Discover 2011 Annual Report Download - page 18

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Marketing
In addition to working with our credit risk management personnel on account acquisition and portfolio management, our
marketing group provides other key functions, including product development, management of our Cashback Bonus and other
rewards programs, fee product management, and brand and advertising management.
Product Development
In order to attract and retain customers and merchants, we continue to develop new programs, features, and benefits and
market them through a variety of channels, including mail, phone and online. Targeted marketing efforts may include balance
transfer offers, fee product offers and reinforcement of our Cashback Bonus and other rewards programs. Through the
development of a large prospect database, use of credit bureau data and use of a customer contact strategy and management
system, we have been able to improve our modeling and customer engagement capabilities, which helps optimize product,
pricing and channel selection.
Rewards / Cashback Bonus
Under our Cashback Bonus program, we provide our credit card customers with up to 1% Cashback Bonus, based upon
their spending level and type of purchases. Customers earn 0.25% on their first $3,000 in annual purchases and 1% once their
total annual purchases exceed $3,000. Warehouse purchases (those made at select warehouse clubs, wholesale distributors,
discount stores and their affiliates) earn 0.25%.
Customers can choose from several card products that allow them to earn their rewards based on how they want to use
credit, as set forth below.
• Discover More card offers 5% Cashback Bonus on purchases up to a specified amount, subject to certain limitations,
in large retail categories such as gasoline, restaurants and department stores that change throughout the year, and up to
1% unlimited Cashback Bonus on all other purchases.
• Discover Motiva card provides customers with Cashback Bonus for making on-time payments and up to 1% unlimited
Cashback Bonus on all purchases.
• Miles by Discover customers receive two miles for every $1 on the first $3,000 in travel and restaurant purchases each
year and one mile for every $1 on all other purchases.
• Escape by Discover customers earn two miles for every $1 on all purchases. This card has a $60 annual fee.
• Discover Open Road card customers can earn 2% Cashback Bonus on the first $250 in gas and restaurant purchases
each billing period and up to 1% Cashback Bonus on all other purchases.
• Discover Business card offers 5% Cashback Bonus on the first $2,000 in office supply purchases, 2% Cashback Bonus
on the first $2,000 in gas purchases each year and up to 1% unlimited Cashback Bonus on all other purchases.
Cardmembers can earn 5-20% Cashback Bonus at over 200 top online retailers when they shop directly through our
online shopping portal. Miles by Discover customers earn double miles for their purchases through our online shopping portal.
Customers who are not delinquent or otherwise disqualified may pay with Cashback Bonus at select online retailers in any
amount. They can redeem their Cashback Bonus in any dollar amount for (i) brand-name merchandise with free shipping at
point-of-sale at select merchants such as Amazon, (ii) merchant partner gift cards (starting at $20) that turn their Cashback
Bonus into larger rewards, (iii) Discover gift cards or (iv) charitable donations to select charities. For customers who prefer
cash, Cashback Bonus can be redeemed starting at and in increments of $50 in the form of a statement credit or direct deposit
to a bank account.
Miles by Discover customers who are not delinquent or otherwise disqualified may pay with miles at select online
retailers in any amount. Miles can also be redeemed for brand-name merchandise with free shipping at point-of-sale at select
merchants such as Amazon, travel credits starting at 10,000 miles, partner gift cards starting at 1,000 miles, Discover gift cards
starting at 5,000 miles, cash in the form of statement credits or direct deposit to a bank account starting at 5,000 miles or
charitable donations starting at 5,000 miles.
Fee Products
We market several fee-based products to our credit card customers, including the following:
• Identity Theft Protection. The most comprehensive identity theft monitoring product we offer includes an initial credit
report, credit bureau report monitoring, prompt alerts that help customers spot possible identity theft quickly, identity
theft insurance up to $25,000 to cover certain out-of-pocket expenses due to identity theft, and access to
knowledgeable professionals who can provide information about identity theft issues.
• Payment Protection. This product allows customers to suspend their payments for up to two years, depending on the
product, in the event of certain covered events. Different products cover different events, such as unemployment,
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