Sanwa Bank California is enhancing its direct marketing programs with the latest data base analysis and modeling techniques.
Executives said they hope the effort will enable the $8 billion-asset unit of Japanese giant Sanwa Bank Ltd. to tailor product offerings to customers with greater precision.
Sanwa is working with Harte-Hanks Direct Marketing, a New York-based unit of Harte-Hanks Communications Inc., San Antonio. The marketer recently created a new marketing, planning, and analysis division, consisting of marketing experts from retail and financial services, that helps clients fine tune their direct marketing campaigns.
The new group is helping Sanwa's in-house marketing team to initiate "client-focused, as opposed to product-focused activities," said Becky Mershon, senior vice president, senior product manager, and data base marketing manager at the Los Angeles-based bank.
"With one phone call, we get consulting from professionals who are very familiar with our data base, and can pick the most effective mailing lists," she said.
She added that using an outsourcer is more cost-effective for the bank, since it lacks comprehensive in-house marketing expertise.
Sanwa Bank is among a growing group of financial institutions that are using data base marketing to get more value out of existing customer relationships. This has become more important in light of increasing merger activity and shrinking customer prospect pools, said David Blackwell, Harte-Hanks' marketing programs director.
"More and more, banks are playing a retention game," he said.
He added that many financial institutions also are trying to keep pace with retail and wholesale businesses that are using data base marketing as a tool to encroach on bank franchises.
"Companies like Sears and AT&T don't need branches; they do it all through the mail," he said.
Data base marketing helps banks compete by improving their understanding of customer needs.
The technology, for example, can be used to hone bank delivery methods by determining whether customers typically interact with call centers, automated teller machines, or branches.
Information gleaned from customer data base analysis can also be used to bundle and price services appropriately, and to predict purchasing behavior. Sanwa is using so-called neural network technology to apply sophisticated computer models to its customer data base to determine the products a customer is most likely to buy next.
As a result of its successful use of data base marketing, the bank is committing more resources to the technology. Its direct mail budget, 5% of the overall advertising budget last year, has been increased to 20% this year, said Ms. Mershon.
Direct mail lets banks accurately measure the return on their advertising investments, said Ms. Mershon.
In addition to building computer models, Harte-Hanks' new division provides back-end tracking of customer purchasing activity, and the effectiveness of direct marketing programs.
The unit was formed to meet client demand for the cumulative expertise in data base marketing that many banks lack in-house, said Mr. Blackwell.
The service adds the important element of data base analysis to the company's existing core competency, which is building and accessing data bases for clients, Mr. Blackwell.