Birds of a Feather Don’t Flock Together…and Some Have Bigger Nest Eggs.

Target your retail deposit products to the right household, not the neighborhood

Contrary to popular belief, birds of a feather don’t flock together.  Compare Stanley “I’m in debt up to my eyeballs!” Johnson from Lending Tree’s television commercials to The Millionaire Next Door featured in doctors Stanley and Danko’s best-selling book of the same name—and of course don’t forget all of the people in between.  If you followed conventional wisdom, you’d be sending a high-yield Money Market Account offer to Stanley Johnson, who is house-broke and really needs the advantage of a feeless Free Checking Account, and that Free Checking Account offer to the wealthy fellow living beneath his means and wanting to earn interest on his liquid assets in a Money Market Account.  The fact of the matter is that they live next door to one another and they need to be treated differently.

The varying needs, attitudes, and behaviors of your customers provides a window into the types of deposit products that are best suited for them.  Why else would you offer an assortment for them to choose from?  And it’s common knowledge that marketing the right product to the right audience is the driving factor in the success of any direct marketing campaign.  Today, more than ever, the need to spend marketing dollars efficiently and effectively is a major concern for financial institutions.  Understanding and identifying who the right individuals are and being able to reach them is of paramount importance.

Outdated strategies that advocate a shotgun approach to mailing the same offer to all the households in a given area, simply because of their proximity to each other, is an inefficient use of marketing dollars and can no longer provide sustainable long term growth.  Distance to branch, age, and income aren’t enough to pinpoint the deposit product that prospective or existing clients want most.  The future of direct mail involves utilizing all available information about the actual needs, attitudes, and behavior of prospects in your market and assessing who has the highest propensity to respond.

You can now successfully predict the right financial product for each of your prospects at an individual household level by using a model that takes into account a variety of demographic and psychographic data coupled with detailed insight down to the product category level.  Most direct mail strategies do not leverage the information and insights available about consumers and even fewer have done the research and analysis to understand these behaviors.

If you don’t have the ability to do this in house, there are turnkey solutions available that let you utilize the industry’s best practices with strong data models, audience-product alignment, and creative execution.  Relying on an external resource can bring you winning results with very little effort, making you look like an expert in everyone else’s eyes.  Take advantage of advanced segmentation and modeling strategies to increase the efficiency and success of your next direct marketing campaign.  In return you’ll enjoy an increased return on marketing investment as well as acquire more profitable customers with higher average balances.  Whether you do it yourself or not, you can’t afford to keep mailing the same offer to the entire neighborhood.

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Todd Werner is the vice president of marketing with Affinion Group and James Hanson is the account manager for NetGain!—Affinion’s acquisition program.  Reach Mr. Werner at todd.werner@affiniongroup.com and Mr. Hanson at james.hanson@affiniongroup.com.