INTELLIGENT TARGET MARKETING NEWSLETTER

VOLUME 15 ISSUE 3 FALL 2016

Understanding Acquisition Models: Cloning Model vs. Response Model and What’s Best SEAN MULVANEY, CFMP, VICE PRESIDENT – PRODUCT DEVELOPMENT

For the acquisition of new customers, it is vitally important to identify which neighborhoods and which households to target and which neighborhoods to avoid all together in a branch footprint—even if a good prospect has been identified. There are two popular models that can be extremely beneficial in the process, if used correctly.

With the introduction of sticky products, onboarding/cross-sell, and most institutions’ desire to gain more share of wallet, customer and household attrition rates have slowly started to creep down. Meaning fewer prospects are in transition looking for a new financial institution.

Typically, acquisition strategies are very expensive and require a large commitment from a financial institution. Acquisition strategy spends are also the only form of mass media that is scrutinized down to the last penny/cost per net new account because it is the only form of mass media that is virtually 100% trackable.

But if done correctly, these activities can equate to a 15%-50% lift over a baseline or a 60%-110% lift over a non-mailed control in new retail checking accounts, which is matched by no other form of media.

A third party data provider would then append roughly 1,000 different data characteristics to these customers and identify the attributes they all have in common. These data elements range from affluency data to response data, hobbies, interests, and even philanthropic data. These data elements are then appended to prospects within a defined radius of each branch for marketing via direct mail.

Keys to Successful Acquisition Programs

There are 6 keys to a successful acquisition program

1. Science

2. Frequency

3. Product

4. Offer

5. Prospect

6. Sales Culture

This article focuses on the Science and identifies which modeling process would best suit the situation.

Continued on page 2 …

Pros of a Cloning Model• Identifies the right prospect• Limits mail volume• Hopefully drives high account

quality

Cons of a Cloning Model• High acquisition cost per

account• Increased postage cost = higher

per piece cost• Decreased response rate • Lower net new accounts

Two Types of ModelsCloning Model: The process of a cloning model (and all models) should start with current customers or a subset of current customers viewed as ideal or the most profitable.

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Response Model: Similar to the cloning model, this process starts with current retail checking account households. These households are then analyzed at a carrier route or zip+2/zip+4 level.

Skip-A-Payment: Everyone WinsTIM BERGER, SR. VICE PRESIDENT

Pros of a Response Model• Efficient – low acquisition cost• Low postage rate = low per piece

cost• Higher response rate• High net new accounts

Cons of a Response Model• Drives high and low preforming

prospects• Limits targeting

Understanding Acquisition Models: Cloning Model vs. Response Model and What’s Best

For this model, the group of households is then looked at for many different characteristics including (but not limited to) market penetration, distance to branch, recency of activity in the last 3, 6, 9, and 12 months, competitor location, and drive/commute times.

Many financial institutions are already using the “Skip-A-Payment” promotion to meet their customer’s need and improve their bottom-line.

In return for a small fee, customers can defer a consumer loan payment for a month (in November, December, or January), freeing up money for the holiday season. For the customer, the obvious benefit is having less strain on their finances during an already “wallet crunching” time of year. Instead of making their usual loan payment for the chosen month, that money could be

used toward Christmas gifts, decorations, or even holiday travel plans.

How It WorksThe process itself is very simple. Those

consumer loan customers with good loan payment records and with terms that still have several months remaining and monthly payments that are much higher than the deferral fee are the best prospects for the promotion.

For the financial institution, the three primary benefits are:

1. Customer goodwill. The customer will be thrilled to have the extra money

for the holiday season.

2. Fee Income. For states that allow a fee to be charged; legal/compliance should be consulted.

3. Loan extension. This results in more accrued interest.

Tiered Payment ScheduleOne way to truly maximize the

Return on Marketing Investment (ROMI) is to have a tiered fee schedule, with customers that have a higher monthly payment being charged a higher deferral fee. With this type of tiered fee schedule, a customer with a $300 payment is more likely to pay a $35 fee, while a customer with a $700 payment would likely be agreeable to pay a $55 fee.

A Success StoryOne WordCom client who rolled out

this program experienced outstanding success. They mailed the offer to 29,000 loan customers. 2,800 customers took them up on the offer to defer a payment and the financial institution made just under $100,000 in revenue. This equates to a 314% ROMI and 2,800 happy customers. The Skip-A-Payment promotion was very successful because… everyone won.

The “areas” are then ranked from the very best to the very worst in a given radius. This makes it easier to identify the point at which it is no longer still efficient to mail deeper into the model.

Many different acquisition companies typically specialize in one of the two processes outlined above, and some will claim their cloning model takes into account response data. But the only way to truly have the best of both worlds or “have your cake and eat it too” is to engage a partner that will truly run both models to maximize mailing results.

Continued from page 1

Consumers are always looking for new ways to stretch their budget dollars, especially during the expensive holiday season. There is a proven program that will help them achieve their goal and also earn income for the financial institution.

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800-822-0622 • 860-875-7373 • www.wordwom-inc.com

Life EventTriggers

Life EventTriggers Life Happens...Be There For Your

Customers When It Matters

TRIGGER ALERTS INCLUDE:

• 3 Phases of a Household Move

• Newly Married

• Newly Single

• Birth of a Child

• Emerging Collegiate

• Emerging Professional

• Empty Nester

• Retiree

• Death

Life event data is aggregated from over a thousand

publicly available sources and delivered with a match-

rate confidence of 95%.

WordCom’s Life Event Trigger Monitoring program enables financial institutions to connect with customers when key events happen in their lives.

• Approximately 12-15% of your customer base annually will experience one or more of the life events we monitor

• These life events could lead to attrition, or open the door to the sale of additional products and services

• Simply provide a monthly MCIF file and WordCom will automatically monitor and report on the 13 life event triggers weekly

• “Positive Pings” (flagged households) will be analyzed and appended with a value-indicator to aid in customer interaction

• Positive Pings are provided each week so branch/call center personnel can contact customers (scripts provided) in a timely manner. Email and direct mail can also be used to support customer interaction

• Quarterly Performance Reporting for all triggered households, such as:

• Ping Report – Trigger Code Analysis

• Call Report – Calls made, data gathered

• Cross-sell – Products/Services sold post-ping

• Attrition Report – Household retention post-ping

• ROI – Overall program impact

• And more...

Why Customers Leave • 29% experience a life event

• 27% are dissatisfied with their product fit or related fees

Nearly all depart in silence, and much of this loss ispreventable.

51 million U.S. households will have a life-changing event happen annually

Start connecting with customers now!

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Sales tracking is the critical last step in a marketing program that can help prove the success of the program (or lack of) and provide insights for future changes. But the tracking process can be done in a number of different ways and not all will result in an accurate matching.

Preparing a tracking report for a customer mailing typically allows for matches to be identified using a household key or customer number. However, not all banks have MCIFs or CRMs that household data, so matching on these key fields isn’t always possible.

Additionally, when conducting prospect acquisition mailings, there isn’t a household key to match on, resulting in the need for an address match.

Address MatchingUnfortunately, all addresses

aren’t perfect and frequently can’t be used “as is” to match. An address can contain punctuation, be abbreviated, or mis-keyed. All of these would result in the potential for a mismatch when trying to do a one-to-one match.

As a result, additional tools are needed to aid with this process. WordCom’s

3. Address and name matching: A 17-step proprietary matching logic that leverages an algorithm to look at full name and address, last name and address, last name in a given zip+2 and last name in a given zip+4.

Both address-matching methods also start with using BCC’s Mail Manager 2010 to standardize the addresses on the

new account file and original mail file. This allows for addresses to be cleansed before the matching process starts.

Using multiple matching techniques to identify account openings between a file of new accounts and an original mail file yields the most accurate results. It’s paramount that the process identifies the greatest number accounts with the highest level of precision… after all, the success of the campaign and the trust of whomever is reviewing the results depend on it.

The Future Depends on the Past

The only way to get more money for future marketing activities is to make the most of the current marketing dollars. In other words, “the proof is in the pudding.” If those current marketing dollars are used to target effectively and meet/exceed the goals of those marketing initiatives, getting money for future endeavors becomes much easier.

Measuring a Marketing ProgramCORY LEIPHART, AVP ANALYTICS & DATA SERVICES

method utilizes three variations of matching:

1. Household level matching (where applicable): When customers are involved and a household key is provided, this key field offers a precise one-to-one match.

2. Address only matching: Using BCC’s Mail Manager 2010 Enhanced Merge/Purge, records are marked between the two files (new account file and original mail file). This software can detect slight variances in the address that might otherwise identify that it’s not a match, when it actually is.

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Fall Trafficbuilder IdeasSTEVE MORRIS, VICE PRESIDENT

Autumn is the perfect time of year for people to get outside and enjoy some activities before Winter comes along and shuts them inside. For financial institutions, it can also be a great time to build branch traffic.

Whether it is a new branch opening or just looking to rejuvenate an existing branch, utilizing branch Trafficbuilder programs is a great way to re-engage existing customers or prospect for new ones.

Marketing Window

There are many options for building branch traffic. The usual way is to plan an event on a given Saturday, put up some signs in the branch or maybe an ad in the paper and hope lots of people show up on that specific day. But an effective program should provide a larger window of opportunity for people to visit the branch location and achieve the marketing and sales objectives.

There many options available that will help drive traffic to a branch over a longer period of time. One proven program is the “Key and Treasure Chest” game. It works exactly how it sounds: there are three treasure chests in the branch that represent different prize

levels, and prospects are invited to come in and see if they have a “winning key.”

The institution puts together a mailing package that includes an actual key and it is mailed to a select geographic area (usually within two-three miles) around the branch location. The recipient then has the chance to come in and see if that key opens any of the locks.

Some institutions put a pirate theme around it, including having the staff in pirate costumes, and they carve out

Measuring ResultsOne drawback with many branch

Trafficbuilders is that after the fun has been had and the winners have been awarded their prizes, no one knows which of the invited guests actually attended. It’s also extremely hard to track whether or not the event was actually worth the budget dollars that were spent to hold it.

“Crack the Vault” is an iPad based game that will not only be fun and

engaging for consumers and the branch staff, but it will provide reporting when the event is over for follow-up and tracking/ROI purposes. It sets up very similarly to other promotions. A mailing package is sent out with a “secret code” and an invitation to come to the branch and see if their code “cracks the vault.”

The iPad-based format also allows for some data collection prior to the consumer being able to play the game. It can collect information such

as name, phone number, address, email, etc. along with an opt-in checkbox to allow for future communication and marketing efforts. This data collection is the key for a branch’s follow-up after the promotion ends, and also helps in performing some results analysis about 60 days after the promotion to determine product or service purchases.

an area with banners and some blow up palm trees to make it look like the consumer is about to unlock “buried treasure.” One important note here is to be sure the branch has other fun things going on, like a face painter to paint pirate mustaches, someone blowing up/giving away balloons, etc. It’s also important to have inexpensive (and easy to replenish) prizes for those with keys that don’t open a chest so that everyone leaves with something.

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WordCom recently welcomed Dawn Vodehnal as the newest member of the WordCom team. Dawn joined the company in July of 2016, bringing with her a strong background of experience that will assist her in her new role as Database Analyst.

Dawn attended Northeast Community College in Norfolk, Nebraska, where she received an Associate of Applied Science Degree in Computer Programming. She previously worked for Acton/Deluxe Marketing Service for over 16 years as a Programmer Analyst, working with financial institutions’ data by performing data analysis, writing VB.Net programs, and creating detailed mail files for marketing campaigns.

What do you like (so far) about working at WordCom?

“I really like the up-beat, warm, inviting and positive personalities and the family organization atmosphere.”

What do you like to do in your free time?

“In my spare time, I enjoy time with family and friends. I have four children (three girls and one boy) that are involved in multiple activities. My oldest daughter, Kiara (12 years old), started out in soccer but now has a passion for basketball and volleyball. Our twin daughters, Hannah and Makenzie (9 years old), also started in soccer but now are trying basketball and volleyball. They also like to dance and would like to learn piano and guitar. Our son, Lukas (4 years old), is starting preschool this fall and enjoys playing with his sisters and fishing with Dad. He will start his

sporting activities next year. I also enjoy walking and watching movies when time permits.”

What would be your dream vacation?

“When the opportunity arises, I would like to go to Hawaii and Alaska. I would also like to return to Brazil with my family to visit a great friend from high school who was an exchange student. The adventures are endless wherever life will take us.”

Meet Dawn Vodehnal

Community Reinvestment Act (CRA): New Loan Customer AcquisitionHARRY WALTMAN, VICE PRESIDENT

The Community Reinvestment Act of 1977 was designed to encourage banks to extend services and loans to qualified low- and moderate-income communities in the areas they serve. But CRA mailing projects can help banks meets regulatory requirements and also serve as a customer and loan acquisition vehicle.

Each bank’s regulator is required to periodically evaluate a bank’s performance and assign a CRA rating. The CRA reinforces the expectation that financial institutions will serve the needs of their respective communities fairly and without bias.

Measuring SuccessAn explicit area of intent for the

Act and a focus for most institutions is providing lending services to low- and moderate-income communities within

their footprint. Many banks formalize a strategic CRA plan with advertising and promotional tactics along with measurable goals. Low-cost mortgages, equity lines of credit, and home improvement loans are the services likely to be offered. Promotion of these lending products to targeted low- and moderate-income areas through direct mail efforts provides a documented course of action with measurable results.

Prospect targeting for offers relating to CRA compliance can be accomplished through identifying LMI Census Tracts in areas within the bank’s branch footprint. However, additional selection filters can be applied to the selected tracts such as age range and likely homeowner. Ultimately, the mailing should strive to position the offer to households in the chosen LMI area who are most likely to benefit from the product.

The Mailing PackageThe mailing package used is generally

a postcard or self-mailer so that cost efficiencies will permit the largest mailing universe possible for the budget. Plus, postcards and self-mailers can effectively convey a very competitive or special rate offer which can provide response lift to the mailing.

It is important to track the results of the mailing and measure them against the plan goals. The sales tracking window for loan offers generally extends for 90 days past the mailing date, allowing sufficient time for applications to be approved and the account opened. New account openings should be matched to the original mailing file in order to accurately assess the impact of the mailing.

Dawn and her family

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CREATIVE CORNER

JANIS WESTON, ACCOUNT MANAGER & PRINT COORDINATOR

The goal of creating and mailing direct marketing pieces is to grab readers’ attention and keep it. Seems easy enough, right? It may not always be as easy as it sounds, but it can be by following a few basic rules of thumb: 1) Make it big 2) Make it simple 3) Make it stand out.

Small mail pieces may easily get lost in the mail pile, and don’t offer much room to effectively get the point of the message across. The piece needs to be large enough to accommodate bold, catchy headlines and just enough information to make the recipient want to learn more about the offer. Bigger does NOT mean there is more space to fill with an abundance of information. Cluttering up a mail piece with an abundance of words is something that must be avoided. Too much copy distracts the reader from seeing the most important features and benefits of the offer being presented.

When it doubt, take it out! If there is extraneous information in the copy that is not likely to increase the response rate, it should probably be removed. If unsure if it is necessary, take it out.

When writing and laying out a mail-piece, ask the following questions:

1. Is the headline the central message? Is it short and to the point? Is it bold and colorful, and does it draw the eye?

2. Is there an enticing offer, and does the offer stand out on the page?

3. Is there a graphic that clearly supports the message?

4. Are there key consumer benefits of the product explained clearly, rather than just listing the features? Does the message answer the reader’s questions of “How does this benefit me?”

5. Is there plenty of white space on the piece?

6. Is your logo noticeable, but not too prominent? (It shouldn’t overshadow the real message.)

If the answer to any of these questions is no, it’s probably a good idea to take another look at the message and design of the piece, and make some adjustments. The recipient does need

to see the marketing message, but there should also be a clear call-to-action with contact information. It may not seem like much is going into the piece, but it all adds up once it’s all there. Let the offer speak for itself. As long as it’s appealing and clearly states the benefit(s) to the reader, and is something they need, the call to action will give the recipient what they need to do the rest!

How big is too big?If postage costs are a concern, it’s best to

keep the piece to “letter-size.” According to USPS standards, pieces are considered letter-sized when they do not exceed 61/8” x 11½”. Self-mailers, however, are an exception and must be no longer than 10½” long. Not only will keeping it letter-size keep your postage costs in check, it could also prevent the recipient from getting the impression that the company is wasteful.

Less Is More. Wait, What??

Please see the “Contact Us” section of our website if you would like to obtain more information

from your Account Executive.

M O D E L I N G | M A I L I N G L I S T | C R E AT I V E | F U L L P R O D U C T I O N | S A L E S T R AC K I N G

Phone: 800-822-0622 • Fax: 860-872-2713 • www.wordcom-inc.com

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56 Main Street P.O. Box 308 Ellington, CT 06029

INSIDE THIS ISSUEUnderstanding Acquisition Models:

Cloning Model vs. Response Model and What’s Best . . . . 1

Skip-A-Payment: Everyone Wins . . . . . . . . . . . . . . . . . . . . . . 2

Life Event Triggers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Measuring a Marketing Program . . . . . . . . . . . . . . . . . . . . . . 4

Fall Trafficbuilder Ideas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Less Is More. Wait, What?? . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Community Reinvestment Act (CRA): New Loan Customer Acquisition . . . . . . . . . . . . . . . . . . . . . 7

Meet Dawn Vodehnal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

VOLUME 15 • ISSUE 3 • FALL 2016

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