SCOTT D. NELSON doesn't look like a guerrilla.

Actually he looks like a banker, more precisely the vice president of market research at $9.1 billion Old Kent Financial Corp., Grand Rapids, Mich.

Still, Mr. Nelson lists guerrilla marketing as part of the support his department provides to Old Kent's network of 213 retail branches in Michigan and Illinois.

His preferred weapon: a comprehensive data base that seeks out attractive targets for direct marketing campaigns. Old Kent relies on these campaigns to maintain its customer base and add to its retail lending portfolio.

"Technology is the great equalizer," he said. "Whether it's in Chicago, where we're a gnat on the back of First Chicago, or in Gaylord [Mich.], where we have a 70% market share, I can use my technology to be smarter, faster, and more precise than they are."

Old Kent also has become something of a direct mail gorilla, judging from its heavy volume. The bank's direct mail count went from zero in 1991 to more than one million pieces in 1992.

"Most financial institutions realized about five years ago that marketing is more than punch and cookies," said John Landgraf, president of Spatial Decision Management, a Windermere, Fla., firm that specializes in data base marketing.

That realization, Mr. Landgraf added, coincided with the rise of bank marketing systems that ran on personal computers.

"These systems do most of the marketing that banks need," he said. "The biggest problem now is coping with the staggering amounts of data, both internal and external, that are available."

As in many other businesses, bankers often have a lot of information about their customers, but no way to conveniently collate it and put it to use.

Take mortgage applications. "You bare your financial soul to the bank, they deign to give you this mortgage, then they take the application and throw it in a box," Mr. Nelson said. "Well, you just told them most of your significant financial assets and liabilities. It's a gold mine for marketing."

Old Kent recruited Mr. Nelson from Household International, a financial services firm renowned for its marketing prowess, to open such untapped veins. One of his mandates at Old Kent was to update its customer data base, commonly called a marketing customer information system.

In 1992, the bank scrapped its existing system, replacing it with one from Harte-Hanks Data Technologies, Billerica, Mass. "We switched because of their back-room expertise," said Mr. Nelson.

When updating the customer information system, the bank provides Harte-Hanks with a copy of its entire customer data base. The company extracts the relevant marketing information, formats it, and forwards the data to Old Kent on a digital audio tape, which can store more than two gigabytes of data.

The tapes update the customer information system, which runs on a Sun Microsystems Computer Corp. Sparcserver. Marketing department users access the system over a local area network.

Complementing the information system is a broader demographic data base from Claritas/NPDC, Alexandria, Va. These data assist in identifying gaps in Old Kent's market penetration.

The research staff then performs what Mr. Nelson calls "the slicing and dicing, to find out what's really going on," alluding to standard statistical methods of analysis.

Old Kent merges its segmented customer information with the products it wishes to push. This information is placed on a matrix, which serves as the basis for mailings.

"Right now we're in a loan acquisition mode, so the matrix is skewed towards loan products," said Mr. Nelson.

For a home equity line of credit promotion, for example, the bank may choose to mail to homeowners older than 35 who have an existing loan relationship.

When reviewing the results of the promotion, the bank may find that "over 35 doesn't seem to predictive of anything, so that'll drop," Mr. Nelson said. "But the presence of two or more children does seem to make a difference."

In that fashion, mailings can' be more finely targeted to groups that will respond.

"There was some concern that we were going to inundate our customers with junk mail," Mr. Nelson explained. "So we take it one step at a time."

Each mailing, he says, must pass through 149 steps before it reaches the post office. It also must be approved by a directmarketing quality team, which includes employees from the branches and the affiliates.

Once a mailing is approved, the data is electronically forwarded to the bank's direct mail house in Virginia, which maintains its own copy of Old Kent's data base. It then completes the mailing using Michigan and Illinois postmarks to create a local feel.

With each campaign, the researchers also provide lists to branch managers for voluntary telephone follow-up. "The smart managers will call," Mr. Nelson said. "We've found very good response to customers' being contacted by their branch people. On some pieces, we double the lift [success] rate by doing telemarketing."

Response rates aren't as important to Old Kent and Mr. Nelson as acquisition costs.

"Different products have different acquisition costs," Mr. Nelson explained. "I want to make sure I don't tank the profitability of a product because of the work I'm doing."

The rule of the thumb for Old Kent is that the cost of acquiring customers for a given product should not exceed one-third of the first year's incremental profit of that product.

That equation is clearly realized in large markets. In cities like Chicago, "I can use my guerrilla marketing through matrix mail to come in at a much lower cost, without. spending beaucoup bucks on WGN-TV and the Chicago Tribune," said Mr. Nelson.

He also said Old Kent's approach can be effective against the reckless pricing that occurs when competition becomes heated. "It's almost a counterstupidity strategy," Mr. Nelson noted. "We're not going to compete with them on the basis they're competing [price], but use our system to get into these households and retain those relationships."

While data bases such as the one Old Kent uses are intended for larger institutions, smaller banks are not shut out. Mr. Landgraf, the consultant, said that marketing customer information systems and geographic information systems designed for PCs are both inexpensive and effective.

With technology continuing to act as the great equalizer, it's clear that future marketing skirmishes will be fought door-to-door.

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