Size is a relative thing, and that's a predicament for West One Bancorp.

With $8.8 billion of assets, West One is not exactly an industry behemoth. But in the markets in which it operates - Idaho, Utah, Oregon, and Washington - where credit unions and small thrift institutions far outnumber commercial banks - its size is enough to make customers and prospects think of West One as a megabank.

Yet executives at West One like to think of their organization as a community-oriented bank, said Theresa Hasman, assistant vice president and data base manager.

"West One has a community banking strategy," she said. "We want to be out in the community and understand who our customers are."

That's tough when you're operating in four states and diverse socio- economic environments. So West One turned to a sophisticated form of market segmentation known as lifestyles segmentation.

The process seems to be serving the company well, helping it retain customers in markets where it has acquired smaller financial institutions and boosting its overall success at cross-selling banking products.

"We needed a better understanding of our marketplace," said Ms. Hasman in explaining the decision to use lifestyles segmentation.

Lifestyles segmentation allows West One to tailor its marketing efforts to specific customer segments, neighborhood by neighborhood. "It helps us determine if there is a market for certain products," said Ms. Hasman. "It helps us determine how to present West One products based upon particular market needs."

This is not a new approach to segmentation, but it's one that appears to be gaining converts, according to Eddie Pickle, president of Claritas Financial Services Group, Arlington, Va. Claritas developed the data base and software that West One uses to analyze markets by lifestyles.

The critical factors of lifestyles segmentation are wealth, income, age, homeownership, and business ownership. Or as Mr. Pickle describes the criteria: How big is your stash? How fast is money flowing into your stash? What are your prospects for financial growth, and what do you own?

Factors such as education and children are secondary in this process, Mr. Pickle noted.

The neighborhood-by-neighborhood approach to market analysis makes sense, explained Mr. Pickle, because people of similar characteristics tend to live near one another. For example, blue-bloods don't tend to live among blue-collar workers, and white-collar professionals don't typically live in the same neighborhoods as students.

"Your neighborhood does say a lot about your lifestyle," said Mr. Pickle. "It correlates with your financial behavior."

Claritas draws upon data compiled by the Census Bureau and local sources to offer detailed analyses of the consumers who live in a particular market - their average household incomes, the types of financial products they use, the radio stations they listen to, etc.

West One - integrating that information with its internal customer files - can identify the types of products that would best suit certain customers and determine how best to reach those customers, explained Ms. Hasman.

"The whole purpose of market segmentation is to give the large institution the ability to speak to and work with customers in a manner akin to the community bank," said Mr. Pickle. "It allows the bank to develop products and services that speak the language their clients want to hear."

For West One, that ability means zooming the eye of its marketing camera into the branch office, a process Ms. Hasman calls "market management."

Drawing upon segmentation data from Claritas, Ms. Hasman and her colleagues at West One headquarters in Boise, Idaho, can give each branch manager an information package profiling individuals in their markets. Branch managers can then analyze opportunities to sell each product offered by West One within their particular markets, and they can direct marketing activities accordingly.

"By understanding the various lifestyles, we can understand how to approach each lifestyle based upon product opportunity for that census tract," Ms. Hasman explained.

Take, for example, investment products.

Using the Claritas data base, West One might find, based upon income and other factors, that 10% of the population in a certain Boise neighborhood could be persuaded to invest in a bank-run mutual fund.

Then using its internal data base, it might further determine that 5% of the neighborhood's households already have mutual fund accounts with the bank. This process would identify as prospects a 5% population segment.

Then, again, drawing upon information concerning the lifestyles of people in that market - what periodicals they read, the radio stations they listen to, etc. - West One could market its investment products using the media most likely to reach the target audience.

"It helps the branch managers understand where their community needs are," said Ms. Hasman. "It provides a blueprint of community needs."

This is an important consideration in the banking business today, where job mobility often renders it difficult for branch employees in a large organization to understand their customers.

"If you're a one-branch bank, you really do know your customers," said Mr. Pickle. "There's no way a big bank can achieve that level of knowledge at the headquarters level. But it can understand the market segmentation profile of its customers."

More to the point, perhaps, a bank that takes this approach to marketing can mesh the best of both worlds - big and small.

"There's no way a local branch manager can bring to bear the sophisticated market development and money a large marketing department offers," said Mr. Pickle. Lifestyles segmentation, however, breaks down that barrier by bringing to bear at the branch level the marketing prowess of a much larger organization, he said.

This not only enhances West One's opportunities to capture market share, said Ms. Hasman, but also helps satisfy mandates of the Community Reinvestment Act - the 1970s-era law that requires banks to take positive steps to meet the credit needs of their local communities.

For example, Ms. Hasman said, West One can identify precisely in its areas of operation where low-income people might have credit needs and how best to sell its products within those markets. "Our regulators really like that," she said.

Lifestyles segmentation also helps West One better integrate acquisitions. During the past five years, it has bought about 10 smaller financial institutions. And lifestyles segmentation has played a major role in retaining the acquired institutions' customers, said Ms. Hasman. The process has helped West One understand who its new customers are, what their financial services needs might be, and how best to reach them.

Although lifestyles segmentation has yet to take the banking industry by storm, experts say it's a technique worth noting by any organization serious about marketing and about surviving the evolution of interstate banking.

"To excel in marketing, you have to adopt these types of techniques," said Genie Driskill, vice president of Synergistics Research Corp., Atlanta.

For West One, the technique's value, said Ms. Hasman, is visible in its cross-sell ratio - the number of accounts per household that are held with the bank.

Synergistics research found that the typical household with annual income of $15,000 or more maintains 3.6 service relationships with its main financial services provider. Although Ms. Hasman would not reveal West One's cross-sell ratio, she said, "The number has steadily increased over the last three years." And that, she said, is largely due to West One's focus on lifestyles segmentation.

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