All in the family

Diners Club was the first credit card of Security Bank Corp. president and chief executive officer Rafael Simpao, Jr. "It was the only card in the country then. At that time, Diners Club was issued locally by another company," he said.

Coincidentally, Diners Club was also the first credit card of son, Rafael Simpao III, after bagging his first job in a stockbrokerage firm. "I knew my dad used his Diners Club as his card of choice and I wanted one of my own, not a supplementary card. So, I filled out the application form but I didn’t course it through my dad," he said.

The younger Simpao is the current brand manager of Diners Club, which is locally issued by SB Cards Corp. (the new name of Security International Card Corp. effective this month). SB Cards is a subsidiary of Security Bank, which has held the local franchise of Diners Club since 1980.

Market mix

"We are developing the second generation of Diners Club cardholders to expand our market base," said SB Cards president Belen Lim. "They are the ideal cardholders because they are normally revolvers."

Revolvers are cardholders who do not pay at once and in full when they receive their billing statements. Instead, they pay the minimum amount and agree to pay a monthly interest on the balance amount that is revolved.

"The secret is to find revolvers of good credit standing. Chances are, if the father or mother is a good payer, then the son or daughter is. If a member of good standing refers a friend, then that friend is also good credit risk," said SB Cards business development group head Catalina Papa.

Revolvers currently make up 60% of Diners Club’s current cardholders base.

"Second generation members supplement our traditional high-end businessman or corporate executive market without sacrificing the prestige and status that automatically comes when flashing a Diners Club card," said the younger Simpao. "For our younger members, the card is aspirational."

The minimum annual income requirement for a Diners Club card is P180,000 instead of the industry norm of P120,000. This translates to a 50% increase in disposable income. Given its high-end positioning, the marketing of Diners Club has historically been selective and highly successful. It has the highest spending level per cardholder at over P7,000 a month. It has one of the lowest past due levels in the industry. It is also highly profitable despite having a cardholders base below the 250,000 breakeven industry level.

SB Cards does direct mailers to Security Bank clients and to the senior management teams of the country’s top 1,000 corporations. Each letter is signed by the bank’s president and is accompanied by a pre-approved card. The card’s credit limit depends on a combination of factors such as how much business (deposits and loans) the potential cardholder has with the bank and his credit rating within the banking industry.

"Our member-get-member referrals have been very effective in getting new cardholders. Half of these referrals are approved for membership compared to the 20% approval rate of other forms of solicitations," said Papa.

Value-added

The referral system also speaks well of cardholder satisfaction.

SB Cards is currently profiling and matching its list of merchants with the needs of Diners Club cardholders. "We are now placing more focus on retail chains and high-end restaurants for better coverage and efficiencies nationwide," said Papa.

Aside from the usual incentives such as rewards points, Diners Club offers a few of its own such as access to accredited airport lounges all over the world as well as house, travel, and motorist assistance to all cardholders. The credit limit has also been increased by 50% across-the-board with the implementation of a separate credit limit for regular purchases and for big-ticket purchases such as appliances.

"We are one of only two cards which offer dual billing, which means our members can choose to pay dollar charges in either dollar or pesos, whichever is cheaper for them," the younger Simpao said.

Cardholders also receive their statements of account within six days after cut-off. "We send the statements early as an added service. Our members realize they still have 21 days from the receipt of the statements to pay their bills but the early reminder to set aside money is appreciated," said Lim.

Ironically, the initial phase of developing the younger market is expected to be a zero-sum game for SB Cards. The resulting bigger cardholder base will be offset by a projected drop in average spending per cardholder from P7,000 per month to P5,000.

"We are in the process of purging both our merchant base and our cardholders base. What we want are active members who use Diners Club as their card of choice," said Security Bank’s Simpao. "The only way to grow is the right way."

For SB Cards, that means pushing brand equity and brand recall this year.