Database Special Report: An Analytical Approach to Banking
Last fall, Frost Bank invested in an aggressive deposit growth strategy with a series of new checking account products. The year-long campaign kicked off mid-October with a free checking account program—a first for this Texas-based bank.
Creative for the campaign, which included in-branch signs, promotional handouts and a direct mail piece, played on Frost’s 135-year history as a trusted financial institution in Texas.
Instead of mailing to particular Zip codes based on branch locations—a strategy often practiced by banks—Frost started digging into its customer database. With the help of Alcott Routon, a direct marketing agency based in Nashville, TN, Frost began to develop a custom model based on its current customer database.
The model defined the primary market area (PMA) for each of Frost’s 81 branches. Each PMA was broken into three subsets that represented a geographic area in which a specific percentage of that branch’s customers reside. For example, PMA 40 represented the area where 40 percent of a branch’s current customers reside.
Defining the primary marketing area was key, because for many consumers proximity to a local branch is a major factor for selecting a bank, according to Jim Harenchar, Alcott Routon’s director of sales.
Approximately 500,000 records selected from a private, compiled database maintained by Alcott as well as from Experian’s national consumer and new homeowner files were run against the Frost customer model. Of these records, 80 percent resided within the PMA 40 trade area. These names made up Frost’s first mailing group, and they received an offer for a free checking account with a minimum $50 deposit. New customers also were offered a fleece “warm welcome” blanket.
Going forward, Frost plans to work with Alcott to refine its prospect universe by developing a customer response model based on responders to the October/November campaign. The next campaign will be mailed in the first quarter of 2004.