Credit cards for preschoolers?

I have a daughter named Skye. A few years ago, I was planning a family trip to England, and I signed her up for United's frequent flier program, Mileage Plus. A few months after we returned, the junk mail started arriving. I knew when I signed her up that she would get some junk mail — Mileage Plus statements, promotions and such.

What I didn't expect was this:

This is a credit card offer from Chase. Skye has gotten at least 30 of these fairly thick envelopes in the last year alone.

Many people might ask, "What's the big deal? We all get lots of credit card offers."

Well, the big deal is that Skye is three years old. United knows that she's a preschooler; they required her date of birth when I created her Mileage Plus account. Somewhere in the information chain between United and Chase's bulk mail department, that information was ignored.

Why is this bad? Here's a short list.

1. It erodes the perceived quality of both United and Chase. To be blunt: What idiot sends a credit card application to a three-year old? Not the best example of competence of either of their parts.
2. It must cost a lot of money. Let's say that each of these mailers cost about 50 cents — that would be $15.00 spent in the past year trying to get credit card business from a three-year old. I can only imagine how many similar dead-end leads are in their mailing lists. For companies in such dire financial straits this seems like money poorly spent.
3. The environmental impact of all of these wasted direct mail pieces has to be significant as well. Think of the trees used to make the paper, and the CO₂ emitted getting the offer from Chase to my mailbox.

How did things get this way?

I'll take a guess. Chase knows that credit card offers have a notoriously low response rate, so "more offers = better," right? Likewise United probably gets compensation from Chase based on the number of new sign-ups, so "more = better" for them as well.

What is to be done?

Either company could say "more targeted offers = better," and do some coarse data mining to eliminate offers to people under 18.

Better yet, the business process could be designed to encourage pre-qualifying the data. Perhaps a compensation model that pays more for per respondent as the overall response rate increases? That would get both parties to spend time improving the quality of the leads, while giving each the freedom to figure out what works best.

The next time you're asked to design a new service, or develop a new product, ask yourself this, "Is there a way to use the information I already have to improve quality, while preventing negative impacts to our reputation, money or resources?" Or, put more simply, "How do I prevent sending a credit card offer to a 3 year old?"

Filed under: Service design

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