What Works? An Analysis of Campaign Results and Best Practices – Part 4 Featuring Marquis’ CMO, Dr. Tony Rizzo

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What Works? An Analysis of Campaign Results and Best Practices.

Part 4: The Power of Triggers

Dr. Tony Rizzo, CMO, Marquis

One of the questions I get asked frequently is, “What works?” So, taking that question to heart, we executed a very extensive analysis of campaign performance throughout campaigns that we managed and produced over 2019.

Marketing automation. This is the holy grail of marketing, in my opinion. But I would add to it to even have it to be more effective. Our marketing automation takes a look at a set of predefined business rules, analyzes those business rules and acts on them every single day.

There are four categories that we look at. One I classify as market automation or triggers. It could be a credit trigger, where I’m analyzing a data set for credit activity to find those members applying for loans not with you on a daily basis. I’m going to make some type of preemptive offer.

It could be what we call good manners marketing. These are things like “Thank you” and “Happy Anniversary.”

It could be a new account trigger. “You opened a credit card yesterday. Thank you. We think you might like an auto loan.”

It could be transactional. “Yesterday, we noticed that you had an overdraft hit. Would you like overdraft protection?”

But as I went back before, and I said, you know, is it worth it? Because there’s a lot going on here, right? There’s a whole lot that goes into marketing automation. It is absolutely not “Set it, forget it and walk away.” So, we undertook another study and looked at 50,000 people. We sent them the exact same letter. One group was based on timing – when they purchased something we thought the timing was right to make a home equity offer – versus 25,000 people that we just picked a date and mailed 25,000 letters out. No time factor at all. However, both the trigger group and the non-trigger group were already predisposed based on filter criteria. So as close as we could, either group was as qualified as the other. All we did was isolate for time.

Again, same exact letter. Nothing was different. Even the envelope was the same. And here’s what we learned. For the group that received the timed letter, there was a higher response rate. Not only was there a higher response rate, but a statistically significant relationship was found between the time an offer was sent and the take rate/response rate on the offer. So, there is something to marketing automation. We’ve proved it scientifically. We’ve also proved it anecdotally through all the different campaigns that we’re doing.

Look at the different benchmarking responses across the universe. You can see, highlighted in red, combining direct mail with email had an impact on balances.

This idea of machine learning, which is really what marketing automation is, it is not set it and forget it. If you have not done this yet, and you’re looking to get into it for next year, do it slow, do it methodically – one trigger at a time. Do the trigger. Launch the trigger. Track the trigger. Go on to the next one. If you don’t follow that sage advice, you will get bogged down in too many details and your progress, your forward momentum, will stop.

Some samples.

This is marketing automation for credit. Remember, these are people that applied for credit outside of your institution.

The best product you can do this for is auto. Do an auto credit trigger 30 days after the person applied for a loan somewhere else. Why? Because if I go to the auto loan dealer, and I’m credit worthy, I’m going to get the auto loan. Might not be the best auto loan, but I’m going to get one. So, for you to try to preempt that with a letter or email sooner, it isn’t going to be very effective. What is going to be effective is, “Hey you probably have an auto loan, we’d like to lower your payment and save you some money.” That’s a better offer.

The worst product to use credit triggers for are credit cards. Why? Because people generally get a credit card for a specific reason. Could be rewards involved. Could be affinity involved. Could be because I went to Best Buy and I got some money off the TV. It was for a specific intent and purpose, by and large. To make another offer for another credit card, right after the fact, is not the best use of money.

Good manners. These are typically Thank You, Happy Birthday and Happy Anniversary. If we’re doing this approach, we’d like to stay light on offers, heavy on the “Thank you.” We’re trying to get to that point. For new accounts, same thing: “Thank you for opening the account. We appreciate your business. It’s customers like you that keep our business viable. By the way, people just like you have purchased …” or, “By the way, you purchased our checking account. You want to make sure you sign up for our access services, our mobile app.”

Transactional. Now with transactions, we’re recognizing a behavior, some type of interaction like overdraft. And we’re making an offer for, in this example, overdraft protection. Or it could be Net Promoter Score. Now here’s the thing: when you’re doing this type of work with transactional data, you have to make sure about the integrity of your data. It’s important. In other words, if you’re not 100% confident that the overdraft data points that we’re going to use are accurate, don’t use it, it will get you in more trouble with loss of confidence, complaint phone calls, those types of unpleasant member experiences. If you’re going to use transactional, make sure that you have an understanding of transactional. Don’t delegate it, because as the person in charge, you have to understand the nuances of data.

No trigger is 100% bulletproof, not one. Give me any trigger, I can poke holes in it. You’re working off probability. You’re working off, “I’m 98% confident in what I’m doing is accurate.” You’re never going to be 100%, it just isn’t realistic. You have to know, in particular, with this transactional data, what you’ve got on your hands.

What do we know? We know from this study that when we use a combination of channels, I double my balances. When I use personalization, in particular time personalization, in particular this idea of daily marketing with triggers, I’m increasing my performance by 4x over a campaign approach. Frequency and consistency – we’ve learned those are your buddies, those are your pals. That’s the way to do direct marketing. It’s not one big campaign that looks beautiful when I put it out there. It’s something I do all the time, that constant machine that’s always working for me.

What we’ve also learned, if I’m looking at direct mail, non-window, live stamp, much higher response rates than indicia-based mail. Much higher response rates than indicia-based mail that’s sent standard class. Now there’s a time to send standard class. So, you’ve got a way when you will and when you won’t spend that extra money. But we know that the non-window live stamp is a high performing package. We know that simple coded email, singular column works the best, as opposed to all the tricks and gimmicks that go on.

We’ve also learned, and I’ve learned the hard way, marketing automation isn’t automatic. Bad name. We have to monitor it. We have to look at the results. We have to make sure that our criteria are valid. We, as marketers, have to be engaged in that. Don’t delegate that. Understand it.

What Works? An Analysis of Campaign Results and Best Practices – Part 3 Featuring Marquis’ CMO, Dr. Tony Rizzo

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What Works? An Analysis of Campaign Results and Best Practices.

Part 3: Campaign Analysis 

Dr. Tony Rizzo, CMO, Marquis

One of the questions I get asked frequently is, “What works?” So, taking that question to heart, we executed a very extensive analysis of campaign performance throughout campaigns that we managed and produced over 2019. Now, on to some granular detail in terms of campaign analysis.

The first thing we’re going to talk about is Invitation to Apply. An Invitation to Apply is a quasi-data element. But it’s like a credit score, basically averages 10 households, say with a 780 score. We don’t use it to make pre-qualified offers. We use it as a filtering tool in comparison, or in contrast to the credit score, and I’ll talk to credit scores in just a second. You can see the results of these campaigns. I am going to draw your attention to the direct mail and email category, where you see that substantially higher balances were generated with the combination of the two channels.

Why do we care? Well, here’s something interesting, and I’ll bet this would hold true for your institution. We do a significant amount of analysis of loan potential and loan portfolios. And here’s what we found on average. That for every one loan you own, there are 46 loans elsewhere within your customer base. For every dollar you own, there are $66 in the membership base that you don’t own, that are financed somewhere else. That does include the mortgage.

But you can see, just by this slide alone, you could 2X your loan portfolio by focusing on your existing members, your existing customers. Super important. A lot of times we go looking for the acquisition, and that’s important. But we don’t go and do outreach to our existing customers. And I meant with a lot of method to it. We’re doing ourselves a disservice because there’s a lot of potential that we’re leaving on the table.

You can see a sample Invitation to Apply. Professional tip: first of all, best month to do these campaigns is in June, worst month is February. If you’re going to do this, keep your offer, and this is kind of global, simple and easy to understand. Not a lot going on in the letter. Not a lot going on in the email. On the postcard, keep it simple.

Next campaign we’re going to talk about is something called the Value Statement. The Value Statement is a content heavy execution. Remember, content was one of the sources we talked about in terms of data and variable production. The Value Statement speaks to what the individual consumer has with you compared to local competition. The idea is to show for a credit union, for example, the value of being a credit union member versus a customer. So, it’s a very heavy analytical project. And you can see again, our DM plus EM category, you’re still generating more balances, right? Your response rates on this are higher than a singular channel.

Here’s a sample of what this particular campaign looks like. It basically shows every account that the consumer would have, and what the annual savings are or earnings would be based on a competitive dive. It’s a statement of value. Why it is important to remain a customer or remain a member here.

Onboarding: if you don’t do Onboarding, this is the only thing you should do next year. Get your Onboarding campaign going, super important. Now, on average, when somebody becomes a new customer, they receive 10 exposures. Could be five emails and five letters, but an average of 10 exposures are coming through. We classify Onboarding campaigns three different ways: standard Onboarding to retail households, to commercial customers or indirect customers – people that got an auto loan on Saturday through the dealer, now we’re going to onboard them. So, we classify those things three different ways.

Why is Onboarding important? From a number standpoint, the average annual churn rate for financial institutions is 11%. Of those, 20% of your customers will leave you that joined within the first year, they don’t even stay 13 months. Of those, half leave in the first 90 days. Now, there’s a lot of mitigating circumstances that go into that. But don’t let one of the circumstances be you didn’t communicate with the new member. Because if you do that, you can control that. Other things you can’t control. This you can control. If you’re not doing Onboarding, you’re leaving money on the table.

Now, our typical Onboarding campaigns are very advanced. They are a spider web of communication that run through various products, various relationships, and various channels. That approach has proven to be very good, very profitable, very high performance. You can see some of the numbers. If you look, the direct mail and email is out-pulling in terms of the average balance generated. Some by a lot. Some by a little. There is something to this multiple channel approach. Our highest performing onboarding campaigns have 16 versions. Don’t know why it’s 16, but our highest performing segment has 16 versions.

The only pro tip I can provide with Onboarding is doing it. If you’re not doing it, you must do it. For Business Onboarding, biggest pro tip I can provide, if I’m speaking to a business account, is to be informational, to use a little bit longer form of a letter, not so offer intensive. If I’m doing something from an indirect perspective, I would add on additional products. That could be for an auto loan, mechanical breakdown, it could be GAP or it could be like the retention segment we talked about earlier. I could just add on an offer that says if you have another auto loan in your household, refinance it here.

I would do that for the Onboarding. What I wouldn’t do … I wouldn’t sell checking accounts. I wouldn’t sell deposits. You can. It just isn’t going to work. But sell me more on an indirect basis, something that’s closer to me, that I understand.

All right, Product. Next one for the campaign analysis is Cross Sell. That is using our predictive model set where you bought a credit card. Now we think you want a mortgage. So, we’re using that. When I do a Cross Sell campaign with two channels, it is driving higher balances. Again, something to this multiple channel approach.

The chart here represents the likelihood someone will leave you in the first 12 months if you don’t onboard, if you don’t cross sell appropriately. I am 50% likely to leave with only one product versus 5% if I have four more. Now, that’s kind of common sensical, right. But now you have some numbers to back up that claim when you’re in the meeting, and they’re talking about the importance of repetition in marketing. The importance of continuing to outreach. Keeping that like a machine and always running, there is a definite financial impact, a benefit of doing that.

We execute cross sell campaigns in lot of different ways. You’re looking at one that has several different suggestions. This particular client wanted to focus on term and balance versus another that wanted to keep it simple, branded and direct with very little copy in there. Either one has proven to be pretty successful. I can certainly say more in a letter than I can on a postcard. So, if I’m going to product cross sell with a postcard, keep it very simple and very branded.

Pre-Approvals. For Pre-Approvals, we use our FICO data. I’m using credit scores to make some type of a pre-qualified offer. This is my only example where multiple channels didn’t have higher balances, by the way. I don’t know why, just reporting the numbers to you. You decide.

If I’m doing a sample, or if I’m doing Pre-Approval, the best month is April. The worst month is October. The best product are credit cards. The worst product are mortgages. Here’s the thing with credit data: less than 60% of your customer base, your membership base, has opted into having their credit score looked at from a marketing perspective. So, what that basically says is you’re leaving opportunity on the table if you’re only doing pre-approvals. The other thing I’m not as juiced about with this credit data is it a risk. It is a liability. All you have to do is Google credit score lawsuits, misuse of credit score, to see that data is risky to use. It’s not to say I wouldn’t use it, but eyes wide open when we’re getting into credit data. All credit data is purchased for a very specific and narrow purpose and cannot be reused. So, if you are doing a portfolio review, and you’re pulling those scores and using them for another purpose, that’s a huge NO. So be very careful when you use this data.

Let’s take a look at Reboarding. Reboarding is when I have a group of people that have detached. They might be a single service household, and I need to get them reengaged. You can see here that although not demonstratively higher on multiple channels, when I use two channels, direct mail and email, I do get a higher average bounce generated. If I’m doing a Reboarding campaign, you isolate for single service. I would also isolate for tenure and those geographically close to you. We don’t reboard everyone. Again, we use predisposition of response to narrow our funnel. The biggest thing with Reboarding is it has to be something that’s frequent. Just like we saw earlier in the campaign versus matrix, the comparison of those two, this is a great example of that. I have to do something frequently in order to rebuild trust, to rebuild familiarity and to open that filter to make a good offer.

What Works? An Analysis of Campaign Results and Best Practices – Part 2 Featuring Marquis’ CMO, Dr. Tony Rizzo

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What Works? An Analysis of Campaign Results and Best Practices.

Part 2: Campaign Parameters 

Dr. Tony Rizzo, CMO, Marquis

One of the questions I get asked frequently is, “What works?” So, taking that question to heart, we executed a very extensive analysis of campaign performance throughout campaigns that we managed and produced over 2019. I’m going to share those results with you today.

We stratified the results also by assets. I was curious to know that the smaller you were, did you do worse than someone much larger? You can see the numbers. Not really. So consumers are consumers. Your asset size does not really play a factor in your ability to be successful with this approach.

We looked at the strategy as well. We stratified across three primary strategies: acquisition, cross sell and retention. And here’s how to think of these – red to green. Red, the farther away you are from the product or institution. Green, the closer you are to the product or institution.

So what does that mean? I’m going to do a checking promotion, a prospecting acquisition campaign. Or I’m going to do a checking retention campaign where I already have the checking account. But you’re going to sell me something like access, convenience services, perhaps a safe deposit box and add on a bolt so I’m closer to the product.

When I’m closer to the product, I already understand that you’ve already captured my attention. My psychological fence, if you will, has been opened versus the acquisition side of that where I may or may not know you. I don’t have this product. I have to think harder. So it’s kind of common sensical that you would think that acquisition all the way to retention, you’re going to have lower to higher response rates, lower to higher marginal ROI.

Next, we looked at the difference between a campaign and a matrix. What does that mean? Campaign – one-time event. Matrix – ongoing frequency – onboarding, reboarding, for example. Or perhaps it was an auto loan campaign that had multiple flights and multiple touch points. In every case, one-time versus multi-times, multi-times outperforms in spades versus the one-time wonder. And you can see that’s true amongst response rates, accounts open and average balances.

Now let’s take a look at channels by direct response and indirect response. Remember direct response, you promoted an auto loan, you bought an auto loan. And you can see we’ve stratified this across direct mail only, direct mail plus email, and then email only.

And here’s the thing that’s interesting. You look at these from a response rate, they’re all fine. There’s nothing wrong with them. They’re pretty good response rates. But look at the balances. If you look at the balances, they’re 126% better when you use those two channels. You’re going to see that throughout the rest of this presentation. The combination of channels substantially, I think, in every case but one, lifts balances.

Why do I care? I’ve never seen an annual report that says we had 7% response rate. I have seen annual reports that speak to marketing’s ability to bring in dollars. So I’m going to focus on dollars – balances per account that come in the door. The numbers hold up when I also look at direct plus indirect response. Same thing, while not as dramatic, same kind of premise will hold.

Let’s take a look at data use and package design.

When we talk about the use of data, we categorize data six different ways, in terms of how we weaponize that data to communicate with the consumer. Could be FICO based data. Could be based on the timing, that’s marketing automation, the timing of the offer. Could be based on variable use of content. In other words, I can go in and send you a letter that says your home, based on what sold within your neighborhood, is worth X. Is it time to buy a new home? Is it time to refi? That’s using content in a variable sense to drive a better connection with that consumer.

Could be branch based. Could be payment based. We do an extensive amount of work with payments, to be relevant, to be personal, and more importantly, to be specific to answer questions ahead of time that the consumer, the member, might have.

I would also use the life stage as a variable driver. We’ll show some examples of that as well. One of those you’re seeing here.

So our typical direct mail letter package looks very similar to what you’re seeing here. A lot of variable photography, variable copy. I’m going to have different offers going in based on what the data is telling me. I’m using a non-window envelope. And in a lot of cases we use a lot of live stamps. It reduces a lot of the clutter on the envelopes.

Again, I’m trying to be personal with you. This envelope that you’re looking at is more personal than one that, say, has a mailing indicia. So that’s our standard package. That’s when I talk about letters. This is really what I’m talking about.

As we go through this now, if I’m doing postcards, same kind of approach. They’re highly data based. They are all oversized. We do oversized cards so they stand out in a stack of mail. Your postcard rises to the top.

If I’m doing email, we do all manner shapes and sizes of email. They are all highly databased. But they’re also very what I call code simple, one column designs that are designed to easily render on 90% plus of the platforms that are out there. Keep your email simple. Don’t do a lot of columning. Don’t do a lot of special effects within the email. It ends up not working as well as something very simple and straight to the point.

What Works? An Analysis of Campaign Results and Best Practices – Part 1 Featuring Marquis’ CMO, Dr. Tony Rizzo

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What Works? An Analysis of Campaign Results and Best Practices.

Part 1: The Theories Behind Marketing Automation

Dr. Tony Rizzo, CMO, Marquis

One of the questions I get asked frequently is, “What works?” So taking that question to heart, we executed a very extensive analysis of campaign performance throughout campaigns that we managed and produced over 2019. I’m going to share those results with you today.

For those of you that are homeschooling in and amongst the pandemic, bring the kids in the room, we’re going to give them a quick psychology lesson.

Direct marketing needs to accomplish two things. One, it has to capture attention and two, it can’t manipulate. There’s two theories at work. The first is called the Capacity Theory of Attention. And the Capacity Theory of Attention is simply this: We have a limited bandwidth in terms of our subconscious ability to process information. Only those things that are familiar to us tend to break through that filter so we can move from the subconscious to the conscious level of cognition. This is why we do things like personalization. We make things more familiar to that customer/member to open up that filter, so the offer can move to a higher level of process.

The next is called the Psychological Reactance Theory. And for anyone that’s ever had kids, or been a kid themselves, you’ve been told not to do something, “Don’t touch the stove!” and you touch the stove. Here’s why that happens. We are creatures of free will. And if someone tells us not to do something, our gut instinct is to do the exact opposite. From a marketing perspective, if someone senses that you are using data to manipulate them, they will affirm their autonomy in doing the exact opposite. We have to run a balance of creating things that are familiar to a consumer while not manipulating him or her as to create an environment where “I am open to processing your message.” Those two theories are the foundation of everything.

Our study was the sample size that you see here on the screen, a pretty extensive look in terms of the number of campaigns that we executed throughout 2019. Globally or strategically, we approach marketing with something called Predisposition of Response. What does that mean? It means the campaigns that you’re going to look at, if it’s a campaign, a one-time event, for example, there are over 20 different filters that went into putting the target audience together. Could have been geographic, psychographic, demographic, balances. Could be exclusions, delinquencies. Could be tenure. All of those things, all of these different attributes, went into building a campaign profile.

Why? To get that Predisposition of Response. Not everyone. I’m looking for the one.

Now, from a marketing automation standpoint, on average, 30 different filters were put in place to build or to get to that audience of one. The heavy lifting with a lot of this work, and work in your campaigns, is done on the front end. I’m trying to capture attention. I’m trying not to manipulate. One of the ways that I can do that is by filtering appropriately. All of the campaigns that you’re looking at have this Predisposition of Response and this maniacal focus on the target market, in order to get to that look-alike profile.

Now, if we do that, when we do that, it leads to an increased response rate. In particular, I’m going to speak to the power of marketing automation. Because one of the things that I’ve really questioned is, “Is marketing automation worth the effort?” It’s a lot of effort to do daily marketing, right? All the way from the front end of segmentation to the back end of production. A lot of work. Is the juice worth the squeeze?

We’re going to show you that it is.

What also leads to increased response rates across the segment of campaigns that we looked at, over 400 campaigns, was, again, maniacal focus on brand. If you put your marketing materials on a table and look at them from a direct marketing standpoint across the board, and they look boring to you, you’re doing the right thing. You are focusing on your brand. Why is that important? Remember, we talked about capturing attention and not manipulating? That Capacity Theory of Attention basically tells me I only have a limited brand bandwidth, right? So if your stuff doesn’t look consistent, psychologically, people are going to ignore it. Not that they want to ignore it, but they will ignore it. So brand consistency, across the board, played into higher response rates.

Now, from a data perspective, we have seen the number of data sources we use to put together our Predisposition of Response explode over the past several years. A lot more data sources are being added – transactional data. It could be from a credit card. It could be from ACH, we’ve seen a lot of that come into the system. A lot more demographics. A lot more psychographics. A lot more geographics. So all of that is coming to fruition as we look to do a better job of segmentation. So practically, what does that look like?

You’re looking at a profile of 100,000 Home Equity users. Primary indicators of Home Equity skewed around several different elements; invitation to apply ITA, income, net worth, loan-to-value, the year the home was built. These were primary indicators of propensity to own a home equity loan.

Secondarily, we have some propensity models. On a scale of one to 100, were you in the market for a home equity loan? On a scale of one to 20, were you in the market to refinance your home equity loan? Were you a mail order buyer? Did you have children? What was your tenure? It’s those things (remember, we talked about the other 20 or 30 different filters) that go into creating this funnel. Well, this is what it practically looks like. These are things that we think through in order to break through the barrier of offer resistance.

Across the board, globally, I’m going to share three numbers. The first is $5. For every dollar invested in our approach, this Predisposition of Response, we generated $5 in profit on the back end. I’ll take that bet any day. The second number is 5%. This is representative of the number of consumers that we mail to, on average. So not big numbers, right? These are small numbers. The last one is 13%. And this is our average combined response rate compared to an average DMA number of 9%. We do much better than the national benchmark. Again, working on this Predisposition of Response, using our data to focus on most likely buyers.

We categorized the results across a number of different categories. The first was categorically channel, right? We did direct mail only, email only, and then a mix of email and direct mail. We categorized across campaign type, be it preapproval, reboarding, onboarding, prospecting … we categorized it that way so we could look at the data.

Two big key findings that we found in the study: the first was that if we use direct mail and email together, your balances go up by 2x in almost every case. The second finding that we found, when we use time personalization, also known as marketing automation, your performance, overall balance performance, response performance, goes up by 4x.

So there is something to marketing automation, there is something to recognizing an event in the consumer’s life with you and doing something with it that creates a lift. It creates greater receptivity. It creates better response.