Vision 2014: How to Turbo-charge Growth of Small Business Checking and Lending

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Learn proven techniques and the key steps to developing and executing a highly successful (550 percent to 1000 percent return on marketing investment) direct-marketing campaign to acquire highly …

Learn proven techniques and the key steps to developing and executing a highly successful (550 percent to 1000 percent return on marketing investment) direct-marketing campaign to acquire highly profitable small-business deposit and loan accounts and relationships.

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  • 1. ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public. How to turbocharge growth of small business checking and lending Bob Tetenbaum First Manhattan Consulting Group Laura DeSoto Experian #vision2014
  • 2. 2©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Maximize profit from marketing spend  Typical goals for small business ► Maximize cross sell opportunities to current business and retail customers ► Add new accounts, balances – both loans and checking accounts from customers and prospects ► Achieve above-hurdle levels of return on marketing investment ► Develop and distribute high quality sales leads ► Increase effectiveness of field sales staff Typical bank objectives
  • 3. 3©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Full range of services are available: 1) Campaign test cell design 2) Competitive product suite analysis 3) Prospect list sourcing and integration with customer lists 4) Product-specific responder model file scoring 5) Target selection and mail file optimization 6) Creative development – typically 3+ versions – customized by segment 7) Direct mail production and on-site quality control 8) Campaign performance measurement – net of control 9) Targeting and creative optimization The benefits of partnering Result – minimal client workload
  • 4. 4©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Approach to small business acquisition Campaigns are designed to meet client needs, e.g., grow business lending or DDA accounts, etc. Three distinct populations make up the file: 1) Existing small business customers 2) Retail customers that own a small business but do not have a business accounts with the bank 3) In-footprint small business prospects Existing 13% Retail 10% Prospects 77%
  • 5. 5©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Leveraging product-specific small business response models for both loans and deposits  Mailing proven creative packages that reflect the bank’s brand, value proposition, product specs, etc.  Providing ranked call lists for selective outbound phone follow-up  Measuring campaign results on net of control basis at a granular level Additional keys to success
  • 6. 6©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Prospect lists and firmographic data sourced from the largest business databases plus over 15 specialized data providers  High percentage tele-verification  Unparalleled accuracy and coverage  Allows for targeting specific objectives (e.g., identifying commercial mortgage loans likely to refinance)  Prospects pulled based on defined radius around each branch or sales office location Business data sources
  • 7. 7©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. The core input: 15+ data sources, aggregated, de-duped, matched to customers and in-market prospects Small business data resources Business prospect databases Firmographic data New to business files CRE and SBA loan holders Import and export dataOther specialty lists Business owner databases UCC Filings Business deposit and loan balances Business credit data FMCG Direct small business marketing database
  • 8. 8©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Business credit data enhances targeting of customers and prospects  Credit usage data available on 60+% of businesses  Credit worthiness evaluated with Commercial Intelliscore®  Can identify known holders of commercial mortgages and SBA loans, businesses with active credit profiles (e.g., recent credit inquiries, UCC filings, etc.)  No requirement for firm offer of credit as business data does not fall under FCRA Business credit data uses
  • 9. 9©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Small business targeting models  Assess the risk level of each business  Determine the appropriate product offer and creative alignment ► Loan lead offer with deposits “backstop” ► Deposits lead offer with loan “backstop” ► Deposits offer only  Determine the propensity to respond  Generate the mail and follow-up phone files Targeting and mail file selection
  • 10. 10©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Built upon analysis of responses to millions of offers in hundreds of campaigns over the last 10 years  Are continuously optimized to: ► Incorporate insights from responses to creative tests, cash offers, rate specials on loans, etc. ► Reflect developments in the competitive environment ► Reflect data element improvements  Predict response to: ► Loan offers ► Deposit offers, including cash management and business services Direct mail response models
  • 11. 11©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Multiple offer versions reflect bank brand, value proposition, style guidelines, product specs, etc. ► Champion is upscale letter package with full color brochure; a business card can also be included Direct mail creative
  • 12. 12©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Multiple offer versions reflect bank brand, value proposition, style guidelines, product specs, etc. ► Champion is upscale letter package with full color brochure; a business card can also be included ► Industry tailoring increases response among high priority segments Direct mail creative
  • 13. 13©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Multiple offer versions reflect bank brand, value proposition, style guidelines, product specs, etc. ► Champion is upscale letter package with full color brochure; a business card can also be included. ► Industry tailoring increases response among high priority segments ► Champion / challenger creative testing optimizes response over time ● Outer envelope formats ● Messaging ● Imagery ● Call to action, etc. Direct mail creative
  • 14. 14©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Outbound calling the best leads enhances response, funded deposit and drawn loan balances and campaign profits ► Leads can be aligned to bank channels; e.g., branch managers, business banking officers, call centers ► Phone numbers are available for 80+% of prospect leads ► Phone lists have extensive information to aid in call preparation; e.g., industry type, number of employees, annual sales, UCC filings, credit quality, etc. ► Leads are ranked with response model scores to ensure optimal use of available resources Follow-up phone calls
  • 15. 15©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Verified phone numbers and owner/ principal names  Outbound calling the best leads enhances response, funded deposit and drawn loan balances and campaign profits Follow-up phone calls
  • 16. 16©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Outbound calling the best leads enhances response, funded deposit and drawn loan balances and campaign profits Follow-up phone calls Business addresses
  • 17. 17©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  Outbound calling the best leads enhances response, funded deposit and drawn loan balances and campaign profits Follow-up phone calls Key attributes:  Annual sales $$  Deposit and loan potential $$  Distance to nearest branch  NAICS code and description
  • 18. 18©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Direct mail impact can be precisely measured  Unmailed control cell – an exact “look-alike” to the mail population – is the baseline for BAU performance  Identical methods of tracking test and control are essential – matching responders, accounts, balances, etc.  Measurement includes both business and consumer accounts opened ► Many respondents will open both business and consumer accounts ► Some smaller businesses prefer to open consumer deposit and loan accounts vs. business accounts Campaign measurement
  • 19. 19©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Offers:  Business checking – free first order of checks  Business loans ► Prime plus 0.50% on business loans / lines of credit ► A preferred rate on owner-occupied real estate Populations mailed:  Business customers  Consumer customer business owners  Prospects Mail volume: 275,000 pieces Client case study #1 Regional bank with ~650 branches
  • 20. 20©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Net-of-control campaign results:  1,100 incremental business accounts plus 550 incremental consumer accounts  $80 million in business account balances; 45% deposits / 55% loans  $7.0 million in after cost profit (lifetime value based)  <3 month payback of campaign investment  1,700% return on marketing investment Client case study #1 Regional bank with ~650 branches
  • 21. 21©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Objective:  Acquire profitable business loans, checking, and savings. Use a tailored approach for the Medical, White Collar Professional Services and Wholesale segments Offers:  Business banking bundle  A $400 cash bonus incentive tested in one region Populations mailed:  Business customers  Consumer customer business owners  Prospects Mail volume: 280,000 pieces Client case study #2 Regional bank with ~700 branches
  • 22. 22©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Net-of-control campaign results:  600 incremental business accounts plus 200 incremental consumer accounts  $67 million in business account balances: 55% deposits / 45% loans  >$6.0 million in after cost profit (lifetime value based)  <4 month payback of campaign investment  1,400% return on marketing investment (lifetime value based) Client case study #2 Regional bank with ~700 branches
  • 23. 23©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Client case study #3
  • 24. 24©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Client case study #3
  • 25. 25©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Campaign insights 1 2 3 4 5 6 7 8 9 10 11 Accountresponse(gross) Times mailed Business-only impact Combined business and consumer impact Additional mail touches over time increased conversion – there were no signs of marketing fatigue or “burn out”
  • 26. 26©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Responserate Sales band Business account response Net-of-control Gross Campaign insights $100,000 $25 million Larger businesses generate correspondingly more attractive results $100,000 $25 million Averageaccountbalance Average business account balance
  • 27. 27©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Concept A Concept B Concept C Concept D Net of control response Gross response Campaign insightsResponserate 250% differential between highest and lowest performing concepts Targeting is key to success – but creative alignment also matters
  • 28. 28©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. External and internal data on customers and prospects Segmentation insights on the needs, attitudes, buying behaviors and financial product wallet potential of small businesses in your marketing footprint Analytic skills and software that enable accurate matching of external segment attributes to customers and prospects Response models to focus and align offers; models updated based on net of control analysis of campaign performance Checklist of essential direct marketing skills/attributes
  • 29. 29©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Multiple creative versions aligned to high response and high profit segments; champion/challenger testing by segment Campaign test design with proper control groups and test cell size to ensure statistical validity of response measurement and cause/effect attribution Sophisticated matching of responders to support accurate, net of control reporting on both targeted and non-targeted products boarded and funded during measurement window Checklist of essential direct marketing skills/attributes
  • 30. 30©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.  $1.5 million in incremental annual revenue and $1.2 million in incremental annual pretax profit run rate ► 4+ year revenue and income stream ► $335 thousand in one-time campaign costs, including incentives ► $3.5 million NPV of pretax profits  Payback of all marketing costs in less than six months for each campaign Impact of small business direct marketing per $10 billion in assets
  • 31. 31©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. For additional information, please contact: Laura.DeSoto@experian.com rtetenbaum@fmcg.com Hear the latest from Vision 2014 in the Daily Roundup: www.experian.com/vision/blog @ExperianVision | #vision2014 Follow us on Twitter
  • 32. 32©2014 Experian Information Solutions, Inc. All rights reserved. Experian Public. Visit the Experian Expert Bar to learn more about the topics and products covered in this presentation.