Project Description

Classically, the standard way of thinking about reboarding was to target single-service customers based on demographics such as tenure or geographic proximity. Once the target group was defined either a single drop or a series of communications were sent to those individuals hoping to reactivate them. While this strategy does produce above-average results, there may be a new way of viewing this initiative to provide a more significant ROI.

The question

We asked the question: does redefining the meaning of a minimally engaged customer as one who has two or more products but no activity on those products create a more profitable target for direct mail marketing to increase revenue and engagement?

The test

To determine if this were true, we undertook a between-subjects testing approach to answer the research question. The two metrics to determine campaign success were direct ROI and direct dollars generated. The population of the study was four financial institutions whose average assets were $367 million. The average mailing size was 18,000 pieces. The mail package construction was a legal-size letter delivered in a non-window #10 envelope. Both the letters and envelopes were printed in a four-color design. All content was prepared to the brand standards and product offers of each client. The study was conducted over a 3-year period between 2013 and 2016.

Test cell “A” consisted of customers with a single service who, on average, have been with the FI for three years or less and live within the FI’s immediate branch footprint. On average, this group received 5-7 pieces of direct mail over a 5-7-month period. The flow of offers followed the same flight plan as traditional Onboarding, which is to say a Checking offer first, followed by Convenience Services, followed by 3-5 loan-specific offers (autos, personal loans, home equity and in some cases credit cards and mortgages).

Test cell “B” consisted of customers with two or more products who had no transactions or activity for more than 90 days. This group received 3-5 loan-only pieces of direct mail over a 3-5 month period. The flow of offers was still from the Onboarding flight, but only the loan-specific offers. It is important to note that the solicitation of checking and convenience services were eliminated as these services were assumed to be the most difficult to acquire from an inactive relationship. Marquis Creative executed the direct-mail design and production on behalf of the participating FIs.

The results

Analysis data was executed by a Marquis OnTrax consultant using the Marquis CRM product.

Old minimally engaged definition New minimally engaged definition
Average dollars earned per participant $4,292,217 $3,022,527
Average ROI earned per account 169% 332%
Average pieces mailed 19,559 16,665


From the above results, there appears to be a relationship between the realigned target market and ROI. There are two possible explanations for the variance between the two test groups. One, the elimination of the checking and convenience letters in cell B provided a positive ROI lift over cell A results because solicitation of checking and convenience services to the inactive segment was eliminated. This could mean the overall impact of changing the minimally engaged definition is not as important as removing checking and convenience offers from the campaign. Two, the change of the minimally engaged definition had a positive impact on ROI. The results showed that the campaign B ROI was 90% higher even though the overall dollars earned were 28% less. This variance can be attributed to either a more productive target market or, again, the elimination of unproductive offers.

The limitation of this exercise was that the measurement taken at each FI was a between-subjects design. This test structure means participants were included in only one test and received either the A or B treatment. The limitation of this model is that results can be attributed to both chance and the actual treatment (changing the single service definition). Considerations for future research and exploration can include a within-subject design, wherein the participants will receive both the A and B treatments of the experiment. This redesign will more accurately isolate research variables.

The take-away

In today’s “we must measure everything” environment, don’t just follow the same old accepted definitions of target markets. Experiment with various alterations to your campaigns by asking different questions long before you execute a campaign. In this case, the question posed was, does a redefinition of minimally engaged result in better ROI? While the question does not empirically prove or disprove the hypothesis, it does provide additional insight into future market efforts that over time will increase your knowledge and productivity.

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