Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Kevane Wong with JMP Securities. You may proceed.
Kevane Wong - JMP Securities
Just a few things. When you are looking at the guidance, it is actually staying where it was in September and October when it was really melting down. How much when you are talking about your caution here, how much is it concern about what might be versus what you are actually seeing. Are things actually getting better and you’re just being cautious about it? Also, I am sort of curious about how much is additional spending that you are putting in, sure there are a lot of pieces to move around, but I just wanted to get color on those factors for a cautionary look.
Michael R. Stanfield
On the cautionary side, I would say a couple of things. One, there is without doubt, a reduction in the new enrollments versus our expectation from ongoing clients. That is partially reflective of the reduction in new credit card issuance that is ongoing in the market. Often, our sales occur at the time of new credit card sales or shortly there after. That is definitely there and it is hurting in a small way.
Secondly, we have not yet seen any significant reduction in attrition, but as unemployment goes up and as credit tightens, we just have to anticipate that it will occur, that we have not yet seen it. With respect to decline rates which are sort of a subset to the attrition issue and a revenue issue, we have not seen a significant falloff yet. I just saw the numbers for October today and our decline rates are holding better than we expected. Both of those are good.
The other thing is we are spending significantly more on customer acquisition than we had planned at the beginning of the year. The new bounty program that we commenced with one of our clients is significant and the consumer-direct spending is higher than we expected. The consumer-direct spending is for the most part, written off as spend because it is often not trackable for purchases, what is that, for the accounting rules to be able to directly contribute the spend to a particular sale. So we write that off.
All in all, considering the world we’re in, we’re not in an unhappy mode. We’re just cautious.
Kevane Wong - JMP Securities
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