HarborOne Bancorp has been on a multiyear journey to retain and deepen customer relationships by using data analytics to craft better marketing campaigns.
Dave Tryder, chief marketing officer of the Brockton, Massachusetts, bank, was tasked with ramping up those capabilities several years ago.
"The CEO realized it was a blind spot and we needed to get in the game," said Tryder.
The $4.7 billion-asset HarborOne, which was a
The onboarding goal hinges on the bank's finding that "those first 90 to 120 days of new customer relationships are pivotal, because if you get customers in the right products, their profitability is three- to four-times more over the next 10 to 15 years than someone who is not onboarding properly," said Tryder.
The community bank's journey is one that many financial institutions are on.
"When consumers are inundated, you can quickly become irrelevant if your messaging is irrelevant," said Bill Handel, general manager and chief economist at Raddon, a research and analytics company.
He is a proponent of sending out fewer, but more targeted, communications.
"If you're simply sending out notifications about CDs or auto loans or credit cards you will quickly be dismissed by the consumer if it doesn't pertain to them," he said.
HarborOne launched with Baker Hill three years ago.
The first priority is getting new customers into the "right products" — a checking account, savings account, activated debit card, online or mobile banking, and electronic statements.
The second piece is homing in on cross-selling opportunities.
"You can send out marketing communications to the world and try to cross-sell savings to checking customers, but unless you have the analytics behind it to know what the next best product is for a particular customer based on what the data is telling you, it's a crapshoot," said Tryder.
To improve on these two undertakings, Baker Hill consolidated customer data across products and channels and combined it with external data, such as information from the credit bureaus, so HarborOne could identify whether customers had deposits elsewhere. Baker Hill also helped HarborOne build a segmentation framework so the bank could cross-analyze segments and predict which customers were good prospects for certain accounts or loans. Customers were segmented by geographic area, demographics, product usage, life stage and more.
This information was all fed into marketing efforts using direct mail, digital advertising, social media advertising and email that encouraged customers to sign up for the five key products in their first few months of being a customer, customized by which gaps the bank wanted to fill with each customer. The same four channels were also used to pitch them on new products.
One positive finding was that customers on the receiving end of these targeted marketing campaigns held 3.7 times more deposits in their accounts than a control group, reports HarborOne.
James Blake plans to retire in May, culminating a 25-year run at the helm. Joseph Casey, the bank's president, was named his successor.
The newest effort, currently in pilot, is figuring out how to retain profitable customers who are about to leave.
"As we managed the customer life cycle from brand new, then onboard them properly, then get them into the next product, our blind spot was those customers who looked like they were going to attrite," said Tryder. "If some of those are your most profitable customers, you are in trouble."
HarborOne asked Baker Hill to build a model that would identify the most profitable customers and flag behaviors that suggested the customers might be ready to leave, such as a lowering their balances, turning off direct deposit or paying off loans. If their behavior raises a flag, "we reach out to them, not in a Big Brother way, but with an email that says, 'You are one of our very best customers, we hope everything is okay, if there is anything we can do please let us know,' " said Tryder. "As we fine-tune the model over time we will start to identify the behavioral triggers that truly identify attrition." The email also encourages these customers to set up an appointment at their local branch.
Handel says this kind of "segmentation of one" is the next step up from marketing by segmentation, which could mean targeting customers of different generations in different ways. "Segmentation of one" means deciphering a customer's transactions and behaviors to draw conclusions and improve outreach. For instance, if recurring payments suggest the customer holds a credit card with another financial institution, that could be a prime opportunity for a bank to promote its credit card.
"You can be talking to customers about the right types of things that you know are meaningful to them, as opposed to talking about everything on your radar," said Handel.
