It pays to give your customers what they deserve—EdgeMark Partners can show you why. Our relationship pricing marketing strategy helps banks specifically target customers according to profitability, offering considerable potential benefit for your organization.

What is relationship pricing?

Experience shows that the top 20-percent of customers can generate a whopping 150-percent of profits, while the bottom 20-percent of customers can drain profits by at least 80-percent.¹ Relationship pricing guides you in dividing your customer base into value segments, allowing targeted relationship-building strategies to be developed for the more valuable households and up-sell/repricing strategies for unprofitable ones.

Segment your customers by household

Motivating customers to act in ways that improve profitability requires getting to know your customers as households. Benefits such as fee waivers, best rate incentives, free services or trips can motivate high-value customers to maintain or enhance the banking relationship, while up-sell incentives and the opportunity to avoid fees can motivate mid-tier as well as low-value customer relationships.

The benefits can be substantial

Precision targeting and relationship pricing can help you encourage higher value household relationships, enhancing your ability to: strengthen customer loyalty, grow accounts per relationship, increase deposits, improve profitability per household and reduce resources expended on low-profitability households.

Take 5 steps to improved profitability

In summary, a relationship pricing marketing strategy can help you… 

1) Identify your most and least valuable customers.

2) Plan a multi-tiered marketing strategy.

3) Invest in your most valuable customers.

4) Divest yourself of profit-draining households.

5) Build relationships; build profits.

In the long run, precision targeting can generate balances far in excess of any incremental costs.² For a more detailed look at relationship pricing or to receive a free implementation guide, please contact Scott Highfill at 804.967.2000, ext. 103 or shighfill@edgemarkpartners.com.

Works cited

¹ Larry Selden, Angel Customers and Demon Customers

² Josh Hyatt, “Playing Favorites,” CFO Magazine

Barack Obama’s campaign for the presidency is a success story of using both Internet and direct mail marketing to reach customers—or voters in this case. In addition to launching a targeted direct mail effort, Obama used powerful Internet marketing tools including e-mail marketing (Obama was rumored to have over two million people on his e-mail distribution list!) and social media tools like Facebook and Twitter.

Each of these marketing techniques has specific benefits…

Tried and true direct mail

Direct mail has been around for a long time, and it remains one of the most cost-effective forms of marketing. There is ample space to tell the whole story, with multiple sales surfaces for highlighting offers and benefits; plus, virtually every consumer has a mailbox.¹

One of the most potent advantages of direct mail is the opportunity to develop highly targeted mailing lists. When it comes to targeted marketing, good mail lists are easier to build than substantial e-mail marketing lists. A segmented and highly targeted customer database helps in pricing and positioning the product uniquely to each household—which lifts response rates, enables better cross-sell and ensures more satisfied customers. Interested in hearing more about enhancing your database? The experienced database marketing team at EdgeMark Partners can help.

Innovative, fast Internet marketing

E-mail marketing is inexpensive, fast and eco-friendly. Using the Internet is a great way to conduct test offers and get answers to survey questions. Also, important downloads, such as white papers, can be made easily and instantly accessible on the Internet to your customers.¹ E-mails can help drive people to Web pages, which in turn lifts customer response rate.

Getting personal

A great way to get the best of both worlds is Personalized Web sites (PURLs). These valuable tools combine direct mail with Internet marketing, and they are a simple way to engage the customer. Customers receive a direct mail piece containing the PURL, which they use to log onto the personalized site and which captures their information for future print or Internet marketing efforts.²

For example, when a bank was having trouble getting customers to convert to online banking through their direct marketing efforts, they switched to variable data printing, a form of on-demand printing that allows for mass customization, and PURLs. These changes helped highlight the benefits and security features of Internet banking. Eight out of 10 customers who visited the PURL enrolled in online banking—an increase from 0.4 percent to 2.5 percent.² That is over a 600-percent rate of improvement.

Avoiding the spam issue

Where there’s e-mail marketing, there are pesky spam filters. Getting around these filters presents a challenge to marketers and communicators in their e-mail marketing efforts. That’s why the Obama campaign sent out pieces of full-color direct mail in South Carolina—ensuring that an important message ended up in the hands of actual voters and not in the e-mail spam folder.³

Sources: 

¹ Businessknowhow.com “E-mail Versus Direct Mail: Which works better?” 

²  eZinearticles.com “The Power of PURLs”

³ hotcards.com “The Obama Direct Mailer Debate”

Boomer background

When World War II ended in 1945, many countries experienced a boom in births. Nearly 78 million Americans today were born between 1946 and 1964. Three years ago, the oldest boomers turned 60 years old, and approximately 8,000 people turn 60 every day.

Boomers are a diverse group comprised of empty-nesters, parents and grandparents. Probably the most significant fact about this group for your business is that they remain the wealthiest and most educated of purchasers.

Why do boomers require special attention?

This famously non-conformist group reportedly has around $2.3 trillion¹ in hard-earned cash to spend. Blaine Branchik, a marketing and advertising professor, told the New York Times², “Baby boomers each believe they belong to a market segment made up of exactly one person. Many believe the only thing they have in common is that they are all so unique that they have nothing in common.”

Marketers are faced with the dilemma of how to reach millions while making Boomers feel as if they’re speaking to them individually. Some marketers may opt to categorize and label Boomer consumers to make this task easier. For example, the consulting firm Age Wave has categorized post-retirement consumers as “Ageless Explorers,” “Comfortably Contents,” “Live for Todays” and “Sick and Tireds.” As Boomers move up in age, their sense of individuality may make categorizing them more of a challenge.

It is important to be cognizant of Boomers’ needs because they represent big bucks in potential sales. Rix Quinn, author of a syndicated column about Boomers, suggests that there are 10 things this generation will need most within the next 20 years: affordable health insurance, housing, low-cost transportation, travel options, communication options, fitness solutions, advice on care giving, advice on parenting, investments and more education.³

When marketing to Boomers, don’t even imply that they’re “old,” for the same reason you wouldn’t call young adults “kids”—they simply don’t like it. One optimistic Boomer stated, “When I look at myself in the mirror, I don’t see a 50-year-old. I see a 35-year-old.”¹ Many Boomers will even purchase an item targeted to a younger group simply because it reminds them more of their youth and less of their current age. For example, despite being marketed to a younger audience, the Honda Element has been popular among retirees who appreciate that it is low to the ground and can easily hold items like gardening gear.

Get in on the opportunity

A careful, targeted effort to reach the boomer audience can pay dividends—and it’s likely many are already your customers or clients. After all, they have the cash; we just have to earn their respect. To do so, be sure to keep these things in mind:

1) Speak to Boomers as individuals.
2) Be mindful of Boomers’ needs and their perception of their needs.

3) Never label Boomers as “old.”

Works Cited

¹ MSNBC.com, “Baby Boomers create new marketing frontier”

² New York Times, “Six Decades at the Center of Attention, and Counting”

³ eZinearticles, “10 Things Most Baby Boomers Need”

(GLEN ALLEN, VA, FEBRUARY 28, 2009)—EdgeMark Partners will again partner with PNC Bank to manage primary customer notification communications for the bank’s acquisition of National City Bank.

EdgeMark Partners will work with PNC to produce direct mail merger communications welcoming National City customers to PNC and communicating personal account details to consumer, business, corporate, treasury management and wealth management customers—including detailed, personalized account transfer confirmation summary mailings in advance of the transition.

The agency has handled numerous merger communication mailings for PNC acquisitions, including the conversion of Sterling Financial Corporation (2008), Mercantile Bankshares Corporation and Yardville National Bancorp (2007), Riggs National Corporation (2005) and UnitedTrust (2004).

The PNC Financial Services Group, Inc., headquartered in Pittsburgh, is one of the nation’s largest financial services companies, with a regional banking franchise operating primarily in 14 states and the District of Columbia. It is the nation’s fifth largest bank, based on deposits and branches (more than 2,550).

EdgeMark Partners is a results-based marketing and communications agency headquartered in Richmond, VA. The company specializes in database marketing, direct marketing and communications, merger and acquisition communications and brand optimization for the financial services and insurances industries and others.

—Generation X.

Getting to know Gen X

Comprising over 50 million Americans (nearly 20 percent of the U.S. population), Gen X includes those born anywhere from 1965 to 1978, give or take a few years. They are often referred to as the “Baby Bust” generation due to the drop in births following the baby boom. Many members of this age bracket come from divorced-parent and/or working-mom families—hence the term “latchkey kids”—making them generally independent, adaptable and often skeptical.

Now moving into their mid-thirties and forties, they are established in their jobs and have families and homes. The good news: most are in the prime of their purchasing power.

Getting past the obstacles

According to Christopher Bachler¹, there are a few difficulties you must overcome to reach this audience. Gen Xers are…

• More pessimistic about their financial futures,
• Accustomed to inexpensive, imported goods and less averse to buying them, and
• Suspicious of slick conventional marketing approaches.

It’s always best to opt for a straightforward approach with evidence to back up claims when marketing to Gen X (or to any age group, for that matter).

A recession-plagued generation

Vivian Manning-Schaffel² says, “Skeptical and saddled with recessions, the members of this age group never really had a chance to embrace shameless consumerism like Gen Y.” Gen X experienced a recession in the early 90s that produced a bleak job market for then-recent college graduates. In the late 90s they had a prosperous job environment with the Internet boom. Unfortunately, many were forced back into unemployment with the recent recession. The up-and-down economy has made many of them wary of parting with their money.

Take the direct mail approach

Direct mail is an effective marketing approach for reaching Gen X. According to a 2005 study conducted by the U.S. Postal Service³, 70% of this group sorts through their mail immediately. Sixty-seven percent read advertising mail every week. Also, 70% of study participants prefer financial direct mail, such as credit card offers, to e-mail or Internet solicitations.

Michael Fleischner⁴ suggests the following tips for getting the most out of direct mail marketing to any generation…

Ø Know your audience. Really get to know your audience—what motivates them, what annoys them, what they are in the market to buy, etc.

Ø Get the timing right. Have the right offer at the right time. For example, if you’re selling tax software, be sure to market the offer during tax season when it’s on their minds. Also, be sure to leave enough of a window to respond to the offer.

Ø Have a great offer. It goes without saying that a dull offer elicits a dull response. Most people, especially Gen Xers, need to be given a reason to buy. If you have a great offer, place it prominently on the outside of the carrier to entice the recipient to open it.

Ø Present a message that resonates. Be very clear about the value of your product or service to your potential customer. Try different methods of reaching your audience—from lengthier letters to punchy postcards to eye-catching self-mailers.

Reach Gen X using Gen Y tactics

When marketing to Gen X, Manning-Schaffel suggests reaching this group by way of marketing tactics aimed at their siblings, Generation Y. Their younger counterparts grew up in a culture of “pure consumerism,” and their approach to life is “buy, buy, buy.”² While Gen Xers are more wary, they have the same easy access to the Internet and like Gen Y, they carefully research their options before purchasing. The difference between the two is that Gen Y has always had multiple forms of media at their fingertips, which means that advertisers have had more venues to reach them. For more tips on marketing to Gen Y, view our last issue here.

Works Cited

¹Christopher Bachler, homebusiness.com
² Vivian Manning-Shaffel, brandchannel.com
³ United States Postal Service, usps.com
⁴ Michael Fleischner, powerhomebiz.com

Erin Lee has joined the creative services team as a copywriter. A graduate of James Madison University, Lee’s previous experience includes editor and copywriter for Circuit City’s Web site and editorial assistant with Austin, TX-based Sheshunoff Information Services.

Brad Sitterson has joined the account services team as an account manager. A graduate of Virginia Commonwealth University, he was most recently with Direct Mail Solutions.

Terri Andrus has rejoined the company as an account manager, a position she held for five years before leaving to pursue a degree in accounting. She most recently worked for Perrin Quarles Associates.

EdgeMark Partners is a results-based marketing and communications agency based in Richmond, VA. The company specializes in database marketing, direct marketing and communications, merger and acquisition communications and brand optimization.

Who are the Millennials?

This opinionated and technologically savvy generation encompasses over 25% of the U.S. population—those born anywhere from 1977 to 1994. They are a generation of e-commerce, Britney Spears, the OJ Simpson and Monica Lewinsky scandals, and the Columbine and September 11 tragedies.

Millennials average $100 a week in disposable income—a staggering $150 billion or more a year! “For sheer spending power and cultural hegemony, this consumer group is unrivaled in American history,” says small business and marketing author Joanna L. Krotz¹.

The Internet Generation

Perhaps most importantly, Millennials and the Internet have grown up together. They’ve embraced the comparatively recent wave of social media tools, including Facebook, YouTube, MySpace and Twitter. Research shows Millennials get more of their information from each other via social networking than they do from businesses or traditional media. According to Scott Monty, a social media blogger, Millennials utilize social media to²:

Get news or product updates (67%)

Have access to promotions (64%)

View or downloading music or videos (41%)

Submit opinions (36%)

Connect with other consumers (33%)

 A Millennial Opportunity

Successful marketers are finding ways to win over the Millennials. Attractive and informative Web sites, the utilization of social media tools and e-mail marketing campaigns provide big opportunities to reach this generation:

Engage with appealing, information or benefit-rich Web sites.

 This group can see through dramatic presentations that are an attempt to hide the truth. They’re notorious for their short attention spans. If they become uninterested in a presentation, they will simply forget about it.

As with any market segment, engage them or lose them! An appealing Web site is the first step to reaching Millennials. Skip the fluff though. A whopping 91% of this generation sees the value in companies or products that support good causes¹. A majority of Millennials would even switch brands to the one associated with the good cause₃. A company’s charitable support should be displayed proudly, like Yoplait’s dedicated section on their Web site to the “Save Lids to Save Lives” campaign for the Susan G. Komen foundation and breast cancer.

Get the social media advantage.

Marketing through text messaging (also known as SMS, or short messaging service) is a perfect fit for Millennials. It’s inexpensive and allows marketers to create customer databases for future announcements or advertisements. Many large companies like McDonalds and Dunkin’ Donuts have deployed successful text message campaigns⁴_, and the opportunity is large for small business, too.

A great opportunity to reach this generation lies in having a social networking presence like a Facebook or Twitter page. With Facebook, a company can have a page where “fans” will be updated with any announcements. Microblogging site Twitter allows for simple company updates to “followers” in 140 characters or less. Innovative companies like Whole Foods, Jet Blue and GAP provide their loyal followers with frequent company updates through “tweets.”

Embrace e-mail marketing.

E-mail marketing is a natural for reaching this audience when specifically targeted to this group’s interests. For example, when Arista Records was releasing a new album, they sent an e-mail to 10,000 fans (600 were Millennials) of the artist to allow them to pre-order the record. Sixty-two percent of recipients then forwarded this e-mail to friends, growing their Gen Y recipients to over 20,000⁵.

Works Cited

¹ Krotz, Joanna L. “Tough customers: how to reach Gen Y.” Microsoft Small Business Center.

² Monty, Scott. “Advertising to Gen Y on Social Media networks.” Social Media Marketing Blog.

³ Northcott, Geoff. “Cause marketing driving sales growth.” Supercollider.

⁴ “Small Businesses Marketing with Text Messaging” All Business.

⁵ Horovitz, Bruce. “Gen Y: A tough crowd to sell.” USA Today.

Research has shown that you have a mere 2 to 3 seconds to get your direct mail message across to the customer before they trash it. How can you get your message to cut through the clutter and get noticed? That’s the million-dollar question. While there’s no right answer that applies to every situation, there are strategies and tactics that can deliver the response rates you’re looking for.

Offer, Audience and Creative…the Three-Legged Stool of Direct Mail

Dozens of considerations go into any DM campaign, but the three “load-bearing” factors that’ll make or break any campaign are offer, audience and creative. If one of these is weak, the entire campaign can collapse like a two-legged stool! Let’s look at a couple of scenarios where the offer, audience and creative work together to get noticed and get results.

Challenge #1

An established Toyota dealership seeking to expand its footprint and product line opens a Lexus dealership 30 miles away. The priorities are to lift awareness, encourage showroom visits, and generate sales.

3-Point Solution

Offer: A free portable DVD player for taking a test drive is offered, plus a free installed entertainment package in a new Lexus purchase.

Audience: The audience consists of high net worth customers of the existing dealership, plus a purchased list of similarly modeled prospects within 20 miles of the new dealership.

Creative: A 3D package with a video catalog and the free DVD player offer on the outside gets the piece opened and drives the audience to the new dealership. An inserted card provides variable messaging to customers and prospects. To further lift response, an oversized postcard repeating the offer is mailed as a “last chance” reminder two weeks later.

Why it works

The carefully targeted audience has propensity to purchase and ability to pay. The offer is appropriate to both product and audience and is likely to encourage dealership visits. The creative suggests value, gets attention and will probably be opened. The highly attractive offer encourages the desired response. The second-touch postcard also typically lifts response.

Challenge #2

A developer is selling waterfront home sites in a new gated golf community in the coastal southeast. Creating awareness among qualified prospects, generating leads (reservations) and closing sales are priorities.

3-Point Solution 

Offer: Accommodations, golf, seafood, helicopter rides and other activities are offered at a free grand opening weekend, plus “VIP preview discounts” available that weekend only.

Audience: An audience of golf, travel and vacation enthusiasts living in the northeast, having a high net worth and with children at home is carefully selected.

Creative: A multi-panel self-mailer with full-color property photos and attention-piquing headlines draw readers inside for details. The “free” offer is prominent to generate qualified leads through toll-free reservation calls.

Why it works

The multi-layered offer creates excitement. Language like “be among the first” and “for two days only” adds a sense of urgency. Sending this in February offers the northeastern audience an added incentive to book a free warm-weather trip. The creative uses photography on every panel of the self-mailer, showing the property and the surrounding area drenched in sunlight to appeal to winter-bound prospects. The copy features sumptuous details to create a sense of luxury and positions the offer as an “exclusive invitation to a select few” to flatter.

The creative challenge—effective communication

The purpose of your custom creative is to get your message read and drive your recipient to action. When it’s done effectively, it’ll lift your response rate. Take a look at your DM creative with a fresh eye and determine how well it passes the AIDCA test:

Attention – make an impact; grab your reader’s attention

Interest – present your proposition

Desire – build up the benefits and introduce offers

Conviction – overcome doubts and objections with proof (or testimonials)

Action – call-to-action, with an expiration date to create a sense of urgency

The rate hike countdown is on. The United States Postal Service (USPS) will apply new postage rates on Monday, May 11, 2009. Postage rates will increase across the board. So now’s the time to anticipate your direct mail needs and make the most of today’s lower rates before the increase.

New rates will be:

First Class Mail (1 oz. and less)
Single Piece = .44 each (each additional oz. = .17 each)
Presorted = .414 each (each additional oz. = .125 each)

First Class Automation
Mixed AADC = .382 each
AADC = .360 each
3-digit = .357 each
5-digit = .335 each
(each additional oz. = .125 each)

Standard Class Automation (3.3 oz. and less)
Commercial Non-Profit
Mixed AADC = .270 each .169 each
AADC = .253 each .152 each
3-digit = .251 each .150 each
5-digit = .233 each .132 each
BMC discount = .034 each
SCF discount = .043 each

* All rates above are Letter rates and do not apply to Cards and Flats.
** These prices are not comprehensive. Please refer to the USPS website for complete information.

We have provided for more information below.

3 Ways to Save
While postage increases are inevitable, careful planning and evaluation of your direct marketing and other mail programs can help you make the most of your postage budget.

EdgeMark Partners may be able to save you time and money by:

1. Leveraging Bulk Mail Center (BMC) and/or Sectional Center Facility (SCF) drop shipments for large bulk mailings to get a reduced postage rate.
2. Commingling with other mailers’ shipments to potentially lower postage costs.
3. Utilizing the most up-to-date NCOA (National Change of Address) sorting, resulting in more pieces that qualify for automation discounts.

How well do you really know your customers?
Think about your top five customers right now. You know your customers’ names. You can probably look up their addresses. You know what they buy from you, how much they spend, and how often they purchase.

But do you know why they buy from you and not your competitor? Do you in fact know that they DON’T buy from your competitor? Do you know how your customers feel about current events? What their favorite pastimes are? What worries them?

Discover a rich, new vein of customer information.
Opportunities for learning more about your customers–and finding similar prospects– through data-driven segmentation are evolving. It’s long been possible to target customers by geographic segmentation (urban, suburban, rural address) and by demographic segmentation (age, income, ethnicity, etc.). But today’s technology provides opportunities to model your current customers in greater detail, which can give you a competitive edge both in targeting like prospects and in retaining and growing current customer relationships. These modeling methods include:

Psychographic segmentation: lifecycle, lifestyle, activities, interests, opinions, attitudes, values, political affiliations, preferred communication channels. (Will an email, direct mail piece or incorporating a PURL–(personalized URL)–get the response you want?)

Behavioral segmentation: behavior toward products, benefits sought, usage rate, brand loyalty, readiness to buy, occasions that stimulate purchase (such as holidays or birthdays).

Online behavioral segmentation: capture of specific, defined online behaviors that can be appended to mailing lists to further differentiate customer behavior patterns.

Turn that gold into profits.
Once you have a list with segmentation appropriate for your product or service, you can create tailored and relevant messaging for each segment. And with eDM and some forms of DM, you can change copy and images economically for each segment, or even each individual, for true one-on-one marketing. The result?

1. Higher profits from existing customers
2. Lower costs to attract new customers
3. Higher return on marketing campaigns
4. Improved retention and less churn

The year is young…why not investigate smarter, more affordable marketing tools in 2009.