Marketing Analytics. What s the Bottom Line? Kevin Stang Area Vice President Raddon Financial Group

Transcription

1 Marketing Analytics What s the Bottom Line? Kevin Stang Area Vice President Raddon Financial Group

2 The RFG Solution Understanding the needs of the customer Aligning products, systems, people, and processes Industry Research (since 1983) Solutions Center (since 2007) Strategic Analysis (since 1988) Software Solutions (since 1997) Understanding the competencies of the organization Marketing, sales, and management tools Raddon helps financial institutions gain a competitive advantage and improve performance with sustainable and measurable results through: 1. Research and Analysis 2. BI/CRM/MCIF Software 3. Data Solutions 4. Consulting

3 Decisions Based on Fact, Not Over 25 years of consumer research trends Opinion Loyalty Benchmarks from 300K Annual Surveys Industry Product and Channel Benchmarks 6,000+ Branch Profiles Benchmarks from 45 MM Accts & 13 MM Households RFG s Business Intelligence 87 Annual Seminars with 3,300 Attendees Product & Customer Profitability Norms

4 RFG Campaign Tracking Averages 100 s of Financial Institutions 1,000 s of Campaigns 10,000 s of Direct Mail / offers Tracked Direct Response Indirect Response Overall Response New Households 4.1% 12.8% 16.9% Top Loan Targets 4.2% 21.6% 25.8% Auto Retention 2.9% 7.2% 10.1%

5 Efficient, Research-Based Targeting

6 CU Industry Loan Growth Beginning to Improve 60 High performers have exhibited stronger loan growth in all periods since The CEO Average growth rate is 5.6%; for high performers it is 8.5%. Source: CEO Strategies Average Data

7 Macro Level Targeting: Potential Tracking Results Your CU s Member Survey National Research Gut Feeling

8 CONSUMER SEGMENTS - All Households Southeast Region Age and Income $125,000 or more Segment by Blending Age & Income Gen Y Gen X Baby Boomers Traditionalists Upscale $50,000 - $124,999 Credit Driven Middle Market Middle Income Depositor Less than $50,000 Fee Driven Low Income Depositor Southeast Consumer Segments Age Definition Income Definition % of Households Fee Driven 18 to 44 Less than $50, % Credit Driven 18 to 34 $50,000 or more 7.0% Middle Market 35 to 54 $50,000 to $124, % Low Income Depositor 45 + Less than $50, % Middle Income Depositor 55 + $50,000 to $124, % Upscale 35 + $125,000 or more 6.0% Unclassified N/A N/A 13.3% Total 102.7%

9 Understand Segment Behavior NATIONAL PRODUCT USAGE Product Usage All Fee Credit Middle Low Income Middle Inc. Households Driven Driven Market Depositor Depositor Upscale Checking 98% Savings 71% Money Market Account 21% Certificates of Deposit 23% Mortgage 48% HELOC 17% Equity Loan 9% New Auto Loan 19% Used Auto Loan 16% Consumer Loan 22% Classic Card 54% Gold Card 17% Platinum Card 34% Delivery Channels All Fee Credit Middle Low Income Middle Inc. Households Driven Driven Market Depositor Depositor Upscale Lobby 65% Drive-up 56% Direct Deposit 78% ATMs 60% Debit/POS Card 68% AVRU 18% Online Banking 58% Source: RFG's Spring 2010 Strategic Planning Study Group (SPSG). Usage indexes reflect consumer segment definition changes implemented by RFG in October 2009.

10 Your CU Member Survey Data CREDIT DRIVEN PROFILE Percent of All Households Overall Emerging Affluent ABC Credit Union 10% 8% 3% Percent ile Group Average 12% 9% 3% Peer Group 16% 11% 5% Extended Demographics ABC CU Average Age ABC CU Average Income $86,649 $70,241 $133,745 Services per Household¹ Homeowner 77% 79% 72% Children at Home 51% 54% 42% Overall Usage Anywhere 4 Overall Usage Anywhere 4 Delivery Channels² Index³ Overall Emerging Affluent Products Index³ Overall Emerging Affluent Traditional Loan Products Branch Teller Transaction % 86% 79% Auto/Truck Loan % 65% 73% Telephone--Employee 93 39% 43% 27% Mortgage Loan % 70% 74% Electronic Home Equity Loan 70 13% 14% 9% Direct Deposit % 93% 86% Home Equity Line 61 10% 12% 5% AVR 94 31% 40% 7% Overall Credit Card % 75% 80% ATM % 85% 85% VISA /MasterCard % 68% 68% Direct Debit % 68% 73% Rewards VISA /MasterCard % 30% 44% Overall Debit/Check Card % 86% 87% Personal Line of Credit % 17% 22% Debit/Check Card % 86% 80% Other Loan % 26% 18% Rewards Debit/Ck. Crd % 31% 66% Deposit/Investment Products Online Banking % 86% 95% Checking % 91% 95% Bill Payment % 50% 55% Money Market 84 30% 32% 27% Online Account Statement % 43% 53% Certificate 64 21% 23% 17% ¹Services per Household is based upon Member Survey product usage anywhere, IRA 70 26% 27% 24% excluding retirement investments, mutual funds, annuities and stocks/bonds. Mutual Fund 73 16% 18% 9% ²Delivery channel data is available only for Member Survey participants. Annuity 98 12% 13% 9% ³An index above 120 means the Consumer segment has "above average" usage anywhere compared with all Consumer segments. Indexes under 80 represent lower usage. 4 Product usage is based on your members' delivery channel/product usage data at any financial institution for this particular Consumer segment.

11 Example: Product to Segment Matching PRODUCT DETAIL FOR CREDIT DRIVEN HOUSEHOLDS Southeast Region - Retail Households Ratio Percentile Southeast Average Average Total Average Average Penetration Balance Profit Profit Penetration Balance Profit Loan Detail Real Estate 3.3% $77,467 $860 $241, Mortgages* 1.8% $120,417 $1,370 $232, HELOC 1.1% $30,450 $247 $15, Equity Loan 0.8% $30,898 $282 $9, Autos 22.8% $12,259 $243 $214, Direct Auto 20.9% $11,754 $241 $194, Indirect Auto 3.1% $14,764 $262 $27, Credit Cards 20.7% $2,460 $49 $45, Classic Card 8.8% $960 $0 ($2,995) Gold Card 3.8% $2,418 $210 $16, Platinum Card 14.7% $3,227 $92 $45, Consumer Loans 7.7% $5,698 $14 ($12,631) Unsecured LOC 7.6% $2,419 ($4) ($9,147) Deposit Detail Checking 60.1% $1,441 $82 $200, Savings 98.1% $1,339 ($76) ($285,748) Money Market 5.2% $16,530 ($132) ($19,658) Traditional MMA 5.2% $12,492 ($109) ($14,363) Tiered MMA 4.0% $22,116 ($127) ($18,704) High-Rate MMA 0.6% $61,975 ($236) ($2,205) Certificates of Deposit 3.2% $13,662 ($157) ($15,657) IRA 2.1% $6,512 ($82) ($5,334) Total $349, *Penetration and Profit include Held and Sold Mortgages. Balance is Held Mortgage only. Percent of Households: 7.8% Percent of Profit: 13.1% Percent of Loan Balances: 7.2% Percent of Deposit Balances: 2.4%

12 Macro Level Targeting: Loyalty Loans Borrowers $1000+ Bill Pay Direct Deposit 2+ Services* *Excluding Savings <$100

13 Macro Level Targeting: Loyalty Deposits $5000+ Deposits Direct Deposit 1 Deposit Product* Checking *excluding Savings/Checking

14 Example: Top Auto Loan Prospects Target using both Potential (Age/Inc.) and Loyalty ($Bals.) Run April & August when you re NOT running any other auto campaign.

15 Micro Targets Onboard and Activate Retain Active Households React to exiting households

16 Newton s 1 st Law of Motion Law of Inertia An Object at Rest will Stay at Rest An Object in Motion will Stay in Motion Onboard and Activate

17 Activate Checking HHs at rest Average # of Transactions per Checking is 38 and growing. Any fewer than 20 Transactions, its likely a secondary checking

18 Example: Checking Activation Find HHs Averaging fewer than 20 Checking Transactions/mo.

19 Activate Debit Cards at rest POS / DEBIT USER - PROFILE BY NUMBER OF TRANSACTIONS POS / Debit User 1 Percent of All Households Delivery Channel Transactions Teller ATM POS / Debit ACH / EFT Online Banking AVRU Checks Written NSF / Overdraft Total Transactions Profile Average Checking Balance Checking Costs Checking Fee Income Loan Balance Deposit Balance Average Age Services per Household Loan Profit Checking Profit Deposit Profit Total Household Profit 1 Shading represents the greatest value in that row. National Average Monthly POS / Debit Transactions None 1 to to 25 Greater Than 25 27% 23% 21% 29% $2,494 $2,750 $3,053 $2,338 $140 $177 $233 $360 $73 $130 $245 $473 $10,285 $10,176 $11,569 $17,930 $22,904 $17,537 $13,015 $10, $6 $85 $104 $170 ($32) ($10) $38 $142 ($254) ($143) ($68) $26 ($248) ($58) $36 $197

20 Example: Debit Activation Find HHs averaging fewer than 1 monthly Debit Transaction

21 Onboard New Households NEW & CROSS-SOLD HOUSEHOLDS PROFILE 75% of New Households are Single Service 50% of Household Services will be sold in the first year 52% of New Retail HHs have a New Households Cross-Sold Households Other Households Profitability Factors Ratio Percent ile Ratio Percent ile Ratio Percent ile Percent of HHs 4.6% % % 55 Services per HH Percent Single Service 75% 50 12% 40 53% 45 Percent With Loans 33% 49 67% 50 42% 46 Average Loan Balance $18, $21, $15, Loan Margins 5.82% % % 66 Real Estate Loan Mix 17% 40 42% 35 46% 42 Percent With Deposits 98% % 70 99% 47 Average Deposit Balance $4, $31, $7, Deposit Margin 0.20% % % 47 Core Money Mix 57% 49 39% 47 69% 51 Loan Interest Income $ $ $ Deposit Interest Income $3 44 $16 46 $33 42 Fee Income $ $ $ Operating Expense $ $ $ Loan Loss $95 45 $ $ Efficiency Ratio 61.8% % % 61 Average HH Profit $ $48 49 $32 52 Loan Profit $ $ $74 39 Deposit Profit ($41) 64 ($171) Checking 62 ($42) 68 Return on Balance 0.85% % % 55

22 Example: Identify Lead Products WHAT TYPE OF ACCOUNTS WERE OPENED IN NEW RETAIL HOUSEHOLDS Southeast -- Retail HHs Comparisons - Dec-10 Dec-09 Jun-10 Dec-10 Percentile Peer Group Region Average National Average High Performers New Household Ratio 4.7% 4.5% 4.1% % 4.1% 3.8% 4.5% Deposit accounts opened by new Retail Households (4.1% of Retail HHs in Dec-10): Consumer Checking 50.7% 49.8% 51.9% % 51.9% 51.6% 59.9% Savings 95.0% 97.2% 96.3% % 96.3% 96.3% 95.5% Tiered MMDA 1.9% 2.5% 2.6% % 2.6% 2.5% 3.0% Traditional MMDA 2.4% 2.4% 2.6% % 2.6% 1.9% 3.1% High Rate MMDA 1.1% 1.1% 0.9% % 0.9% 1.4% 1.4% CDs (new/renewed) 4.6% 4.1% 3.5% % 3.5% 4.3% 4.9% Loan accounts opened by new Retail Households (4.1% of Retail HHs in Dec-10): Direct Auto Loans 11.1% 11.1% 13.2% % 13.2% 11.5% 11.5% Indirect Auto Loans 0.5% 0.4% 0.5% % 0.5% 0.5% 0.5% Consumer Loans 4.8% 4.4% 5.0% % 5.0% 5.6% 5.2% Equity Lines 0.7% 0.9% 0.8% % 0.8% 1.0% 0.7% Equity Loans 1.1% 0.7% 0.8% % 0.8% 0.9% 1.0% Held Mortgage 0.9% 0.9% 0.7% % 0.7% 1.3% 1.7% Sold Mortgage 0.3% 0.4% 0.4% % 0.4% 2.0% 1.8% Classic Credit Cards 1.7% 2.1% 2.0% % 2.0% 3.5% 3.7% Gold Credit Cards 1.3% 1.4% 1.3% % 1.3% 2.1% 2.6% Platinum Credit Cards 3.7% 4.7% 4.8% % 4.8% 3.9% 3.6% Unsecured Lines 2.3% 2.2% 2.1% % 2.1% 3.4% 6.0%

23 Newton s 2 nd Law of Motion Law of Force The Rate of Momentum is Directly Proportionate to the Force Acting on it. Retain Active Households

24 Segment Description Target on Survey Data AUTO / TRUCK LOAN TARGETING MATRIX Research Data ABC Credit Union Projected Potential Intend to Have at Pot./ New New Conv. Conv. New Conv. Pot./ Targeting Age Deposits Loans # HHs Open Other Loyalty HHs Balances 1 HHs Balances 1 Bal. Bal. Loyalty Efficiency Sav. Only -- 4,981 20% 26% 10% 1,009 $17,150 1,285 $21, Sav. Only -- 12,016 16% 25% 6% 1,978 $34,546 2,956 $51, Low $0 13,186 13% 26% 13% 1,778 $27,175 3,396 $51, Low $0 12,442 20% 21% 5% 2,481 $38,842 2,631 $41, Low Low 2,490 18% 34% 12% 454 $1, $2, Low Low 3,692 13% 16% 9% 465 $6, $7, Low High 6,593 14% 30% 27% 944 $17,136 1,955 $35, Low High 9,423 19% 24% 18% 1,755 $30,693 2,261 $39, All High $0 12,586 7% 15% 11% 928 $16,569 1,839 $32, All High Low 2,905 18% 14% 10% 533 $1, $1, All High High 5,269 19% 9% 17% 1,013 $16, $7, Consumer Segment Estimates Fee Driven 12,182 14% 13% 0% 1,705 $24,119 1,584 $22, Credit Driven 8,798 11% 44% 28% 968 $14,641 3,871 $59, Middle Market 21,037 28% 33% 17% 5,890 $87,509 6,942 $105, Low Income Depositor 18,414 9% 10% 0% 1,657 $21,978 1,841 $24, Middle Income Depositor 16,480 16% 17% 16% 2,637 $35,265 2,802 $38, Upscale 8,672 18% 31% 17% 1,561 $24,525 2,688 $43, Total 85,583 16% 22% 13% 13,338 $208,036 18,663 $294, Balances shown in $000s. Bold text indicates the highest figure or index for each segmentation scheme. Sales Pot ent ial Indices Weighting 37% 5% 58% 100%

25 Example: Auto Retention Target Households at their 2,3,and 4 year Auto Loan Anniversary

26 Newton s 3 rd Law of Motion Action / Reaction For Every Action there is an Equal and Opposite Reaction Be Reactive

27 How Well Are You Retaining Households? CEO Average - All Households - December Gross New HHs Net Change in HHs 810 2,843 Lost Households: 2, ,000 1,500 2,000 2,500 3,000 How strong is your household retention? Low retention rates will hinder overall growth. Household Retention 100.0% 95.0% 96.0% 96.0% 96.3% 90.0% 85.0% 80.0% 75.0% 70.0% Percentile 51 CEO Average CEO Average High Performers CEO Strategies Book Pages: 10

28 Retention Example: Checking Will Close Find INDs in the Prior period with EFT or Bill Pay and today they are not using that channel P_ Indicates a defined prior period.

29 Retention Example: Loans Closing Find INDs that decreased total loans by at least $5000 and 1/3 the balance in the past quarter. P_ Indicates a defined prior period.

30 Example: Moved Households Find HHs that moved, but are still convenient

31 ROI Measurement

32 3 Key Metrics Balance (Basis Point Acquisition) Profit (ROI) Share of Wallet (% of your Potential)

33 Raddon s Profit Calculation Example for an MMA Account:

34 Profit Calculations Marketing ROI = Revenue Campaign Expense Campaign Expense Marginal ROI = (Revenue Variable Costs) Campaign Expense Campaign Expense Fully Allocated ROI = Profit Campaign Expense Campaign Expense Account Acquisition Cost = Campaign Expense (Number of Direct + Number. of Indirect Accounts/Units) Basis Point Acquisition Cost=Total Balance Of Direct New Accounts -and- Total Balance of Indirect New Accounts Total Expense For Campaign Total Expense For Campaign Profit= NI Income + Net Int Margin Loan Loss - fixed expenses - variable expenses Revenue= (Interest Income + Fee Income) (Loan Loss + A/L Adjustment)

35 48 Balance Drives Profit

36 26 Measure Checking HH Relationships

37 Measure Share of Wallet With Which Segments Is Your Total Share of Wallet Strongest? CEO Average - Retail Households - December SOW: Your Own Total 100% of Potential 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 27.0% Generational Segments - Total Share of Wallet 17.8% 23.6% 30.3% Baby Boomers 50 Traditionalists All Retail HHs Percentile Gen Y 50 Gen X 49 Credit Driven CEO Strategies Book Pages: 364, % All Retail HHs Gen Y Gen X Baby Boomers Trad. 27.0% All Retail HHs Consumer Segments - Total Share of Wallet 24.3% Fee Driven 15.7% Credit Driven 25.0% Middle Market 45.6% Low Inc. Depositor 30.8% Mid Inc. Depositor 22.8% Upscale Percentile Fee Driven 50 Middle Market Low Income Depositor Mid Income Depositor Upscale All Retail HHs 49

38 Measure Share of Wallet How Much of the Deposit and Checking Relationship Do You Control? CEO Average - Retail Households - December Deposit Share of Wallet 40.0% 34.9% 35.0% 29.1% 29.9% 29.3% 29.3% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Dec-11 Jun-12 Dec-12 CEO Average High Performers Percentil While many institutions are not in need of deposits, the deposit share of wallet still speaks to the depth of relationship with members. Checking Share of Wallet Notice the higher deposit and checking share of wallet for the High Performers. This demonstrates a comprehensive approach to relationship development. 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 52.2% 54.3% 53.7% 53.7% 62.9% 10.0% 0.0% Dec-11 Jun-12 Dec-12 CEO Average High Performers Percentile CEO Strategies Book Pages: 381

39 Thank You Contact Information Kevin Stang Area Vice President Office: ext 6541 Raddon Financial Group 701 East 22 nd Street, Suite 400 Lombard, IL Need ideas, recommendations or solutions to improve marketing results? Contact RFG for our unique blend of industry expertise, strategic analyses, objective intelligence and MCIF solutions.