1/29/2009, Tampa, FL:  Attracting customers and deposits in an environment where consumers have lost confidence in most banks, is just one of many new challenges facing marketers today, according to Glenn Hudock, SVP Retail Banking, for Harte-Hanks.

Hudock joined Harte-Hank's Creative Strategy VP, Li Saul, for a Webcast entitled, "Deposit Growth Strategies in a Difficult Market," hosted by OnsiteConference, Inc. a privately held research marketing firm located in Tampa, Florida.

Harte-Hanks provides global direct and targeted marketing strategies and solutions for financial institutions in today’s troubled environment.

Besides these pressures on earnings, marketers must also need to consider:

• Customer concerns about financial stability of the markets

• Generating accounts, balances and fees from new checking acquisition

• Reducing first-year customer attrition

Hudock stated that, "Business as usual is not working to plug the holes in the deposit balances. Banks need to work smarter to provide innovative products, engage customers through multiple channels; and manage all aspects of the customer lifecycle, including acquisition, onboarding, retention."

Innovative Products

A couple basis points, noted Hudock, or promises of friendly service, won't bring new customers and deposits through the doors. Instead, banks are making innovative and attention grabbing offers.

Hudock observed that SunTrust Bank donates $100 to a customer’s charity, or they can choose to receive a $50 SunTrust Visa® Gift Card. Customers must accept a new SunTrust Visa Check Card and make a purchase.   HSBC encourages customers to sign up for e-statements, and to enroll in online bill pay in exchange for green living kits.  While a bit costly, the key is to sell "sticky" services that have high retention rates, and provide logical cross-selling opportunities.

Engage through Multiple Channels

"Your grandparents got their news delivered on the front porch every morning," offered Hudock.  "Today, it"s a bit more complicated. Consumers get product information from direct mail, search engines, online media, and websites. Additionally, viral marketing programs create messages that are passed along to consumers; sometimes under the radar of the bank.   Marketers should monitor such social networks, to be certain that their messages are being properly received."

"Regardless of the channel," pointed out Li Saul, "marketers must test and learn.  Creative rotation lowers the degradation of response. While consistency of the message and the offer is imperative, banks should constantly be innovative in presenting the message, while imitating and reinforcing what the consumer has already seen."

Manage The Customer Lifecycle

Saul stated that, "banking today is not about what you acquire but what you retain."  Saul noted that:

• Consumers attrite at an alarming rate during the first year of the relationship, averaging 35% within the first year; more than half occurs within the first 90 days.

• Attrition rates are much higher for relationships without "sticky" services.

• The 73% of the cross sales occur within the first 90 days.

"Attrition," according to Saul, is high because acquisition strategies are poorly targeted, with value propositions that do not meet the customers’ needs. Marketers need to include sticker services, follow-through on fulfillment, and create an on-boarding process that builds a two-way dialogue.
"Improved customer engagement can be achieved with a greater focus on the first 90 days of the relationship," recommended Saul. He related that early on, the bank must establish a relationship and identify the customer's needs and preferred communications channel. This can best be done by data-driven segmentation, cross-sell propensity models, and profiling. "All this," he concluded, "will lead to the sale of services that drive entrenchment and retention."

A review of Harte-Hanks customers using this approach finds strong, yet predictable, results from such a disciplined approach. Hudock summarized the results by reporting:

• Overall mail response rate delivers 30%+ incremental lift versus control.

• 20% response rates on profiling are not uncommon.

• New-customer attrition declines by more than 12%.

• Average balances are 10%+ higher compared to control groups.

• Cost per gross account is less than $12 incremental.

• Cost per account is less than $1.50 per $1,000 in balances.

• 80% of product responses occur within six weeks of mail.

• Response rate improves as number of touches increase.

• Sales of "sticky" services are the single most important activities to affect retention.

Hudock noted that customers who provide profiling information are two to three times more responsive.  Such efforts are outside the ability of most financial institutions.  However, such significant additional results make the investment in outside talent a viable consideration.