Financial services marketers are about to have a few of their most cherished myths debunked.

Many believe, for example, that their cost per account acquisition (CPA) will go down if they mail less based on traditional response modeling. But that’s not the case, at least not in the home equity business, according to a new study. On the contrary, high-volume mailers that tailor their messages invariably do better.

The research, now half completed, was conducted by Rosetta Marketing Strategies Group with the Direct Marketing Association’s Financial Services Council. Preliminary results concern home equity lines of credit (HELOC).

The study had four HELOC participants: NationalCity, Key, Wells Fargo and SunTrust. Results from an insurance group were not shown, although they “tended to confirm the HELOC hypothesis,” said Robert Tetenbaum, executive vice president of First Manhattan Consulting Strategies Group, speaking during the Direct Marketing Association’s annual conference in October.

Among four companies cited, the CPA ranged from $20 to $159 and lifetime value from $1,364 to $4,569. Three out of four cited were above $3,000. Firms that employed cross-selling as their acquisition strategy did better than those that did not (by 23-1). The largest-volume mailer achieved a CPA and loan-size yields roughly equal to those that mailed less.

On gains charts, the traditional curve is that “the more you mail and the deeper and more frequent, the higher the CPA,” Tetenbaum said.

But that’s a myth. “Actually, the curve is not as steep as generally believed,” he added. “This enables greater frequency of mailing, and deeper mailing.”

Tetenbaum noted that the HELOC industry is exactly where the credit card business was 14 years ago. In those days, the top 10 credit card institutions had 53% of the market. Last year, the top 10 controlled 82%. And the top three — Chase/Bank One, Citigroup and MBNA — have snared 51%.

In contrast, the HELOC industry has “not cracked the code in prospecting.” It’s just as fragmented as the credit card business was in 1990. But that could change, and with good reason: The profitability of HELOCs is 35 to 40 times that of credit cards.

It’s simple. The average cost of an acquired account is $30, he said. A typical mailing piece costs $1. The average HELOC account is worth $4,000.

His conclusion? “We could mail huge amounts more than are being done today. The discoverers of the winning formula for prospect acquisition will dominate the HELOC business in this decade.”

The full study, including insurance results, will be released in February, said Jeff Gundersen, head of the DMA Financial Services Council.

Financial services marketers are about to have a few of their most cherished myths debunked.

Many believe, for example, that their cost per account acquisition (CPA) will go down if they mail less based on traditional response modeling. But that’s not the case, at least not in the home equity business, according to a new study. On the contrary, high-volume mailers that tailor their messages invariably do better.

The research, now half completed, was conducted by Rosetta Marketing Strategies Group with the Direct Marketing Association’s Financial Services Council. Preliminary results concern home equity lines of credit (HELOC).

The study had four HELOC participants: NationalCity, Key, Wells Fargo and SunTrust. Results from an insurance group were not shown, although they “tended to confirm the HELOC hypothesis,” said Robert Tetenbaum, executive vice president of First Manhattan Consulting Strategies Group, speaking during the Direct Marketing Association’s annual conference in October.

Among four companies cited, the CPA ranged from $20 to $159 and lifetime value from $1,364 to $4,569. Three out of four cited were above $3,000. Firms that employed cross-selling as their acquisition strategy did better than those that did not (by 23-1). The largest-volume mailer achieved a CPA and loan-size yields roughly equal to those that mailed less.

On gains charts, the traditional curve is that “the more you mail and the deeper and more frequent, the higher the CPA,” Tetenbaum said.

But that’s a myth. “Actually, the curve is not as steep as generally believed,” he added. “This enables greater frequency of mailing, and deeper mailing.”

Tetenbaum noted that the HELOC industry is exactly where the credit card business was 14 years ago. In those days, the top 10 credit card institutions had 53% of the market. Last year, the top 10 controlled 82%. And the top three — Chase/Bank One, Citigroup and MBNA — have snared 51%.

In contrast, the HELOC industry has “not cracked the code in prospecting.” It’s just as fragmented as the credit card business was in 1990. But that could change, and with good reason: The profitability of HELOCs is 35 to 40 times that of credit cards.

It’s simple. The average cost of an acquired account is $30, he said. A typical mailing piece costs $1. The average HELOC account is worth $4,000.

His conclusion? “We could mail huge amounts more than are being done today. The discoverers of the winning formula for prospect acquisition will dominate the HELOC business in this decade.”

The full study, including insurance results, will be released in February, said Jeff Gundersen, head of the DMA Financial Services Council.