Premiums - Freebies from the Financial Side (1,436 words)
The standard technique that credit card issuers are using is as follows. On the outer envelope, the premium is pictured or mentioned to entice the recipient to take a closer look. Then, inside, the premium is offered if 1) the recipient sends for the card and 2) the recipient uses the card before an imposed deadline.
Why make it a two-step process? Once the card is used, it will most likely stay in the consumer's wallet, where he or she is more likely to use it again. Also, it discourages tire kickers from getting the card just to get the premium, and then never using it.
One exception to this rule is an offer from Bank One to a potential Visa card recipient. For simply receiving the card (as far as we can tell from reading the fine print), the recipient can receive a miniature alarm clock. Though the actual cost depends on the type and quantity, generally speaking, this premium is not a costly investment to acquire a new customer.
However, most credit issuers offering larger premiums and incentives to potential cardmembers require the customer to use the card before the premium is sent.
Novus, Bank One and FIRST USA
Here are some examples of how credit card marketers have been using a wide array of premiums in recent months.
Novus Financial, the company that issues both Discover and Bravo cards, offers several different premiums to encourage customer acquisition and card activation. A Lands' End apron and a calculator are two premiums given to customers who activate the Bravo card. Why should Bravo offer a premium? Since the Bravo card is a lesser known card than Visa, MasterCard or even Discover, a premium might be just the right nudge to introduce the card and encourage a recipient to get it.