March 27, 2008

For banks, a major benefit of enrolling customers in online banking is the "stickiness" of the relationship. Signing up customers for electronic bill payment deepens that relationship even further, while promoting operational efficiencies as well. "It is basically running your life with the bank as the hub of what you do," explains Jennifer Dixon, product manager for Sovereign Bancorp's electronic bill payment service, BillPay. "You are making it a lot harder for them to walk away from the bank."

Recognizing the benefits, Sovereign ($85 billion in assets) decided in 2006 to launch an e-mail campaign to draw current online banking customers into the BillPay program. The Philadelphia-based bank already had an established relationship with Waltham, Mass.-based direct-marketing services firm Click Tactics, Dixon notes. "Some people do have this [functionality] in-house," she relates. "But at the end of the day, it requires an awful lot of technology ... and constantly monitoring the elements within the e-mail market."

A Trusted Partner

Dixon adds that Sovereign already had built up trust with Click Tactics. "An e-mail-fulfillment provider is getting a lot of very sensitive data about your customers," she says, so it makes sense to work consistently with one partner.

Starting in June 2007, Sovereign targeted customers who had enrolled in its online banking service and opted to receive e-mails about the bank's products and services with an e-mail that simply explained the benefits of the BillPay program. According to Dixon, each week the financial institution worked with Click Tactics and its e-commerce platform provider, Atlanta-based CheckFree (now part of Fiserv), to identify new online banking enrollees to receive the BillPay activation message.

"The initial identification of a data set based on payments activity was done [by CheckFree] by interrogating Sovereign customers' payment histories at CheckFree," Dixon recalls. Based on predefined criteria, CheckFree sends the appropriate new customer files to Click Tactics nightly. "The business rules, campaign rules and real-time record preferences held within the Sovereign databases at Click Tactics are applied to the data files, which translate to the target groups for each [mailing] each week," Dixon explains.

"Any of the campaign rules and individual, real-time preference setting is done by the Click Tactics technology," Dixon continues. "We just define the rules up front for Sovereign records within the Click Tactics environment and for Sovereign target groups that fall into this campaign."

While 7 percent of the customers who received the e-mails activated the BillPay service and used it to pay at least three bill-payment streams, according to Dixon, after a couple of weeks, the bank identified customers who "maybe needed a little more of an incentive" to sign up for BillPay. They were targeted with a new offer -- if the customer set up and paid three bills through BillPay within a 45-day time frame, he or she would get a $25 gift certificate.

The campaigns, Dixon explains, are part of what she calls an "e-lifecycle program" that aims to move customers along the "stickiness scale" to use online banking more. "Once they are comfortable with BillPay, it might be an idea to get their usage up," she says.

For example, the bank plans to work with Click Tactics again on a repeat of an environmental-themed campaign it launched last year. The 2007 campaign focused on encouraging customers to sign up for e-bills, offering to plant a tree in that customer's name if he or she activated an e-bill. That effort, Dixon says, led to a 40 percent increase in e-bill activations over a two-month period.

E-MAIL MARKETING

Institution: Sovereign Bancorp (Philadelphia).

Assets: $85 billion.

Business Challenge: Increase enrollment in online BillPay program.

Solution: An e-mail marketing campaign in partnership with Click Tactics (Waltham, Mass.).