Strong Back-Office System Needed to Assure Success

The news was heartening but not unexpected: Our firm was selected to launch the direct marketing campaign for a major bank's new business credit card.

We were confident, based on our past account management experience with large credit card issuers, in our unique qualifications to launch the product.

Very abruptly, the entire launch was killed, and for a frustrating reason: The bank's existing computer systems were not sufficient to support the program's transaction processing and billing procedures.

It wasn't a matter of putting the cart before the horse. Without fully developed systems, the cart lacked wheels.

Support Vital

Although this is an extreme example of how the best-conceived direct marketing program can be detoured, it illustrates that inadequate support can be lethal.

There is no way around it: Your back-end systems have to be in place and functioning efficiently to support your product.

It is more than just hardware and software. It means an informed, responsive branch staff to handle inquiries; knowledgeable customer service representatives, and a fulfillment operation used to quick turnaround.

Intriguingly, all of these priorities are linked to revved-up consumer demands for better service from their banks. Customers have been expressing their needs loud and clear: convenient service along with competitive fees.

In the credit card area, customer communication is the core of good and effective customer service. It means regular - at least quarterly - communications that sell something of value, namely the varied benefits of membership.

Often these messages will cross-sell additional services and identify free and fee services, helping the bank realize incremental revenue.

It behooves the bank, of course, to target those cardholders who are the best candidates for cross-selling campaigns. But how does one make that determination?

One way to increase overall efficiency and speed up the pay-back on your investment is to smartly utilize the front-end talents of a group of back-end professionals: market researchers. To maximize response, the right kind of research has to be done to identify the best segments within the customer base and among prospects.

Using computer modeling of customers and past inquirers, and a series of strategic mailings to carefully selected groups, you can narrow down the universe of prospects into groups and, ultimately, prospect list with the best chance for success.

This requires some very intricate geo-demographic research, but it has to be done in order to target only the best prospects. At that point, the bank's marketing team can begin to break out a powerful lineup of customized messages.

What are some of the most important research components to zero in on? First, remember that your existing list of customers represents the best place to begin developing a target audience profile.

Then, a crucial task is designing a direct marketing test plan to validate that profile. The plan helps determine the best methodology to acquire new cardholders. The guts of that plan should include:

* List recommendations.

* A testing matrix, to determine who gets what mailing.

* Editorial copy for the direct marketing and telemarketing campaigns - the style and substance of the written messages.

* A short list of the companies that perform relational data base analyses, which balance the bank's risk tolerance with internal marketing objectives.

To develop and maintain a more muscular, responsive back-end operation, meanwhile, there has to be a companywide commitment to its direct marketing programs over two to three years. It's over that realistic time frame, not two to three months, that the real benefits of relationship banking emerge.

Supplement to Program

Everyone has to understand that the program doesn't replace the need for a coordinated, multipronged sales effort. It supplements it.

As the banking industry's merger mania builds steam across the nation, patience and planning are needed more than ever. With 300 banks holding about 85% of U.S. banking assets, there has to be vigorous attention to thoughtfully absorbing all those accompanying banking relationships, the real fuel to growth.

Mr. Trink is executive vice president of Princeton Direct, a marketing and advertising firm based in Monmouth Junction, N.J.

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