Uncover Your Secret Within: Using Member Data to Strengthen Your Bottom Line


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The amount of member data is limitless and can be overwhelming. How can you dissect this data to make it more powerful and use it to your advantage? In this podcast from the 2013 NAFCU Annual Conference, Maria Del Amo, Steve Miller, and Trish Donahue explore how to develop a successful growth strategy using member data to deepen your credit union member relationships and improve your credit union’s revenue. Included is a list of 10 database marketing strategies and several successful case studies, including laser-focused retention, maximizing wallet share, new client development, and logical development.

Listen to the full podcast here: http://www.nafcu.org/NAFCU_Services_Corporation/Partner_Library/Uncover_Your_Secret_Within__Using_Member_Data_to_Strengthen_Your_Bottom_Line/

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  • Transaction documents are a key driver of customer satisfaction, comprising 41% of the consumer finance satisfaction score and 17% of the credit card industry satisfaction score.
    Source: J D Powers
  • Combining the power of your data and relevant marketing transforms the results of your acquisition strategies from mixed member potential to a predominance of high potential members.
  • Communication strategies:
    Targeting messaging
    Segmenting data
    Data Modeling
  • Uncover Your Secret Within: Using Member Data to Strengthen Your Bottom Line

    1. 1. Uncovering the Secret Within: Using Member Data to Strengthen Your Bottom Line. Presented by Tricia Donohue – The Marketing Mix Maria Del Amo – Cathedral Corporation Steve Miller – Cathedral Corporation July 10, 2013
    2. 2. Relevance is Key Relevance is the single largest lever on response in individualized direct marketing.
    3. 3. “We are drowning in data but starving for knowledge”. John Naisbitt
    4. 4. New Key Perspectives & High-Impact Strategies: Account & Member Relative Value Laser-Focused Retention Checking Bundling Member Triage Activities + Meaningful Data Appends Maximizing Potential New Client Development Logical Member Growth Strategy Guerilla Prospecting De-Marketing
    5. 5. New Key Perspectives Account & Member Relative Value Behavior-based using commonly available fields Balance NSF Fees Interest Rate POS Income Core Fees Transaction Activity Meaningful Appended Data Lifestage Available Wallet Age Income
    6. 6. Key Perspective: Account & Member Value • Adding a value viewpoint significantly enhances decisionmaking • Behavior-based approach uncovers actionable strategies to improve the bottom line
    7. 7. Key Perspective: Meaningful Data Appends P$YCLE : Segmentation system that groups consumers into 58 segments based on assets & a wide variety of financial behavior. Income Producing Assets (IPA): Conservative estimate of liquid assets held by the client. Based on a correlation with HHs P$CYLE code. Gap-To-Tap: Difference between a client’s IPA & the deposit/investment balances they hold with your organization
    8. 8. Priority Strategies: Account & Member Relative Value Laser-Focused Retention Checking Bundling + Meaningful Data Appends Maximizing Potential New Client Development Logical Member Growth Strategy
    9. 9. Priority Strategies: Laser-Focused Retention • Top 10% most valuable clients account for 8090% of net income; Top 20% for 100% + • 30% to 50% of these clients are completely unknown to branch/call center staff • Average annual attrition for this group is 10-15%
    10. 10. Priority Strategies: Laser-Focused Retention: Case Study Avg Value All Clients = $388 Avg Value Top Decile = $4,237 # Top Decile Clients = 1,216 Annual Top Decile % Attrition = 13% Annual Top Decile $ Attrition = $670,000 Year 1: Reduced Attrition to 10.5% = $129K in Net Revenue Improvement Year 2: Reduced Attrition to 9% = $206K in Revenue Improvement
    11. 11. Priority Strategy: Laser-Focused Retention: Case Study • Group “frozen” & tracked each year • Top Decile indicator on member record • Commitment from field staff to be very familiar with this group • Over-sampled in yearly satisfaction surveys • Multi-pronged communications plan: direct mail, email, phone • Results: Decreased attrition & enhanced bottom line (See results on previous slide)
    12. 12. Priority Strategy: Maximizing Wallet Share • All low value/small position clients are not created equal • You are likely missing 30-40% of total wallet – even from the most valuable clients
    13. 13. Priority Strategy: Maximizing Wallet Share: Case Study Assets = $625 Million Estimated Total Opportunity: 3,962 Clients with $640 Million Gap-To-Tap Final Based on Large Wallet/Low Risk: 1,125 Clients with $396 Million Gap-To-Tap
    14. 14. Priority Strategy: Maximizing Wallet Share: Case Study • Branch-specific VIP Priority Prospects identified • Special “under the radar” promotions developed & consistently delivered via direct marketing (mail, email, phone) over a 12-month period • Results: $19,700,000 deposited in promo accounts – 76% new money
    15. 15. Priority Strategy: New Client Development • For the past 5-8 years, many organizations have been more focused on getting the getting the next new member than expanding the ones they just won! • 90 days after acquisition, 75% of new clients have only a single service
    16. 16. Priority Strategy: New Client Development: Case Study • 1,237 new consumer clients acquired in the period analyzed • After 90 days, 86% had only 1 service; after 6 months, 78% still had only 1 service • Average consumer client performance ratio = 38% Net Income of New Clients ÷ Net Income of All Clients = Performance Ratio
    17. 17. Priority Strategy: New Client Development: Case Study Estimated Annual # of New Clients = 4,900 Average Annual Consumer Account Net Income = $285 Estimated % Single Service New Clients = 80%
    18. 18. Priority Strategy: New Client Development: Case Study • New consumer clients assigned to three toplevel categories: Yes Checking No Checking Large GapTo-Tap • Specific offers designed for each group based on onboarding path. • Results: After 12 months, 16% of former 1service clients owned two or more services -revenue improvement = $169,048
    19. 19. Priority Strategy: Checking Trifecta • Key to achieving strong non-interest income for Checking accounts – presence of priority add-on services: – Direct Deposit – POS – Bill Pay • Often as important as selling another service to overall value
    20. 20. Priority Strategy: Checking Trifecta: Case Study # of Consumer Checking Clients = 6,479 Almost 40% missing either Direct Deposit or Debit Activity Average NII for Checking exponentially higher when key addons present
    21. 21. Priority Strategy: Checking Trifecta • Sales associates incented for “out-of-thegate” bundling of Direct Deposit & Debit Card for new Checking clients • Low-cost communications to current Checking Clients with cash coupons executed throughout the year + quarterly targeted calling blitzes • Results: Average NII increased by 11% -adding over $100,000 annually
    22. 22. Priority Strategy: Logical Member Development Senior Management Directive: “Grow the Franchise!” “What am I working towards? “And how do I get there?
    23. 23. Priority Strategy: Logical Development: Case Study Define the ultimate or “Omega” client Establish minimal number of development levels Assign clients to various levels leading to Omega status Ensure that progression = improvement in profitability
    24. 24. Priority Strategy: Logical Development: Case Study • Omega level present on all customer “touchpoints” – Branch distribution frozen and followed for 12 months • Additional analysis focuses growth efforts on members most likely to move up • Direct marketing strategies identified for each level • Results: % of clients in Levels 3+ increased from 27% to 31%
    25. 25. Secondary Strategies: Account & Member Relative Value Laser-Focused Retention Checking Bundling Member Triage Activities + Meaningful Data Appends Maximizing Potential New Client Development Logical Member Growth Strategy Guerilla Prospecting De-Marketing
    26. 26. Priority Strategy: Member Triage Activities • Most clients exhibit tell-tale behavior prior to closing an account or ending a relationship • More cost-effective to discover/manage potential client attrition than execute lost client win-back strategies Potential Potential Account Account Risk Risk Potential Potential Member Member Risk Risk
    27. 27. Secondary Strategy: Guerilla Prospecting • Uncover & focus on neighborhoods where you are successful at the desired behavior… Clients with Home Equity Prospects in That Area…
    28. 28. Secondary Strategy: De-Marketing • Embrace the truth that you can’t – and shouldn’t – invest in all members • Identify & isolate long-term members who are low value/balance and low potential • Find low-cost communications alternatives • Allocate resources to members where possible return is greater
    29. 29. “The purpose of computing is insight not numbers”. R.W. Hamming
    30. 30. Data Modeling • Transforms your member information into stronger relationships that drive business growth through personalized print and digital media services. – Provide high-impact client insight – Align with cost-effective communication programs to fully leverage this new intelligence – Drive your data with little impact on your internal resources • Business results provide the case for doing the work • Bottom line improvements are the objective
    31. 31. Thank You!
    32. 32. Cathedral Corporation is the NAFCU Services Preferred Partner for Variable Data Driven Solutions for Printed and Electronic Financial Services Communications. Learn more at www.nafcu.org/cathedral or visit us in the Preferred Partner Pavilion, Booth #30.