Untapped data could help financial companies improve targeting in uncertain times

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The credit crunch isn’t just making it difficult for consumers and businesses to secure loans, it is also prompting some financial services companies to rethink their marketing strategies, re-evaluate the audiences they target and reduce overall direct mail volumes.

“As financial service marketers tightened their lending criteria, their marketing criteria have also tightened,” said Kevin Akerman, director of data products at Experian Marketing Services. “Today, we are seeing a lot more scrutiny around determining who the most desirable prospects are before spending the marketing dollars to generate a potential response.”

Of course, in the current marketplace, this may be easier said than done. Economic conditions have prompted radical changes in business’ and consumers’ financial status, as well as interests and behaviors. As a result, yesterday’s marketing maxims aren’t necessarily valid.

“You can’t rely on what was conventional wisdom or your own preconceived notions about how people manage their financial activity,” said Don Ryan, managing partner at marketing consultancy iKnowtion.

Rather, the key to understanding this brave new financial world is the robust supply of data available to today’s marketers—both through third-party providers and within their own organizations.

According to Ryan, transactional data could help companies understand the effects of the economic downturn on their customer bases. Examples of actions that could indicate shifts in consumers’ financial services needs include changes or interruptions in salary direct deposit payments, changes in average withdrawal amounts or frequencies, changes in credit card payment amounts or propensity to pay on time, changes in 401K payments and address changes, he said.

On the b-to-b side, reductions in an organization’s number of employees or the elimination of 401k matching programs might signal a significant change in financial status, Ryan added.

“You could use those as triggers to send off what you think would be an appropriate communication about products or services that you have. Or if it’s a big customer, you might invite them to come in for a meeting,” he said.

Engagement data—information about how often customers check their online accounts, visit a branch, etc.—is another untapped resource that could yield opportunities to sell additional services or to save customers in danger of closing accounts or leaving an institution.

“That information is being captured and, unfortunately, sometimes it’s … not being reconnected to the transactional database,” Ryan said. “We’ve found … that information is a very good predictor of somebody’s likelihood to purchase additional products. It also can be a very strong leading indicator about changes in somebody’s behavior and you could use that information for trigger events.”

Akerman often sees substantial lifts when financial marketers use Experian data to fill in missing information, validate or update their own customer views.

“Enhancing [the] customer view with outside data like estimated income, own vs. rent, household characteristics, consumer behavior data and which marketing channel that consumer prefers to be reached in all help the financial services client learn more about their customer and, ultimately, make more targeted offers,” Akerman said.

For invitation to apply (ITA) business marketing offers, Akerman said there is increased interest in bringing in consumer demographics and statistics that examine credit characteristics of consumers at the ZIP code level based on where the business owner lives.

“Adding this type of very powerful consumer data to the business data can not only make ITA campaigns perform better but can paint a very different view of the two business owners who may look similar at the business view but have very different characteristics and behaviors as consumers.”

In good times and bad, Ryan said he believes all companies could benefit from having a more holistic view of customers and prospects. “There are significant revenue opportunities that are being left on the table at just about every place that I’ve been,” he said.

That may explain why, even as the Dow dives, many database marketing companies are thriving.

“We’ve been much busier since the economic decline,” said Kurt Ruf, owner of database marketing company Ruf Strategic Solutions. “When you’re losing your ad budgets, you have to really understand your customers to make the most of the resources you have left.”

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