By George Wachtel
Cross selling products and services to existing customers is a proven approach to increasing products and services per household. Through deepening relationships and share of wallet, marketers can impact account openings, balances and bank profitability.
Direct mail remains a backbone of cross selling efforts for many institutions. American Trust in Dubuque, Iowa (assets: $1 Billion) has been managing a cross sell mailing program since 2012. Peggy Hudson, Executive Vice President, says “having an automatic, monthly matrix mailing program pays continuous marketing dividends for the bank.”
Define and adjust objectives
She points out, “A monthly mailing program should align objectives with the bank’s strategic goals.” Identifying which products and services to be offered is a first step. Structuring the customer selection process by prioritizing the offer segments within a ‘waterfall’ hierarchy will help the program realize the desired results.
Adjusting product priorities in response to changing markets is easily done. Peggy Hudson notes that the flexibility is important for the program’s success, “the ability to modify the segmentation/waterfall offers helps us achieve primary and secondary objectives as the bank’s needs and competitive environment evolve during the year.”
Target Offers
From ‘business rules’ criteria to customized predictive modeling, targeting of offers will increase response rates and boost ROI. American Trust’s cross sell program relies on modeled customer product profiles and quarterly demographic appends to select the best candidates for their offers.
The modeled customer profiles employ outside demographic, socio-economic and lifestyle attribute data to build a product specific profile of what their customers ‘look’ like. The modeling then allows for the selection of customers for the product offer who ‘look’ like other existing customers who own a certain product.
Loan Focus
American Trust’s program has had a focus on loan accounts. Offered loan products are HELOC, Mortgage, Credit Cards and Auto loans. In addition to the product profiles, selection criteria include RiskIQ, a modeled risk proxy score. This allows the bank to make loan offers to customers likely to meet certain minimum credit score profiles.
For deposit products, checking accounts are offered to customers who profile as checking customers but don’t have the account. ‘Business rules’ also apply to services offered including online banking, mobile, bill pay and debit cards. “(Our) targeted approach allows the bank to make cross sell offers to customers likely to open a product while limiting wasted mail on those less likely to respond” says Jacque Weber, Marketing Specialist at American Trust.
Track Results
Understanding the results of a cross sell effort is important not only for evaluating the organizational impact of the mailings but also to make program adjustments in order to improve results. Direct responses, where the customer opens the product or service offered, are critical. So too, are purchase responses where the customer opens a product or service other than the one offered.
Understanding open rates, balances generated and the ROMI based on revenue spread data will help assess the effectiveness of the program. Segment offers and selection criteria can be adjusted according to the tracking results on an ongoing basis. Weber emphasizes “detailed sales tracking provides a clear picture of revenue and expenses across the entire program.”
Branch Support
Follow up support at the branch level ensures that customers who want additional information or guidance in account opening can be helped. At American Trust the letters are signed by the account officers at the branch level. “The account officers appreciate that the bank has a proven system in place to offer products based on data intelligence that meet their client’s needs. Including all areas of the bank helps the program to be effective” says Hudson.
An automatic monthly, repetitive, communication mailing program allows marketers to know that appropriate offers are continually being made to the right customers. Expanding customer relationships while responding to their changing needs ultimately helps to drive bank profitability.
George Wachtel is chairman of Wordcom, Inc., Ellington, Conn., a target marketing company specializing in the financial services industry. E-mail: George@WordCom-inc.com
