Issue #47, December 2011

"If everybody’s thinking the same thing, then nobody’s thinking."
— General George S. Patton

As it relates to marketing today, it seems that everybody’s thinking that social media must be the most effective communications channels. In the rush to not be left behind, a majority of marketers have abandoned the traditional direct mail channel to jump aboard the social media express. General George S. Patton warned us years ago: “If everybody’s thinking the same thing, then nobody’s thinking.”

His observation appears to be proving true today.

The Great Social Media Experiment


From a marketing perspective, the great social media experiment couldn’t have come along at a worse time – at the beginning of The Great Recession or what some experts are now calling The Great Correction.

In the last couple of years, marketers have shifted billions of marketing dollars from some of the traditional marketing channels to an array of nascent social media channels.

Yet, currently we don’t really know if it pays to spend huge sums of marketing dollars with Facebook, YouTube, Twitter, LinkedIn, Second Life, and blogs.

It’s as if a presence on these sites has become more important than actual marketing results.

Such experimentation might be justified during an economic boom when companies are flush with marketing dollars. But now is hardly the time to be diverting scarce marketing dollars away from traditional marketing channels that deliver actual monetary results.

Which reminds us of something Mark Twain once wrote: “Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

Well, now would be a good time to pause and reflect as to whether or not you could be getting a better ROI by spending your marketing money on two or three direct mail programs with proven track records.

One thing is certain – today there is significantly less clutter in the traditional mail channel when compared to the overwhelming, and growing, clutter in social media.

Whereas a few short years ago marketers concerned themselves with the issue of clutter and its impact on getting their marketing messages heard or read, today it’s as if clutter no longer matters.

What’s changed – greater clutter for one thing.

Historically, the smartest managers know that tough economic times present opportunities to grow market share while many competitors hunker down and cut their marketing budgets. These same managers know it’s best not to gamble on new, untested marketing channels…they stick to what they know works best

In the banking business, personalized direct mail works – and it often works best.

  • Direct mail uses targeted mailing lists consisting of those prospects most likely to respond.
  • Direct mail enables you to mail less while getting a better response.
  • Direct mail response is easily tracked.
  • Direct mail delivers attractive ROIs.
  • Direct mail is affordable.

Best of all, consumers still enjoy receiving mail at home where they can read it at their leisure.

And today direct mail delivers an added bonus. As a result of a cutback in marketing spending by many companies, greater use of email, and the flight to social media, direct mail is a less cluttered marketing channel. This means your direct mail package bearing your offer no longer has to cut through the clutter of assorted messages including your competitors’ credit card, mortgage loan, equity line of credit, and CD rate offers.

While technology has brought us a collage of social media sites, 24/7 mobile connections, and what appears to be an infinite number of blogs, it has also enabled us to make dramatic improvements in the direct mail marketing channel.

While these technologies aren’t as exciting or “sexy” as today’s blogs, social media sites, and embedded video – and don’t get the same media coverage – they have enabled the direct mail industry to not only dramatically improve prospect selection, they have accelerated the movement of mail through the postal system while holding the price on postage.

In this issue of the newsletter, we’ll take a closer look at three successful customer acquisition programs using the traditional direct mail channel.

What all three programs share in common is the prospect identification process.

IDENTIFYING THE BEST RESPONDING PROSPECTS

In the final analysis, the single most important aspect of any direct mail program is the mailing list or prospect file.

It, alone, can determine the success or failure of your marketing campaign.

The importance of the list is exemplified in the famous direct mail marketing formula:

40% List
40% Offer
20% Everything Else (the creative, the timing, and the format)

Put another way:

40% List + 40% Offer + 20% Creative, Timing, Format = Direct Mail Success

Of these five components, your LIST is the most important component of the Direct Mail Formula – followed by your OFFER. Together, they account for 80% of the success of your direct mail campaign.

After over 30 years of direct mail marketing experience, your newsletter editor feels strongly that this formula should be revised to weight the list at 50% and the offer at 30%.

What sets ACTON Marketing apart from most of its competitors is a laser-like focus on the list development process.

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Inside this Issue

• The Great Social Media Experiment

• Identifying the Best Responding Prospects

• The Original Free Checking and Free Gift Customer Acquisition Program

• The New Disruptor Customer Acquisition Program

• The Auto Loan Refinancing Program

• When the Going Gets Tough – The Tough Get Going
 

 




The community bank using this self-mailer has a significant marketing advantage over its local competitors as it has chosen to remain with the traditional direct mail marketing channel. The strong offer and eye-catching creative on the front of this free checking self-mailer helps ensure this piece of mail gets noticed by the prospects comprising the bank’s mail file. Another reason this self-mailer will likely get noticed and read is that many marketers, including banks and credit unions, have abandoned the traditional mail channel in favor of the much more cluttered social media channels. Now is an opportune time for your bank or credit union to reconsider using direct mail to acquire new customers.

Since introducing the Free Checking and Free Gift program in 1982, ACTON Marketing has devoted a significant amount of time, money, and effort to a continuous list development process.

The reason behind this fanatic approach to prospect identification is that it enables banks and credit unions to spend less money mailing fewer pieces while getting more response and new customers. This accounts for the higher ROIs using ACTON Marketing’s direct mail programs.

Today, client banks and credit unions are the beneficiaries of ACTON Marketing’s current proprietary statistical model known as TASC. Tested against other models, TASC outperforms them as follows:

  • 3.6 times better than a simple radius model
  • 2.5 times better than a household model
  • 1.7 times better than a consumer model

This chart shows the dramatic improvement in the number of accounts opened when a model used by a new client is replaced by the TASC Model developed by ACTON Marketing.

And the news gets even better.

The TASC Model enables the ACTON Marketing list technicians to predict response before the mail is dropped. And, the more times the client bank or credit union mails, the more predictable the results. Imagine being able to advise senior management about the results before the mail is dropped.

Such predictability basically eliminates the risk when committing scarce marketing dollars to a new customer acquisition program.

Such predictability is only a fantasy if you’re using the social media channels today.

The TASC Model is used specifically for the Free Checking and Free Gift turnkey program and the disruptor campaign used to solicit new checking account customers.

The auto loan refinancing turnkey program uses a variation of the TASC Model that includes extracting data from the automated credit bureaus in order to provide the bank or credit union with a prescreen list of credit-qualified auto loan prospects.

Again, this model delivers heretofore unheard of results as shown below after only one week of response.

Next is a brief overview of the three high-performing direct mail programs available from ACTON Marketing.


This graph depicts what the list experts at ACTON Marketing call the mail quantity sweet spot. It indicates the optimal cut-off point for your personalized mailing list. Usually, during any list development process you will always have more qualified prospect names than you should mail. Why? Because some prospects have a higher probability of responding than other prospects. Your goal is to determine the “optimal” quantity to mail – not the maximum quantity. The optimal quantity considers the predicted cost per acquired account. Using the sweet spot enables you to mail more efficiently by mailing less. Such valuable information is only available when using a proprietary, predictive statistical model like ACTON Marketing’s TASC. This is why your choice of direct response partners is so critical.

 

THE ORIGINAL FREE CHECKING AND FREE GIFT CUSTOMER ACQUISITION PROGRAM

Next year will be the 30th anniversary of the Free Checking and Free Gift turnkey marketing program introduced by ACTON Marketing in 1982.

It was this program and its early users that made free checking the most popular personal checking account in the country. Ironically, the mega-banks didn’t jump on the free checking bandwagon until the late 1990s, when they realized it was the checking account of choice for millions of Americans.

Although free checking is still the consumers’ #1 checking account choice, it has recently come under attack by the four mega-banks that have dropped free checking because of a revenue squeeze brought on by new legislation out of Washington. Because of their immense size, massive branch networks, and crippling operating costs, senior management at these banks believe free checking is no longer a viable product.

Fortunately, it remains a viable and cost-effective product for the thousands of community banks and credit unions throughout the country.

The ultimate irony today is that while fewer community banks and credit unions are using the free checking and free gift turnkey marketing program, the demand for free checking is greater than ever given its banishment by the mega-banks and some of their big bank followers.

Now is the ideal time to be participating in the Free Checking and Free Gift turnkey marketing program.

When a bank retains free checking but drops the turnkey marketing program, the immediate result is a sharp drop-off in new account openings.

When a bank drops free checking and replaces it with a fee-based account, it not only realizes a sharp drop-off in new account openings, it suffers an increase in checking account attrition.

This is what happened to a large Midwest bank that dropped free checking and the turnkey marketing program last year. As a result of alienating its free checking customers, the bank saw new checking account openings fall by half while checking account attrition jumped 50%.

Imagine if you were a local competitor of this Midwest bank and were still offering the free checking and free gift turnkey direct mail program. Response to your direct mail offers would have increased significantly last year.

After all these years, this unique turnkey customer acquisition program still works better than any other marketing approach when it comes to attracting new checking account customers. It works for many reasons – one of which is that you are in the mail throughout the year with mail drops timed for maximum response.

This program is continually tested, evaluated, and revised to stay ahead of the changing economic and competitive environments. Over the years we’ve found that clients new to the program see a dramatic increase in new checking customers when compared to their pre-turnkey marketing efforts.

Here are current new account results by size of bank or credit union:

  • Community banks and credit unions with 1-5 branches see a 120% increase.
  • Mid-size banks and credit unions with 6-20 branches see an 85% increase.
  • Regional banks and credit unions with 21-99 branches see a 50% increase.
  • Super regional banks with 100+ branches see a 45% increase.

Congratulations if your bank or credit union is still using this proven marketing program. If not, you might want to consider putting this turnkey marketing program to work for your bank or credit union right away.

More details about this program are available here.

Because of the disruption in the checking account market thanks to the mega-banks dropping free checking, you now have a choice of a second checking account acquisition program.

Called a disruptor campaign, you can make it part of your ongoing free checking and free gift program…or you can simply elect to do a standalone disruptor campaign.

THE NEW DISRUPTOR CUSTOMER ACQUISITION PROGRAM

Recent product and pricing decisions by the four mega-banks and a few large regional banks have handed community banks and credit unions a golden marketing opportunity to grow market share at their expense.

It all started when the mega-banks and their friends in the media made a big deal out of dropping free checking – replacing it with new accounts requiring minimum balance requirements and charging monthly fees.

They followed by threatening to add a monthly usage fee to their debit cards. Fortunately for consumers, this turned out to be a disaster for these big banks. On the other hand, we can expect them to follow-up with other new fees in the months ahead.

There are many situations that cause disruptions in your local market. While dropping free checking and attempting to introduce new debit card fees are two obvious examples, other situations include bank failures, branch closings, new branches being opened, bank acquisitions, and repricing of existing accounts.

These situations, and more, present a golden opportunity for your bank or credit union to quickly jump into the market with an enticing offer delivered by direct mail.

Let’s consider a mega-bank that decides to close a branch near one of your branches. We know it is likely mega-bank customers will switch to another, close-by neighborhood financial institution rather than drive farther to a branch of the same big bank.

A mega-bank or large regional bank buying one or more local branches causes many of these branch customers to move their accounts to a smaller bank or credit union nearby to avoid banking with a larger bank.

Why are they moving their accounts from the larger banks to the smaller community banks and credit unions?

Besides high fees, customer service is another major reason.

The results of MSN Money’s 5th annual customer service survey were released on June 1, 2011. Four large banks are on the list of ten worst customer service providers.

  1. Bank of America (leads the list)
  2. AOL
  3. Capital One
  4. Sprint
  5. Time Warner
  6. Comcast
  7. Citigroup (Citibank)
  8. Progressive Insurance
  9. JPMorgan Chase
  10. Farmers Insurance

Last year’s 2010 survey found five large banks on the list of ten worst customer service providers.

And let’s not forget the large number of checking account customers who moved their accounts from the mega-banks to local community banks and credit unions last month on November 5, Bank Transfer Day.

Finally, it’s important to remember that at any time, around 22% of banking customers are searching for a new place to bank. And, this percentage increases dramatically when an event causes disruption in the marketplace.

Michael Moebs, CEO of Moebs Services, estimates that four million customers left the 30 largest banks in 2010 because of fee changes. He’s expecting an additional 11 million to leave their bank in 2011.

This puts a lot of new checking customers in play.

A disruptor marketing campaign helps ensure you get way more than your share of them. It accomplishes this by capitalizing on the element of surprise.

It makes your bank or credit union a hero in your local markets. It will be very popular with consumers, but not necessarily with other bankers. But then, that’s the point.

Aside from timing, the secret to a disruptor marketing campaign is “overlap” which you can learn more about by watching the video here.

If you want to grow market share quickly, a disruptor direct mail marketing campaign should be your first choice for how you spend your scarce marketing dollars.

The September issue of the free ACTON Marketing newsletter is devoted exclusively to describing the disruptor marketing campaign in detail. You can read it here.

While our main focus is your customer’s primary relationship with your bank or credit union – the all-important checking account – recently, auto loans have become another valuable source for new customers.

Last year, ACTON Marketing introduced a new auto loan recapture turnkey marketing program that is delivering heretofore unimaginable ROIs.




The images above are of the front and back of a double-window envelope housing an original Totally Free Checking and Free Gift mailer from 1991. This package was created by ACTON Marketing for your newsletter editor who, at the time, was the new direct response marketing manager at 1st Nationwide Bank, headquartered in San Francisco, CA. At the time your editor joined the staff at the bank in late 1989, the branches were opening, on average, about 5-6 new checking accounts per week or between 22-26 per month, for a grand total of 260-312 accounts per year. The traffic volume in many branches was low to the point of causing a serious morale problem among employees who preferred being busy. Compared to competitors, the bank was doing poorly. One of your editor’s first major decisions was to hire ACTON Marketing with its turnkey free checking acquisition program. Within six months of introducing this program in the Los Angeles branches, employee morale had improved significantly. It was the result of the increased prospect traffic visiting the branches to open a new checking account and walking out with their free gift. Because the results were so dramatic, the bank cut short the test and rolled-out the program across the country. At the time, 1st Nationwide Bank had branches in several states including Illinois, New York, New Jersey, Missouri, and Florida. By 1994, the new checking volume had soared to an average of 81 new checking accounts per month per branch or 967 per year per branch. This was an increase of 238% in new checking accounts opened annually. The bank quickly became ACTON Marketing’s largest free checking client. This same turnkey customer acquisition program is still being used successfully today by community banks and credit unions across the country. Unfortunately for 1st Nationwide Bank, it was acquired by Citibank at the turn of the century.

 



Shown above is the front cover of a 12-page Free Checking manual dated 2006, produced and distributed by ACTON Marketing. Since introducing the Free Checking and Free Gift turnkey marketing program in 1982, ACTON Marketing continues improving the program based on the results of thousands of mailings across the country over the past 29 years. Today, the TASC Model, a predictive statistical model, is used to identify the most responsive prospects, enabling client banks and credit unions to mail less while achieving better response.

 





SunTrust stunned consumers in its market areas when it stopped offering free checking accounts to new customers effective June 18. Replacing the much-loved free checking account is Everyday Checking – an odd name choice for an account bearing huge fees. The new checking account has a $7 monthly fee unless the customer either maintains a minimum average daily balance of $500 or has a monthly direct deposit of at least $100. Adding insult to injury, the bank also introduced a $5 monthly fee for debit card use except at ATMs. Announcements like this scream “marketing opportunity” for the community banks and credit unions with branches near SunTrust branches. It’s a golden opportunity to launch a disruptor marketing campaign as quickly as possible once the announcement is made. The headline in the second image appeared May 24, 2011, on the CBS MoneyWatch.com website. Like the SunTrust announcement, the Bank of America announcement presents another opportunity for community banks and credit unions to launch a disruptor marketing campaign. In this situation, effective May 24, Bank of America is increasing its monthly account fee by 34%, from $8.95 to $12 on its popular MyAccess checking account. This huge fee increase is enough to cause a large number of BofA checking customers to consider switching banks. Launching a disruptor marketing campaign as a result of this announcement is an excellent way to get more than your share of these unhappy BofA customers.

 

THE AUTO LOAN REFINANCING PROGRAM

Even though our country is in the midst of a major economic recession, there is one business that is experiencing significant growth. Today, the auto industry is the largest manufacturing business in America. Not only have we seen a major turnaround with Chrysler and General Motors, foreign brands continue building new assembly plants in the South, expanding existing plants, and adding new shifts at others.

For example, Toyota Motors recently opened a new Corolla plant in Blue Springs, Mississippi, while a third shift was added at Kia Motors’ plant in Georgia. And Hyundai Motors is expanding a plant in Alabama.

According to a recent article in the November 7, 2011 issue of Bloomberg BusinessWeek, “Surprise! Carmakers Are A Recovery Bright Spot,” there’s been a 10% increase in auto sales so far this year.

And the auto industry research company, Edmunds.com, estimates that U.S. consumers will purchase 13.5 million new cars and trucks in 2012, up from approximately 12.6 in 20ll. These numbers are above and beyond the huge volume of sales of used cars and trucks.

This increase in car and truck financing activity presents a great marketing opportunity for community banks and credit unions willing to allocate marketing dollars to auto loan financing programs.

Although the auto loan market is crowded with captive finance companies and an assortment of non-bank lenders, there is one segment of the market that is under-banked and proving extremely profitable for the handful of lenders.

It’s the auto loan recapture or refinance market.

Contrary to popular belief, this market is not focused on subprime borrowers and others with compromised credit and low credit scores.

Quite the contrary!

Since it was introduced last year, ACTON Marketing’s auto loan refinancing or recapture program has been a huge success for those banks and credit unions brave enough to spend marketing dollars on direct mail during a severe recession.

The early results alone should be sufficient to grab your attention and have you on the phone calling the direct response marketing experts at ACTON Marketing.

We first described this results-driven marketing program in the April issue of our free monthly newsletter available here and followed-up with an updated analysis in last month’s issue available here.

ACTON Marketing’s auto loan recapture program landing page is available here. Contact information is available at the bottom of the landing page.

While experimenting with the social media channels is okay, now is the perfect marketing opportunity to grab additional market share using one or more of ACTON Marketing’s unique turnkey direct mail programs.

You are guaranteed to achieve more new customers and a higher ROI with one of these three programs described above.

WHEN THE GOING GETS TOUGH — THE TOUGH GET GOING

Right now, we continue experiencing tough economic times with no relief in sight.

Consumers are busy paying down debt while cutting back spending. They are attempting to save more and borrow less. The demand for business and consumer loans has dropped like a rock.

Banks and credit unions are experiencing massive inflows of deposits as consumers are fleeing an uncertain stock market. Unfortunately, slack loan demand negates the need for costly deposits.

As a result, many banks and credit unions have slashed their marketing budgets which may be a good short-run decision but a poor long-term strategy.

Tough times present opportunities to grab market share at the expense of competitors who’ve chosen to hunker down and ride out the recession and those larger competitors who’ve chosen to take advantage of their customers by dropping favorite accounts and adding new and higher fees.

If you are interested in grabbing market share today, you must make some tough marketing decisions – one of which is which marketing channel or channels will deliver the best results while delivering your desired ROI?

While it’s okay to be testing the social media channels, just remember these consumers can’t be targeted to the degree possible with personalized direct mail.

And it’s extremely difficult – if not impossible today – to track the results of social media campaigns with any degree of accuracy.

If you need to prove your marketing expenditures are working and opening more new accounts, you can do it with direct mail marketing but not likely with social media campaigns.

If in doubt, ask your social media proponents to prove their results statements to you. Don’t simply take their word for it that you’ll successfully generate new customers and open more new accounts. Ask to see campaign results.

The sales folks working for ACTON Marketing will be more than happy to share campaign results with you.

Remember, when the going gets tough, the tough get going.

Now is the time to request more information about one or more of the turnkey marketing programs described above.


The key to your auto loan refinancing marketing program is your offer, in writing, to save your prospects’ money by lowering their current monthly auto loan payment. Shown above is how your offer appears in the personalized letter sent to each prospect. Using direct mail enables your bank or credit union to make an enticing money-saving offer for a specific amount that’s backed-up in writing. This provides your bank or credit union with a distinct point of differentiation over your competitors’ traditional auto loan marketing programs.

Past Issues of the Newsletter

All past issues of the ACTON Marketing, LLC newsletter are available online in the archive.

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