Its marketing is getting more effective and less costly, KeyCorp says, thanks to a two-year-old data warehouse.
The warehouse, supplied by International Business Machines Corp., lets KeyCorp predict not only the next best product for a customer, but the best channel to pitch it through.
Though a number of banking companies are using data warehousing to improve marketing response rates, few have achieved the ability to push specific messages through a particular-often cheaper-channel.
KeyCorp's effort is an example of "a recent development by financial institutions to leverage the knowledge they have," said Bill Bradway, research director at Meridien Research in Newton, Mass.
The Cleveland banking company has increased response rates through software that identifies the next set of products customers are most likely to buy.
Compared with direct-mail marketing campaigns of the past that achieved response rates of 1% to 2%, Key "pretty consistently" now gets response rates of 5% to 10%, said Jo Ann Boylan, executive vice president of Key Services Corp.
In addition, its costs are declining as marketing gets more targeted. It now sends out 20% fewer marketing messages, Ms. Boylan said.
Yet the array of marketing programs is increasing. Instead of seven major cross-selling campaigns a year, the company now does about 45 more targeted ones.
Key's refined marketing methods have increased by 200% the rate at which people buy the products offered them, Ms. Boylan said.
Messages also reach customers through channels that are less costly than the mail. For example, KeyCorp used its voice response system, which gets four million calls a month, to market overdraft protection to customers who don't already have it.
Ms. Boylan said most of Key's 3.3 million consumer households do their banking through electronic channels, as opposed to branches.
The data warehouse supports a central marketing department that includes representatives from the commercial and retail sides of the bank. "The central focus lets us build these utilities that we leverage across" the bank, Ms. Boylan said.
The enterprisewide approach is the opposite of some banks' strategy of deploying numerous data marts to support individual business lines.
"We understand that cross-selling products and services requires having complete profiles of customers," Ms. Boylan said.
She added that the $80 billion-asset company built the warehouse incrementally so there was no sense of its being a gargantuan, enterprisewide project.
KeyCorp moved the warehouse to a dedicated IBM S/390 server in 1997. It built in-house its KeyLead application, which identifies the products most likely to be bought next by a customer.
It then installed Exchange Applications Inc.'s Valex campaign management software, which helps it regularly assess the results of campaigns and revise messages as needed.
Key cut its teeth on data warehousing with a warehouse it built for its call center between 1990 and 1994, Ms. Boylan said. The goal was to put all customer information in one place so calls could be handled more quickly. The later, more comprehensive warehouse for enterprisewide decision support was easier to build because of the proliferation of new technology, plus the experience gained in the first project, Ms. Boylan said.
