How 1 CU Is Delivering Value At Every 'Touch-Point'
Credit Union: IBM Southeast EFCU
Nominated By: Raddon Financial Group
Nominated For: Matrix marketing
When John Zells wrote "Outrunning the Competition" for CUES, he drew upon his experiences in database-driven "matrix marketing" and the success it brought to IBM Southeast Employees Federal Credit Union.
In any Best Practices section, Zells' experience using Raddon Financial Group technology-and especially the results achieved-bears repeating.
"We tried to find a way to deliver greater value at every member touchpoint," says Zells, IBM Southeast's senior vice president and chief marketing officer. "We built a marketing management solution based on predictive behavior modeling."
The logic was simple: If the credit union was better able to identify needs based on small, narrowly defined member groups, marketing would better be able to promote the right information at the right time to the right members. Raddon Group's CRM software, seeded with predictive modeling behaviors, provides that opportunity.
Members At The 'Cellular' Level
IBM Southeast creates dozens of different member "cells" based upon behavioral patterns and member characteristics. At given times, cell are combined and products promoted to between 12,000 and 15,000 members (combined sub-segments of the credit union's 57,000 members) through postcard mailings, Zells says.
Zells calls this a "matrix campaign" because it involves different member groups and is part of a developmental marketing scenario that can stretch out over a period of one to several years.
"When members respond to promotions and buy, they move through a 'decision tree' of similar products and purchasing decisions to help us develop greater share of wallet," says Zells.
Credit union data run through Raddon's modeling program makes this possible, says Zells. "(Raddon) provides the intelligence for this program," he says.
That intelligence has helped IBM Southeast net some excellent results, according to Zells.
In the two years since the program has been in place, overall services have increased from 2.2 to 2.4 per household, says Zells. Deposits have climbed from an average of $8,300 to $10,600 and loans from $11,200 to $13,800 per household over that time.
"Checking account penetration has increased from 60% to 66% of all credit union members and money market certificates have grown from 9% to 12% over the past two years," Zells says.
Matrix marketing efforts have generated even more impressive results. Direct purchase response to the postcard mailings averages 2% during the first 90 days after the mailing goes out, compared to just .5% across all other industries, says Zells.
Indirect response-other new purchases during that same period-average 6.31% during that same period. Add that to the 2% and the campaigns generate a whopping 8.31% response rate on average, said Zells.
The numbers are even better with new members who come to the credit union, Zells says. Direct response to mailings net a 6.1% response of this group, while indirect response averages 12.9%.
"Our business model is focused on creating a best experience for the member and this has become a critical measurement of our success," says Zells.