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challenge
A regional commercial bank wanted to promote a low-cost loan offering to well-qualified customers that could benefit from better rates. But in a highly competitive market, they needed something to help their message stand out as they promoted this product.
Solution
The bank engaged the MX Catalyst professional services team to help them analyze their customers’ financial transaction data and identify attributes that would help them better understand and segment their customer base. Using this segmentation, the bank was able to reach out to their customers with personalized messaging.
Using Transaction Data to Know Your Customer
A regional bank that’s committed to the financial health of their customers believes that by helping local families and small businesses, they can strengthen the greater community. As part of their mission to make a positive difference in people’s lives, the bank offers multiple loan options that can help fund their customers’most important purchases—including homes, cars, home improvements and more.
The bank wanted to help their customers by providing a low-cost loan solution designed especially for well-qualified customers who could benefit from better rates. But in a highly competitive market, the bank had to make sure their offering stood out, engaged customers, and provided an experience that would produce results.
Recognizing the value of their customer transaction data, the consumer lending division wanted to analyze that data to gather helpful insights. They believed this would enable them to reach customers with customized messaging that would strike each as relevant and meaningful. But accessing and analyzing customer data to create the messaging would require specialized expertise. Having previously partnered with MX to enhance their digital and mobile banking experiences, the bank knew that MX’s expertise and experience in leveraging financial data could be a good resource to them. And so they turned to MX Catalyst to help them translate their customer data to make it meaningful and actionable.
Uncovering Purchasing Affinities
MX Catalyst conducted a Value of Data analysis and processed millions of the bank’s customer transactions. Through this analysis, they were able to identify multiple customer attributes, including purchasing affinities, demographics and financial health status. For instance, based on how customers were spending their money, MX Catalyst was able to identify 14 different affinity segments that represented above-average spending at a statistically significant level relative to their peers.
“Transaction data reveals not only how customers spend their money, but what they're truly interested in. By identifying purchase preferences, like a high level of spending on a pet or vacation experiences, in comparison to their peers, we can create marketing messages and design products that create better customer experiences.”
Strong Affinity Segments
With customer affinities revealed, the bank was able to craft customized marketing messages for their loan offering that would resonate with their customers and improve the performance of their promotional campaign. For example, those that fell in the “Pets” category saw an ad that featured a woman sitting next to a dog, while those that fell in the “Travel” category saw an ad showing a woman relaxing on vacation.
Marketing Messages that Convert
Using these affinity-based marketing campaigns, the bank saw better conversions than ever before. An analysis of campaign performance showed that by creating ads with customized creative assets, they increased conversion by 38%. This represented roughly $1 million in originations, resulting in an 18x ROI on ad spend.
Additionally, the bank saw lower long-term loan losses with the loans that originated from this campaign. Prior to this campaign, the bank had lowered their FICO threshold for its pre-approved loan product in order to meet campaign targets. When they did this, they saw the loan losses on these campaigns rise dramatically. To remedy this, the bank raised its FICO threshold back to previous levels—but in order to meet sales targets, they had to spend $48,000 on purchasing additional leads.
However, when the bank worked with MX and used affinity segmentation to personalize their marketing efforts, they were able to dramatically increase the campaign effectiveness. Because the campaign had such a high conversion rate, the bank was able to set a higher FICO threshold and be more selective about who they extended loans to—while still hitting their desired sales numbers without having to purchase additional leads. Thus, they demonstrated how using data to personalize marketing efforts can improve the response rate and reduce costs, risk and losses.
Conclusion
By leveraging the power of MX’s cleansed and categorized data, the bank was able to better understand their customers’ needs. In doing so, they not only improved campaign results, but also provided a more relevant experience for their customers.
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