What do you really know about your members?
Sure, you call them by first name, acknowledge their special occasions and provide them with products and services you think might be useful.
But, that doesn't even skim the surface of who they are, how they think and what they can do to help make the CU more profitable.
Imagine how knowing more about the an individual member can change how the credit union solicits products and services. Instead of sending hundreds of brochures about the newest college savings plan to members who have already retired, the brochures could be sent only to those most likely in need of such a product.
Database Marketing Agency, Portland, Ore., says it has developed such a system for credit unions that want more sophisticated marketing tools. With its Integrated Database Marketing and Matrix Marketing programs, DMA can track members down to the smallest of details, such as how often they make deposits and withdrawals, which ATMs they frequent, which credit cards they favor and the profitability of each of their relationships.
The purpose, said Rich Weissman, founder, president and CEO of the nine-year-old company, is to provide the tools for more effective and profitable marketing. "We feel in our very clear bias that marketing and sales must result in increased profitability," he said. "If there is lots of energy, volume, activity and costs (in marketing), but nothing at the other end, why bother?"
In contrast to other types of campaigns, such as direct mail that typically reaps a 1%-2% return, so-called matrix marketing sees as much as 10%, he said.
At The Cell-ular Level
Weissman, former senior marketing executive with major financial institutions that include Bank of America, U.S. Bank and Bancorp, and National Westminster Bank USA (now Fleet Bank), said his team has created several integrated software programs that gather data, including financial history, census data, demographic and geographic information, and which then creates a matrix with clearly defined categories, or cells, that give marketers a better starting point.
"It's multi-dimensional," Weissman said of the matrix. "The cells overlap particular groups of people who are like one another but different from others. From there, we define the cells."
He said each cell gives a picture of a group of people with particular profit potential. For example, one group with children of a particular age would be a good target for college savings plans. To further define the potential, the information will pinpoint only those families with parents who are college educated themselves and have a capacity to save money.
"The critical point is that it is not just about selling more but selling right," he said. "It's offering home equities to homeowners with particular loan-to-value ratios and particular credit scores-and not offering it to people who just refinanced last month."
Throughout the year, DMA provides its credit union clients with updated information that tracks the success of the sales and pinpoints down to the cent the profitability of each member according to how they manage a particular product or service.
Weissman said while DMA doesn't do any of the actual marketing, it does keep in close contact with those who do and inputs that information into the system as well. "We track how many times we target folks and what specific message we send," he said. "We record whether the communication is through direct mail, the phone or through ATMs and statements."
And, every month, those cells are revised, depending on the member response to the communication.
While the cells are clearly defined, Weissman said, the cells fall into one of four general categories.
Sales: They meet the criteria for particular products that will increase the credit union's profitability.
Retention: "We can define cells that are at risk of closing accounts and define certain behaviors," Weissman said. "If they know this, they can get in touch with the member before it happens."
Change behavior: These campaigns focus on those members who, for example, have inactive revolving accounts or online access but are infrequent users of either.
New members: "We want to put them on track for communication so we don't lose them," Weissman said. "By the time their first year is up, we want them to be active users."
DMA has about 40 clients, half of which are credit unions, Weissman said. Last year, it won a Best Practices Award from CUNA for its effective marketing tools. Among its clients is Portland Teachers Credit Union with $1.5 billion in assets, where officials attributed a 75% increase in profitability-$9 million in one year-to the Matrix Marketing Program.
In addition to its Matrix Marketing and Integrated Database Marketing systems, the company offers tailored consulting services focused on the disciplines of marketing, sales, finance and technology. While it serves very large markets, Weissman said, DMA was specifically created to give opportunities for success to small and mid-sized financial institutions.
Not Upscale Marketing
He said he wanted to stress the fact that his company or its products are not about "upscale marketing."
"That is not what this is about," he said. "It's far more refined and sophisticated. It's not about targeting people with money. It's about targeting the right kind of people with the right kind of sale whether they be students, first time homebuyers or retired folks."
Weissman said the company has grown steadily since its formation and he expects continued success as more businesses see the results. "This way of thinking is very different," he said. "The few folks who have picked up on it are reaping the rewards...I think more are beginning to understand that they need to move in this direction to be successful. It's about detail."
Weissman said it has surprised many that the initial set up process is relatively speedy.
To get the data input into the IDM system takes about 90 days, he said. It takes another 90 takes to create the matrix.
