Do you want the good news or the bad news first? That’s the question that comes to mind when I look at the April financial stats on my computer screen. And, that age old question sent me on a bit of a tangent. What news DO I actually want first? Off I go to Google. There I found a white paper written by students at the University of California, Riverside that attempts to answer that question. You can read it here. Here is an excerpt that highlights the findings.
…our findings show that people who ended on a high note (i.e., with good news) felt best overall. In addition,
people who ended on a high note also perceived the set of news
most positively confirming that news order influences certain
cognitive outcomes. Regarding behavior change, our study
found that ending on a high note led people to have the weakest
intentions for behavior change and to avoid taking actual steps to
improve. Finally, providing only bad news resulted in the most
negative mood and a more negative outlook on the results, but
greater intentions and actual behavior change.
So I guess the question that now remains for me is, do I want the Barclaycard Ring readers to feel good or do I want some to feel compelled to actually change behavior? Off to the 3 thoughts…
Revenues: A New High. We reached $152K in revenues in April, which is 28% higher than our previous high point. We’ve been growing at a good rate lately and we reached new levels across all 3 revenue categories. Interest eclipsed $100K for the first time and we reached a new high in fees; $6K. Our April revenue from net purchases also eclipsed our previous high from the last holiday season. All good news. (clearing throat)
Unpaid Balances: The Bad News. Active accounts grew 15% and balances grew 16%. However, our balances that are more than 60 days late grew 34%. That total volume of balances that are more than 60 days late now sits at over $110K. About 0.5% of our balances sit in this “bucket”. We have to reserve 2x that number and any change to the size of that bucket in a given month is a change to our profitability. The balances more than 60 days late grew almost $30K last month requiring us to have a negative P&L hit, around $60K. That combined with the unpaid balances that we officially charged off resulted in an unpaid balance level of 5.3% of balances, annualized. With our effective interest rate (which is the interest rate after accounting for the grace period) of 6 .7% in April, that rate is not sustainable. The end result is that we lost $2K in profit in April.
Paperless. This topic has come up a few times recently in the community. Why does our paperless rate keep dropping? We reached a new paperless statement low, 35%, in April. I will tell you that the channel through which a member applies (for example, a website or direct mail offer) is a pretty big indicator of whether or not a customer will go paperless. It goes without saying that someone who comes to us via an online channel is more likely to go paperless than someone who joins us via offline. We have been increasingly using direct mail to invite customers to Barclaycard Ring and I believe that has something to do with the downward turn. Still, given we know we can save $5 per year, per person for the community, there should be some way we can get the word out and increase that paperless penetration.
By the way, as a quick follow up from an earlier blog, the direct mail piece with the community quotes had a lower response rate than the direct mail with the media quotes. For our next campaign we are going to test a piece with quotes from both. More to come!