With the cost to acquire deposits increasing and fewer traditional bank deposit dollars circulating among an increasingly large playing field of competitors vying for them, like retail establishments, investment firms, person-to-person payments providers and others, financial institutions will have to work harder — and smarter — to retain and acquire deposits.
A Data-Driven Approach
We are now fully entrenched in the data economy, and data is the key to matching the right products to the right consumers at the right time. Financial institutions can no longer afford to cast a wide, impersonal net with the hopes of catching anybody and everybody — aside from being costly and ineffective in a market environment where relevant, personalized engagement rules, a haphazard approach to deposit acquisition results in a high account holder turnover rate and transient deposits among rate hoppers.
It’s far more efficient to take a strategic approach by knowing what kind of account holder to attract as well as what products appeal to them and how to reach them. Data, including that of existing account holders, is the key that will unlock which prospects are right for your institution based on your objectives. Data will identify which prospects are most likely to purchase multiple products and generate significant revenue.
Whether it’s Millennials or Baby Boomers, new movers or small business owners, financial institutions that can pinpoint their top prospects and extend personalized offers via multiple channels will be the most likely to succeed.
Matching the Right Products to the Right Prospects
Gone are the days of relying on passive, organic growth or saturation mailings in which every household within a certain radius of the branch received the same offer and message. The amplified competitive environment and financial pressures faced today necessitate a more nuanced and specific approach to deposit acquisition.
Fortunately, using a combination of data, analytics and exceptional creative, technologies exist to empower financial institutions to offer the right product to the right prospect at the right time — at the same price as saturation mailings.
The Right Product
It may sound obvious, but you need to ensure you’re promoting products that align with your institution’s strategic initiatives. How are deposits going to help you get there? Are you after large deposits? Low-cost deposits? Money market accounts? Aligning promotional products with the institution’s strategy and growth goals will ensure executive buy-in and support, which are crucial to the collaboration between marketing and other departments.
The Right Prospect
The most obvious difference between the old and new ways of acquiring account holders lies in the power to target and engage the right prospect.
While traditional programs were only marginally targeted and typically required huge mail quantities, today’s programs can be tailored to select households, such as new movers, small business owners, or lookalike consumers, resulting in a much smaller target audience. These new programs produce higher responses than saturation mailings, but they come with higher costs that require higher returns.
This flexible approach targets neighborhood clusters with the highest likelihood of responding to the financial institution’s offer.
To achieve this best-of-both-worlds result, it’s necessary to use all three phases of what’s known as the analytic journey.
The Analytic Journey
The analytic journey consists of 3 distinct phases: descriptive, predictive and prescriptive.
Descriptive analytics is a look back at what has happened. This means examining the available data on a financial institution’s existing account holders.
Predictive analytics is a look at what is likely to happen in the future. By combining propensity models with demographic and behavioral information, highly accurate predictions can be made about who is likely to purchase what products and when.
Prescriptive analytics answers the question, ”What should we do about it?” This relies on a wide number of data points, along with consumer segments and cutting-edge algorithmic techniques.
Data points that can be used to provide valuable insights into buying behaviors and clues about upcoming needs can include basic attributes such as income, net worth, home value, occupation, age, and education. They can also include industry-relevant attributes like credit card use and under-banked prospects. They can even include socio-demographics such as organic food purchasers, online shoppers and foreign-born residents, to name a few.
By combining a wide variety of such data points with robust analytics across all three phases of the analytic journey, financial institutions can, for instance, identify areas where competition is fierce or where opportunity lies. They can also get a custom consumer index that ranks prospect areas based on how similar or dissimilar they are to the institution’s target consumer.
Using a data-driven approach, financial institutions can accurately select the most desirable prospects based on budget and institutional requirements. This is light years ahead of the spray-and-pray approach of traditional saturation mailings. Not all marketing departments are staffed, trained or equipped, however, to access, analyze and interpret large amounts of data sourced from multiple places.
Fortunately, Harland Clarke can help. Our acquisition solutions include everything you need — analytics, incentives, creative, and comprehensive reporting — to land the account holders you want just when they are ready to make a switch.
>>Click here to download Harland Clarke’s “Multi-Wave Household Acquisition Campaign Results in 340% ROMI” Case Study.