Direct Deposit

Data is a lot like money. If you have it and you can access it, it's a wonderful thing. But if you don't have it, or you have it but can't get to it when you need it, that's not such a great scenario.

Fifth Third Bank is working with marketing consultancy Quaero to revamp its data store, making it easier to analyze and utilize customer information for DM programs. At the forefront of that operation is Katherine Black, vice president of direct marketing, analytics and research, who has been with Fifth Third for about two years.

Prior to that, she was with Capital One in Richmond, VA for five years, where her duties included managing a program to cross-sell credit card customers other types of banking products and helping restructure the bank's internal DM agency. She started her career at Wachovia in Winston-Salem, NC as a corporate finance officer, doing underwriting and relationship management.

At Fifth Third, Black manages a group of marketing analysts who tend to the bank's marketing database and its current reworking. She also oversees customer satisfaction, and all of the bank's customer management research.

The Cincinnati-based bank has about 5 million customers, segmented into basic types such as consumer, high net worth consumer, commercial and small business. Subsets such as lifestyle and users of specific products also are studied to create proprietary models for promotion and product development. Fifth Third operates more than 1,100 full-service locations in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Pennsylvania, Tennessee and West Virginia.

Direct talked with Black recently about the database project and how that will further CRM, cross-selling and other initiatives.

DIRECT: Is there a profile of the typical Fifth Third customer?

BLACK: I would say we are a pretty mass-market type of bank. We tend to try and segment quite thoroughly, so to say our average customer is this age and has this type of account [is something] we don't find to be a particularly relevant measure.

DIRECT: Who do you see as your main competition?

BLACK: In terms of direct competition, certainly the major banks in our area would include U.S. Bank, National City, Bank One (which recently merged with J.P. Morgan Chase) and the smaller community banks in the area, particularly in the deposit business.

DIRECT: What percentage of your promotional activities is devoted to direct marketing?

BLACK: I think from a dollar perspective, it's probably less than 25% of what we spend. But from an activity perspective it's significantly higher. That's generally because the cost is a bit lower, particularly on some of the inbound marketing pieces.

DIRECT: Do you see DM primarily as something for retention or prospecting?

BLACK: Both. We probably do it more for retention and cross-selling. A lot of our acquisition strategy for some product lines is really cross-selling to existing customers, so I'd say that makes up the bulk of it, rather than acquiring brand-new households.

DIRECT: Is there one type of product you've been focusing on for cross-selling?

BLACK: I would say we do it across the board. Really, the only things we're heavily into pure prospecting on tend to be our deposit products and, to some degree, car loans through our dealership networks. Beyond that, everything has a pretty heavy cross-sell component.

DIRECT: Do any of your local branches run campaigns on their own?

BLACK: Definitely. We're trying to coordinate that better. We're working on a system that will allow them to take corporate templates, campaigns or lists and modify them to their specifications so we have a little more coordination and control around the brand, but still let them do decentralized work. That sort of local ownership and autonomy has been a mainstay historically. So we're in a bit of a transition period where we're trying to maximize that but get some standards in place.

DIRECT: Do local branches ever have a problem deciding which location owns which customers?

BLACK: It's definitely a thorny issue. We have a logic in our marketing database that assigns that, but of course it's not perfect and never exactly the way everyone thinks it should be. It's probably going to change as our strategy evolves, and as we become more customer-centric vs. product-centric. It's going to drive new decisions and new logic.

DIRECT: Is direct mail a big part of your marketing efforts?

BLACK: It is. We're interested in shifting and doing more and more mail as well as looking at channels like e-mail. We mail roughly 20 million pieces annually — probably 80% prospecting or cross-sell and 20% retention.

DIRECT: What types of pieces do you mail?

BLACK: Since we have a heavy cross-selling focus, we definitely do a lot of letters. For prospecting, we certainly will do postcards, self-mailers — glitzier, more color. In terms of direct mail response, though, it's the list, the offer and then the creative. As long as we've got some of the key elements in place, like the right outer envelope or the right mechanism, a clear offer and benefit statements, [good creative] obviously will make some difference, but it isn't the main driver.

DIRECT: How does telemarketing fit into the mix?

BLACK: We do outbound calls primarily through our branches, which tend to be softer calls. We don't do a lot of heavy third-party, pure-prospect telemarketing, but we run a program through our branches where they call folks who [might be inclined to close their account] or are likely candidates for a cross-sell offer. [We also call] just for general account maintenance.

DIRECT: Do you feel that making these calls through a local branch gives them a more personalized feel?

BLACK: That would be the theory. I think we've seen mixed results on it, truth be told.

DIRECT: Do many customers take advantage of your online banking options?

BLACK: We have pretty decent penetration with free Internet banking and bill payment. We've promoted that to new customers, which really drives retention.

DIRECT: How do you promote your online programs?

BLACK: We've actually done a good bit of direct mail. We don't have a very thoroughly developed e-mail capability at this point, so we're not exploiting that to a large degree. But we promote online banking through branch materials, direct mail, and calling after accounts are set up to make sure customers know they have [the online option] available to them and it's free.

DIRECT: How does CRM factor into your marketing?

BLACK: We have programs in place to drive loyalty and we're testing new offers. We've been very focused on a loyalty program for new customers, and we're looking at how we can expand that and roll it out to our larger customer base. We're working with Quaero to [revamp] our database, which is pretty critical to helping us accelerate testing in this area and getting our data in better shape. [We're trying to] structure our systems in such a way that we can access the data more efficiently. That's been a big struggle for us historically — we may have the data, but accessing and analyzing it has been a bit painful.

DIRECT: Can you get to the data in real time to, for example, identify someone who is about to churn?

BLACK: We have some programs set up to do daily looks against a model to identify [such customers]. We're not rebuilding our database daily. We're at monthly, and our goal is probably to get to weekly. I don't think we want to get to daily, actually. I think it's too difficult to maintain. But certainly, some of the processes they've put in place have enabled us to do some daily programs more efficiently.

DIRECT: How do you determine your marketing programs' return on investment?

BLACK: We're right in the middle of refining and expanding our use of net present value or discounted cash flow, which is where we want to head for everything. NPV analysis forecasts the expected cash flow from a given marketing program or strategy over an extended period — one year, three years, five years, lifetime — and discounts those cash flows back to today so we can accurately forecast the future return on a dollar in marketing that's spent today. That's ultimately the measure.

DIRECT: Do your DM programs integrate into non-direct forms of advertising?

BLACK: Definitely, particularly on the acquisition side. We tend to run traditional campaigns of which direct is a piece. They're linked in terms of offers and timing and sometimes creative.

DIRECT: What do you see as the next step in your DM programs?

BLACK: I would say our entire focus is on getting more things automated, so that from a production perspective we can spend more time on analysis and really stepping up the level of analytics we're performing.