Ask the well informed about the trendiest expressions in banking today and "strategic customer targeting" will place high on any list. The phrase encompasses two elements:

The ability to predict customer value based on advances in technology and statistical techniques that allow manipulation of data on a scale unimagined even a few years ago.

The capacity to take maximum advantage of these predictions based on a redesign of business processes.

The successful application of these two interconnected elements will enable some institutions to obtain decisive competitive advantages. Indeed, so awesome is the potential of strategic targeting that a number of institutions are poised to commit huge resources to realize it.

Herein lies the problem: As institutions contemplate building the Rolls- Royce of targeting efforts, many are moving far too deliberately. Other, more nimble competitors, convinced that the great is often the enemy of the good, are turning from mega approaches to less ambitious efforts, sometimes dubbed "rapid prototyping."

Rapid prototyping includes the following steps:

Isolating key segments of a large customer population.

Obtaining relevant data on these segments.

Building limited predictive models.

Developing customer initiatives based on the model results.

Building the organizational capacity to formulate ongoing initiatives.

In cross-selling, for example, the attempt is to isolate those variables that play a significant role in the purchase decisions of potentially profitable customers. For some products, as few as three variables can account for between 50% and 60% of the variations in behavior among selected customer segments.

It is comparatively simple to use regression analysis, which is just the process of assigning weights or coefficients to common sense, to uncover the relative importance of each of these three variables.

At one institution, such a mini-model underpinned a sales campaign that secured a double-digit response rate, appreciably higher than that which might have been secured through random efforts or simple intuitional targeting. Just as important, the model and its data elements were assembled in only about a month, involving thereby less than one-tenth of the time and cost of a full-blown mega exercise.

However, successful cross-selling campaigns depend on more than just good customer targeting. They also require, among other things, acceptable methods of delivering product offers.

And since the bank is preselecting customers, delivery must occur through direct marketing, which usually means telemarketing.

It is again possible in this phase of the operation to err by aiming too high. True, most bank direct marketing facilities are at present rudimentary, and bank telephone personnel are far better equipped to service than to sell (the inbound direct bank is usually more advanced than the outbound).

These familiar observations have in the past served as excuses for not doing anything until extensive infrastructural and training investments have been made.

This is a trap that savvy banks don't fall into. They are mounting campaigns with literally fewer than a handful of internal telemarketers and with some quite modest outside assistance.

The resulting efforts are not without problems, to be sure: Systems designed to funnel sales leads to internal telemarketers are deficient; these telemarketers lack certain key technological aids (e.g., power dialing and follow-up software); and coordination between product and telemarketing personnel is weak.

Nevertheless, these institutions have persevered, achieving thereby not only vital new sales but also valuable knowledge.

They have learned about the great power inherent in certain proprietary internal and readily available external data elements, the value of simple mathematical approaches, the need for im-proved delivery systems, and the obstacles that must be surmounted to ensure the requisite cooperation between staff and line.

More generally, the institutions have acquired a healthy regard for the visceral truth expressed in that celebrated Nike ad: "Just do it." u

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