COLUMBIA, MD: Friday, October 10, 2003—When a national credit card company realized it stood to lose millions of dollars in bad debt, it decided to get creative about its collection process. So it sent hand-addressed greeting cards to its unpaid customers saying it understood they were having a tough time and would like to work with them to find a solution. The result: a 10,000 percent return on investment with millions of dollars collected from customers who felt the credit card company was sympathetic to their plight!

With credit managers facing new economic challenges every day, scores of major companies are looking for new ways to retain customers as well as collect what those customers owe. The credit card company adopted a strategy espoused by Hallmark Loyalty Marketing, a division of Hallmark Cards, Inc., called Emotion Marketing. The strategy, says Robin Schauseil, President of the National Association of Credit Management (NACM), recognizes the value of loyal customers-even those who can't pay their bills.

Ms. Schauseil said: "In today's business environment, it is essential for business credit managers to find unique ways to address their unpaid debt. The Hallmark strategy opens the door for creditors and their customers to address credit problems on a more personal level. Recognition that there is a shared problem will ensure a mutually beneficial outcome."

Emotion Marketing recognizes that strong employee and customer relationships are the foundation to a successful enterprise. The strategy is simple: by showing them you care, they will remain loyal. Hallmark's program uses a system called the ValueStar to give companies a way to assess how well they are perceived by customers based on five areas of value. Those five areas are: equity, product, experience, money and energy.

"NACM believes that building solid and lasting business relationships is key to profitability. With business credit problems, especially, it is critical to explore new and unique ways to ensure customer retention and loyalty. Hallmark certainly presents us with an interesting opportunity," Schauseil noted.

The fact is, said Scott Robinette, President of the Hallmark Loyalty Marketing group, people are emotional about money. "The situation where people are overdue and making payments is even more emotional. How a company communicates to collect money-without alienating the customer from future business-is critical to keeping that customer loyal," added Robinette. This is the key underpinning of the emotional marketing strategy. "Emotion marketing has the potential to recognize the relationship between a company and a customer," Robinette said, adding, "A consumer wants to give loyalty, but doesn't necessarily believe a company is earning that loyalty-and the key driver between satisfaction and loyalty is if they think the company cares."

Hallmark commissioned a study in June asking 1,000 consumers whether companies in three industries-retail, financial services and telephone and telecommunications-demonstrate they care about their customers. Caring was defined as whether a company knows your preferences and values your business. A majority, 55 percent, rated retail companies as excellent or good; 47 percent rated financial services companies as excellent or good, with 51 percent rating them as fair or poor. The lowest rating went to telephone and telecommunications companies that were rated fair or poor by two-thirds, or 67 percent, of their customers; 30 percent rated them as poor.

Securing a customer's loyalty is the key driver of any emotion-marketing program. Robinette cautioned, however, that to ensure success, there needs to be a company-wide commitment to the concept of emotion marketing. "Companies that invest in their culture, equip people with the resources they need to meet the moment of need for a customer," he said.

Schauseil agreed, noting that business credit managers are the front line contact between a customer-and their willingness and readiness to pay their bills. Business credit managers equipped with the right tools, the right communications vehicles and training can create win-win outcomes for the customer and their company.

Discover Financial Services has worked with Hallmark Loyalty for four years now, and has been extremely successful in recovering outstanding invoices. Cathy Edwards, a Discover spokesperson, described Discover's program: "When a credit card customer falls behind on payments, most card companies take an aggressive stance. But Discover Card acknowledges that when good Cardmembers miss payments, the reasons are often outside their control. Instead of a terse letter, they receive a compassionate letter and in some cases, an actual Hallmark card, acknowledging that life takes unexpected turns, with a handwritten note offering to help. Cardmembers who call Discover Card receive business credit counseling and can qualify for a special payment plan. Being treated with respect and understanding by Discover Card can encourage the loyalty of Cardmembers long after their temporary problems have passed."

Can emotion marketing work as well for business-to-business relationships as it has for business-to-consumer ones? Robinette thinks yes. The key principles of customer loyalty apply to both, he said. "If I am representing a business, I have more of a rational side to justify; at the same time, I have to think about the business relationship. How important is trust? You are more accountable as a business." He noted that emotion-marketing programs could be tailored to fit a specific company's practices.

At a time when competition for dollars is fierce, when market share for almost any company in almost any industry is shrinking, emotion marketing gives companies an even chance to win the hearts and minds of their consumers-not just their pocketbooks. "The trust and emotional relationship you build with your customers is critical to keeping them in your fold-and paying their bills over the long haul," Schauseil said. "Embracing concepts such as emotion marketing lets business credit managers think outside the box to create, nurture and sustain long-term and profitable business relationships. This is key to our future as an industry."

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The National Association of Credit Management (NACM), headquartered in Columbia, Maryland supports more than 25,000 business credit and financial professionals worldwide with premier industry services, tools and information. NACM and its network of Affiliated Associations are the leading resource for credit and financial management information and education, delivering products and services, which improve the management of business credit and accounts receivable. NACM's collective voice has influenced legislative results concerning commercial business and trade credit to our nation's policy makers for more than 100 years, and continues to play an active part in legislative issues pertaining to business credit and corporate bankruptcy.

For more information contact Norma Heim at 410-423-1842.