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Turning the Ideal Prospect into the Ideal Customer
by John M. Floyd
Once you've identified your ideal prospects by demographics, risk considerations, and geography, implementing an integrated new customer acquisition program will help convert them into profitable, dependable account holders in record time.
Account acquisition programs are frequently contracted out to financial consulting firms specializing in this service, or managed in-house by your institution. In either case, the key variables in a comprehensive, well-designed, program are:
- Targeted direct mailings
- Strictly controlled timing
- A compelling incentive
- Close tracking of results
These are the type programs implemented by John M. Floyd & Associates (JMFA) that have historically increased the number of new checking accounts by 80% to 175%. Moreover, they have attracted stable, desirable, direct-deposit accounts.
Our experience is that combining the basic offer with a value-added overdraft privilege (ODP) service increases in the number of valuable new accounts even more. Perhaps this it why ODP has become a hot commodity in the banking world. Not long ago, it was a new and revolutionary idea. Today, banks consider it a fundamental part of the service arsenal necessary to stay strong in an increasingly competitive marketplace.
TAKING AIM AT THE TARGET
JMFA experts recommend that acquisition programs begin with a geographic analysis to measure current customer penetration near your branch locations. We look at geographic constraints and generally ascertain overall accessibility and convenience around each branch. Then we create a targeted list for several timely mailings throughout the year. Between mailings, our account development team analyzes response trends - down to the carrier route level - around each branch. This process enables us to increase the account productivity of each list.
DIRECT MAIL
For financial institutions, direct mail "done right" has proven to be the best communication vehicle for attracting new accounts. But there is a definite "method to the madness" where several components must be managed effectively in order to maximize response rates.
They include:
- Direct mail design
- Print production
- Postal analysis
- Database analysis and mapping
- Secure data storage
- Prospect targeting and lists
- Gift selection and fulfillment
TIMING IS EVERYTHING
JMFA believes that the "low hanging fruit" is the 16% to 26% of neighborhood consumers that are in transition every year. These banking consumers are more likely to open a new account because:
- They are planning a move
- They have moved
- They have changed jobs
- They are dissatisfied with their current bank
OFFERING AN INCENTIVE
Testing and experience have proven that the most effective offers that drive response are:
- Free checking
- Free gift
- Overdraft privilege
Free checking is the best way to establish an initial account relationship. A free gift is another offer that significantly increases the response percentage. Traditional premium gifts include coolers, cookware, travel bags, cameras, or cassette players. For every 1000 residences mailed, our client banks consistently open between 10 and 20 new accounts. With the promise of overdraft privilege the response is almost always greater.
TRAINING
It is essential that all bank personnel are knowledgeable about your new customer program, so they can contribute to its success. We train on all aspects of the acquisition plan including:
- Direct mail components
- Gift fulfillment
- In-branch preparations
- Referral coupons
- How to handle objections
- Cross-selling
- ODP
BANK SIGNAGE
Interior and exterior signage at each branch location should reinforce the graphics and messages prospects have seen in the mailers. The designs should be professionally produced and include informative messages so that, even if a visitor hasn't seen a mailer, the sign communicates the offer and call to action.
BENEFITS TO THE BANK
Contracted account acquisition programs are very cost effective fixed fee or contingency fee programs.
Historically, we have found that each new account, on average, will provide your bank with $150 of fee income per year. With overdraft privilege, fee income could increase to $190 per year per new account - therefore, $190,000 per 1,000 new accounts.
JMF Boilerplate
John M. Floyd & Associates (JMFA) is a leading vendor of overdraft privilege programs serving more than 2,000 financial institutions in 49 states and Central America. JMFA is also nationally recognized for training, account acquisition and earnings enhancement programs, as well as product, service, pricing and technology improvement consulting. To learn more about John M. Floyd and Associates and to receive a FREE Overdraft Privilege Analysis, please visit www.JMFA.com or call 800-809-2307.
First published on BankersOnline.com 8/15/03
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