Credit and Collections Issues for Bill-Me Offers (2,137 words)
The near-ubiquity of credit cards in the United States has lightened the burden of collection for non-financial-service direct marketers. The exception: Those who make bill-me offers are still at risk. This means that any marketer that ships merchandise before receiving payment—book clubs, music clubs, magazine publishers, collectible marketers and continuity clubs, including a burgeoning field of coffee, tea and wine clubs—runs the risk of not getting paid.
Says Douglas Harpham, vice president of sales and marketing for North Shore Agency, a Great Neck, NY, collection agency, "Bill-mes are just as common as they ever were."
Adding a bill-me payment option to a mailing is a proven response booster, but it plays havoc on pay-up on the back end. Why? Typically, introductory offers are very soft ("Try it free at our risk!") in an attempt to maximize response. Any free gift, sweepstakes or special offer is likely to attract consumers who are in it for the freebie.
Marketers can only determine the balance between response and pay-up by testing offers and creative, including:
• Using a slightly harder wording for a bill-me offer. For example, instead of "Try two free copies with no obligation," test "Receive 12 issues for the price of 10."
• Changing premium offers from "free gift with order" to "free gift with payment."
• Choosing a premium that's tightly connected to the product.
While the right offer will improve your pay-up rate, don't rely on your offer alone to prevent delinquent accounts. Make sure you do your homework on who you mail as well.
Preventing Collection Problems
Says Bill Gossman of Advanced Software Applications, a Pittsburgh-based database company that specializes in risk management, "If you do a better job on the front end of who you mail to, there is less of a chance you're putting offers into the hands of those who aren't good risks."