Sovereign Bank

Target marketing used for successful cross-sell campaign

Discovery

After a highly successful launch of a new product package, Sovereign Bank, a commercial banking franchise in the Mid-Atlantic and New England, wanted to target the new product's customers with a cross-sell campaign – specifically those customers with a high propensity for variable-rate money market products.

Strategy

Sovereign used several Claritas products to develop its cross-sell strategy. The bank used Claritas’ P$YCLE segmentation system to identify specific consumer segments by financial product propensity. It used Claritas’ Market Audit survey to identify segments by institutional relationship propensities. Sovereign applied this information to determine which of the new product's customers to target in a direct mail campaign testing cross-sell potential. Market sizing indicated that 83 percent of potential relationships were within 13 P$YCLE segments.

Implementation

For its test market, Sovereign chose a county in its market region with 10 branch locations in which Sovereign had two strong competitors. The target group of customers was divided into two subgroups – one to receive a direct mail piece offering a gift; the other an offer of a fixed rate for a guaranteed term. The campaign did not include any in-store promotions or targets outside the designated test-market. In addition, one-half of both groups was targeted for a 20-day telemarketing blitz to be conducted by branch staff. To facilitate this, each branch in the test market received lists of their customers as well as individual pre-printed lead sheets indicating whom to call and which of the two offers each customer received.

Measurement

Sovereign's test market cross-sell campaign generated $2.7 million in new deposits in 30 days. If the same campaign was rolled out bank-wide, this would translate into a potential of $145 to $290 million, at a cost of less than $ .01 per dollar acquired. There was no indication that one promotional offer was more attractive than the other. One-half of respondents opted for the rate term guarantee, the other half for the free gift. Telemarketing support fell far short of its goal, however. Seventy-five percent of the customers targeted for telemarketing from branch staff were not called.