable rate. You can handle the application process either by including one (check with your compliance officer for disclosure requirements) or by allowing the consumer to apply by telephone. Whichever offer and application method you choose, this product can produce very profitable mailings.

Mortgage Loans: Although the number of households that are potential targets for mortgage loans is typically smaller than that for home-equity credit, the lower mortgage rates in recent years offer a great opportunity for selling...