WordCom, Inc.

Here are some more tips to help the mailing piece to stand out from the rest of the reader’s mail pile. 

• Limit the text and headline volume.  Say what needs to be said in as few words as possible, with headlines that answer the key question, “What’s in it for me?” – intriguing the prospect enough to make them want to visit the local branch, make a phone call or go online to find out more about the offer. 
• Use a colored envelope instead of plain white. Most printers offer a variety of stock color options for the same or slightly higher cost.
• Decide on printing “teaser” copy on the envelope.  One side says this can intrigue readers to open the envelope; others argue a simple “personalized letter” from a bank or credit union will get read. 
• Be sure to factor in plenty time for the research and for the production of the unique mailing piece.

No matter what the offer is, the presentation of it is the key.  If the mailing piece ends up in the Junk Mail pile, marketing dollars have been wasted.

To help the mailing piece to stand out from the rest of the reader’s mail pile, there are options to take into consideration when designing and writing the mailing package:

• Go large with an oversized postcard or self-mailer.  For a few pennies more, a large piece will stand out and allow more room for the marketing message.
• Use a larger envelope than the standard #10 size. Though slightly more expensive, a 6” x 9” envelope will set the mailing piece apart – and still qualify for the same discounted postage rate.
• Design a non-standard shape using die-cuts. While this can be a bit pricey, it will get the reader’s attention.
• Choose a different paper stock. There is a wide array of paper options: thick, thin, glossy, silky, matte, dull, coated, uncoated and more.
• Use bold images, large easy-to-read fonts and colors that pop.

The same statistical methodology used in predictive modeling to identify the next most likely to purchase an additional product/service can be used to target those households most likely to close an account and drain balances.

Rather than waiting until a person closes an account and is almost impossible to bring back, it’s better to identify households as having a high propensity for attrition, and take preemptive action.

Structuring repetitive offer mailings, supplemented with active branch calling programs, can stop up to 45% from leaving.  The resultant deposit impact can be dramatic.

An effective cross-sell and retention program can help deepen and strengthen relationships with existing customers.

To improve the cost-effectiveness of a cross-sell program, households can be targeted with an offer for what a predictive model has determined as the household’s most likely next purchase.  And repetitive (minimum quarterly) mailings in a matrix format can be scheduled. 

While a traditional cross-sell program takes ALL households in a class and mails them an offer of products/services they don’t have, Bank Intelligence Scores targeting can reduce the mail quantity while increasing the account openings and help the institution “pick up much of the low hanging fruit.”

“Just because the individual does not have a product, it does not mean they need it,” points out Chris Wachtel.  “An effective cross-sell program reduces mailing costs by targeting only households that actually are likely to need the product; and as a by-product, provides a greater share of wallet and increases the lifetime income per household.”

Two things every financial marketer desires are predictions about which households want to buy which products and which households are likely to close (or drain substantial balances from) the products they currently hold.

“The data we now have on buying patterns and retention opportunities will take our marketing programs to a new level,” said Barbara Bowker, Vice President Marketing at PSECU (Pennsylvania State Employees Credit Union).

The $3.8 billion asset credit union had just reviewed the data from an analysis of their member buying history called the Bank Intelligence Scores™.  According to Barb Bowker, “This marketing intelligence now stacks the odds in our favor to help us do a more efficient job of offering ‘the next most likely’ product to our members.”

As financial institutions grow more sophisticated in their approach to targeting existing customers for cross-sell and retention, predictive modeling is becoming more prevalent.

“Most institutions are now starting to employ some form of statistical modeling to identify which customers are next most likely to purchase a particular product” says Christopher Wachtel, WordCom President & CEO.  “While many marketers understand the potential of modeling, effectively utilizing the data it provides can be challenging.”

The holiday season and the end of the calendar year provide unique customer marketing opportunities.  Here is one targeted marketing program that has proven successful year after year:

Equity Activation – Another tool customers can use to manage their holiday finances, is tapping into their existing home equity line of credit.  Customers with low activity and/or high available balances should be contacted to remind them of this resource.  Topics can be tuned to the season, focusing on debt consolidation of high interest credit cards, making home improvements, college tuition payments, etc.

The holiday season and the end of the calendar year provide unique customer marketing opportunities.  Here is one targeted marketing program that has proven successful year after year:

Best Customer – Every business has an “80/20” rule - “Eighty percent of business comes from twenty percent of customers.”  With financial institutions, it may be more extreme.  Identfication of best customers can be based on number of accounts, profitability or balances. 

However defined, the holiday season/year end is a perfect time to strengthen those relationships and show those customers their business is appreciated.  It could be a holiday letter from the CEO with handwritten notes for those he/she has met personally or a social event after the hustle and bustle of the holidays has passed.  For best business customers, maybe a series of breakfast meetings with programs aimed at them. 

The holiday season and the end of the calendar year provide unique customer marketing opportunities.  Here is one targeted marketing program that has proven successful year after year:

Skip-A-Payment – During the holidays, people are looking for ways to stretch their budgets.  Offering a program like this is a good way to increase profitability as well as offer some financial flexibility to customers when they may need it most.

For a small fee, customers can defer their next consumer loan payment for a month.  The best candidates for Skip-A-Payment are customers with loans that have several months remaining in the term and a monthly payment large enough so that the deferral fee is attractive.  Institutions that offer this program can develop a dependable stream of income.  In addition, the interest on the loan keeps accruing and goodwill is developed with customers.

To get a complex mailing program going, there are several steps that need to be accomplished simultaneously.  While the list is being processed, the creative is being developed.  Copy and graphics need to be approved by management and reviewed by compliance.  Depending on the nature of the mailing and the review/approval process, this stage may take two weeks or more.

Once selected, the list needs to be processed.  This is when multiple lists are merged and purged and variable tables are developed and applied.  Part of the processing involves list hygiene and making sure the list looks as good as possible, especially if a salutation is involved. 

After the list work is done and the design/copy are approved, the project enters into the production phase.  A total of 2-3 weeks is needed here for printing, personalization and mailshop assembly.  The complexity of the mailing package determines the time needed for this step.  Obviously, a simple post card will take less time than a more involved package with several inserts.

Using standard (bulk) postage, the mailing should arrive in-home during the week of January 16.  But of course by then, the spring promotion plans will be well underway!

Getting 2012 marketing initiatives off to a fast start in January means taking the time now to lay the necessary groundwork.  Direct mail programs with on-target creative, highly targeted list selections and above average ROI require action steps starting in November. 

To put time between the end of the Holiday season and the start of a new campaign, the mailing should be received no earlier than January 16.  Working back from that date, here are the critical production steps:

First, the scope of the project has to be defined and a budget prepared.  If a budget already exists, all the component costs of the campaign can be worked out from it. 

If a budget needs to be developed, the first step is to define the most appropriate target audience.  It could be customers from an MCIF and/or prospects chosen using demographic and geographic selections.  Once the approximate mailing quantity has been estimated, a budget can be prepared using costs for producing the most appropriate mailing package.

With the budget approved, the list development may be done quickly in many cases.  However, if complex selections are involved, it may be necessary to allow up to two weeks for this process.  If predictive models are being used, time will need to be allowed for any updates that need to be done to the model to maximize its effectiveness.

WordCom now has access to a new font technology called Direct Smile® that has the capability to print the recipient’s name within a photograph as part of the graphic of the photograph, and increase mail readership/response.

“Direct Smile® allows you to use common items and arrange them into letters,” according to Charles Gross, Senior Vice President at WordCom, Inc.  “For Katahdin Trust Company (Houlton, ME), we used a photograph of a local park.  In the sky above the trees, we used white cloud-like puffs to spell out the recipient’s first name on the front cover of the mail piece.” 

Vicki Smith, SVP at Katahdin Trust Company, says, “The marketing objective was to increase awareness among consumers and businesses for our branch in Bangor.  We used this attention getting self-mailer featuring a color photograph of a well-known local landmark that’s near the branch.”

The recipient’s name could be spelled with lily pads on a pond, letters in the sand at the beach, holes punched in paper, sculpted in the snow, flower petals floating across a meadow, carved into an apple, balloons hanging in the sky, etc.  The possibilities are numerous.

Click below to see samples of Direct Smile® in use:
Sample #1
Sample #2
Sample #3

Mailing existing customers/members a HELOC Activation mailing is an effective way to remind them of the many benefits of having a Home Equity Line of Credit with a Bank/CU.

One WordCom client had a very successful HELOC Activation project recently. They mailed 3,596 pieces, 892 people increased their line by at least $250 for a 24.8% response rate. The balances totaled $8,279,032 and the 1st year ROI was 2,895%.

Since these customers/members are already approved, the process is very easy and the return for the Banks/CU can be quite attractive.

RiskIQ uses aggregate credit data to assign a ‘Fico-like’ score for each household. Because the data is not specific to each household, mandatory offer restrictions do not apply. 

Other variables can be included to help target households that are likely to open an equity loan and have enough equity in the home to qualify.  They include other zip+4-level data that indicate wealth, responsiveness and lifestyle segment, and household-level data such as age, income, home value, length of residence, presence of children and occupation. 

The combination of household-level data, the zip+4-level RiskIQ scores and demographic information creates a powerful tool to help select customers or prospects that are more likely to respond and qualify for an equity product.

 

In the fall, Banks/CUs normally see an upturn in customer/member loan demand.  But with this “abnormal” financial market, it is sometimes difficult to find homeowners who are good loan risks.  A new proxy model called RiskIQ, can be an effective tool in improving the mailing selection process.

People with the highest credit risk tend to respond best to offers of credit, while those with perfect credit are less likely to respond.  But using a credit bureau to obtain a pre-approved mailing list can be very expensive and the rules surrounding firm offers of credit can be complex. 

“With its core data taken from over 100 sources, using 1,500 input variables,” says Chris Wachtel, WordCom President and CEO, “the model will allow targeting of customers and prospects at a zip+4 level more cost effectively than the expensive appending of outside data. Because the data is totally localized, it takes regional economic conditions into consideration.”

Mailings can include many flashy elements – colorful images, four-color digital laser printing, PURLs or QR codes sending consumers to a website where all of a bank’s/CU’s offerings will be shown to them. 

But before those great ideas have been developed and produced, the key step to ensuring that the people targeted to view the message actually receive it (and have a favorable impression of the mailer) is Data Processing, formatting and cleanup of the mailing list.

“With the process we go through, we’re able to increase deliverability,” says the WordCom team, “We review every piece of data, every name for gender, punctuation, proper capitalization, misspellings, address errors and formatting.” 

“I know that if I get a letter or piece of mail that doesn’t have my name correct or says Mr. Mary Smith, I’m less likely to open it.  So by analyzing the data to be sure that the end result is uniform, it makes the communication seem more personal as well as professional.”

The Dodd – Frank Act mandated the repeal of Reg Q, which prohibited institutions from paying interest on commercial checking accounts. 

Many believe Banks/CUs that choose to offer new or modified interest paying checking accounts will want to market them aggressively. Capturing new market share will require an ongoing acquisition campaign involving targeted direct mail promotions, print and perhaps TV and Radio.

Existing customers will need to be communicated with quickly so they are aware of the new product offerings and aren’t enticed by a competitor.  A direct mail/email product upgrade communication should be used complimented with an in-branch sales effort.

Customers choosing an interest bearing account will have FDIC insurance coverage on balances up to $250,000. Those electing to keep funds in a non – interest paying DDA will have unlimited coverage until December 31, 2012.

The Dodd – Frank Act contains a provision, effective July 21, 2011, mandating the repeal of Reg Q, which prohibited institutions from paying interest on commercial checking accounts. The resulting ability to offer interest bearing transaction accounts has the potential to alter the commercial banking competitive landscape.

The response to the repeal of Reg Q is certain to vary and be dynamic as market forces dictate actions. Many Banks/CUs will view the change as an opportunity to leverage new product innovation into increased market share. Those looking to attract new business customers (and keep existing ones) can simply begin paying ‘hard’ interest on commercial DDAs.

Banks/CUs may also revamp their existing commercial accounts. Under Reg Q, banks have offered ‘Earned Credit Rate’ accounts where fee and transaction charges accumulate against a ‘soft’ earnings rate. This allows the account to be free of extra charges up to a threshold. With the repeal, many are considering ‘hybrid’ accounts where earnings offset charges until they are covered and then ‘hard’ interest is paid.  

There is no question that a small number of customers/members provide most of an institution’s profits.  What is rarely seen are efforts to recognize this important segment and to develop a consistent retention plan for them.

First, there needs to be a workable definition of “best customer.”  It really doesn’t matter whether total balances, total profitability or a combination of the two are used for selection.  What is important is that the definition has credibility in the whole organization and that all the information available is being leveraged to the greatest extent possible.

Once identified, the objective is to maintain a running dialogue with these special customers/members to keep them engaged.  For example, branch managers should have a list of their top customers/members and make an effort to get to know them personally. 

Ideally, a regular communications program done over the CEO’s signature will acknowledge the special role they play.  Let them be the first to know about special offers, new branches, etc.  Ask them about what they feel is important.

Occasional social events should be planned to reinforce the personal relationships that are developed between customer and banker.  At the bare minimum, a targeted thank you message during the holiday season would be appropriate. 

Once an analysis has been done on current checking households, that information can be applied to acquisition efforts.  The goal here is to find prospects that are going to open a checking account and be an engaged customer.  By creating a profile of current engaged customers and using that information in prospect list selection, households can be targeted that are most like the currently engaged customers. 

When building the profile, it is important to use information that is readily available on the prospect file.  Basic demographic information like age and income, as well as lifestyle segmentation and other zip+4-level data can be very useful. 

For example, in a recent analysis for a WordCom client, it was determined that people aged 25-45 with a WealthIQ score of 25-100 were more likely to be highly engaged, while households with a WealthIQ score greater than 125 were more likely to be dormant.

Checking customers can be divided into FIVE levels of engagement, from Dormant to Highly Engaged.  They are defined by a combination of the number of household transactions per month and the number of “Sticky Services” (debit, online banking, etc.) they also have with the bank/CU.

One WordCom client has just over 50% of their households as “engaged.”  The segments with the most opportunity to “move the needle” are Engaged and Active.  The Inactive segment is a little harder, but the revenue gains tend to be higher. 

Even the Dormant groups have some potential.  They should be mined for households that have potential for profitability by appending outside demographic data, like WordCom’s WealthIQ.

Many financial institutions put checking customers/members into only two groups: dormant or active.  However, working with additional segments, based on the level of activity, can help identify households that have a low level of activity that could be increased.

Checking activity can be classified in different ways - either by reviewing just transactions and balances that contribute directly to revenue or targeting all transactions and ancillary services that the household has (and uses).  The latter is often better because it provides a truer picture of how much a household actually uses the account and what the potential for growth is.

The ideal segmentation should be based on transaction levels where a household becomes profitable or the Customer Lifetime Value is highest.  A good indicator of these levels are the thresholds set by product/finance for a household to avoid fees. 

Banks/CUs commit significant budget dollars to acquiring new checking accounts.  But with the legislation surrounding capping bank revenue, it is more important than ever to make sure customers/members are actively using their checking accounts (and related services) to maximize the revenue the Banks/CUs can earn. 

Focusing on how much a customer uses the account (customer engagement) can help accomplish this critical marketing goal.

“We want to actively engage our members,” said Peggy Young, Vice President of Marketing, SECU (MD) “because a fully engaged member will not only be more profitable, they typically promote the credit union to their friends and family.”

Decades and millions of pieces of mail after founding, WordCom celebrates its 30th anniversary.  When the company was started in the early 1980’s, bank deregulation was in full swing … Individual Retirement Accounts (IRAs) and Money Market Accounts were just being actively promoted by banks; and the concept of cross-selling existing customers was a novel idea.

WordCom joined what was then called the Bank Marketing Association (BMA), an active subsidiary of the American Bankers Association, with chapters all around the country, and attended its first national conference (which has happened every year since).

Then in the 1990’s a new tool called the Marketing Customer Information File (MCIF) became popular; and financial institutions had a practical way of analyzing and targeting existing customers for special marketing programs.

While the company started by serving banks in New England, it now has banking and credit union clients across the country.

According to Dena M. Hall, Senior Vice President Marketing & Community Relations, United Bank (MA), “From the marketing perspective, the most important thing to remember during an acquisition is that communication is key.  The customers of the institution you are acquiring may remember their previous painful merger experiences and opt to move their accounts before the transaction is complete."

“For that reason communication is key.  We over communicated with the customers and the staff of the bank we acquired in 2009 to be sure that everyone knew what to expect and when to expect it.  When all was said and done, we received high marks from our customers and staff.  We lost very few accounts and overall, one year later, customers are happy, staff is happy and deposit growth is very good.” 

According to Stephanie Heist, Vice President, Communications, WSFS Bank (DE), marketers have two audiences to keep in mind, “Your future customers have a lot of anxiety…communicate, communicate, communicate.  And provide as much detail as you can at the time of each communication and let them know when they will hear from you next.  The acquiring institution’s Associates are very important in that transition – get them on board first and foremost with as much information as possible…they are likely not only just future associates, but future customers too.”

Dena Hall points out, “The second most important thing is to do your homework…know the market you are entering, see how the competition reacts to new banks in town.”