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Wachovia hones marketing direction with SASWachovia, the nation’s fourth-largest bank, wanted to use its advertising dollars in the most effective way possible. Using SAS Analytics, the company discovered that online ads drew stronger response than broadcast ads. Understanding what triggers a response from customers helps the bank retain market share and build long-term loyalty. 
Check out this video to learn more about Wachovia and its successes with SAS. View Video (Runtime: 3 mins, 20 secs)You have questions; our customers have answers. Check out this video Q& A. 
Dan Thorpe View Video (Requires Windows Media Player 6.4.7 or higher or RealPlayer 6 or higher) Wachovia has grown rapidly in recent years through acquisitions. It is now the fourth-largest bank in the country, consistently scoring higher than its peers in satisfaction ratings. Yet, its size and popularity with consumers doesn’t shelter it from the heightened competition in the financial services industry. Wachovia set out recently to understand the long-term value of satisfied customers, and it chose SAS to help get the job done. “SAS is a very important partner for us,’’ explains Dan Thorpe, Senior Vice President in charge of statistics and modeling. “We use SAS for modeling, forecasting and data management. “ One of Wachovia’s uses of SAS was to understand how advertising spending influences both the acquisition of new customers and the retention of existing customers. By building models using SAS data mining tools, Thorpe’s team set up various experiments. The bank quickly discovered it could reduce spending in some traditional media spends by upward of 50 percent with no change in customer acquisition rates. It further determined that online advertising produced good results. “We found we were overspending in some traditional media, like radio, and underspending in emerging media,’’ Thorpe says. His group also discovered that news coverage influences retention, while advertising is more instrumental in acquiring new customers. “Wachovia budgets for this year have been strongly influenced by the model,’’ says Jim Garrity, Wachovia’s Chief Marketing Officer. “It will have a bigger influence on the coming year’s budget.’’ Thorpe says he didn’t get these results using the pure logistic regression modeling that many software packages offer. Instead, with SAS he was able to build in time series and forecasting “to really understand the value of the customer.’’ With regression modeling, Wachovia can track only when customers say yes or no to a marketing offer. With time series modeling, the bank knows how long customers stayed with a product and whether they bought more products. Another strength SAS brings Wachovia is the ability to look at not only individual customers but also households. With that household view, Thorpe’s staff tries to figure out what product mix is associated with loyal, long-term customers. Marketing uses that information in offering new products to customers. The process is much more strategic than randomly mailing offers to every customer for every product. “We want to satisfy the needs of our 11 million households but not overwhelm them,” Thorpe says.
Why loyalty is important Thorpe adds, “One of the things that we’ve discovered at Wachovia is that it’s the people who are moderately loyal – those who have a lower wallet share with us – who have the most potential. We look at the attributes of our most loyal customers and compare those to the moderately loyal customers. That helps us determine which moderately loyal customers to target.”
From loyalty to lifetime equity Thorpe’s team is determining a reasonable amount to spend on acquiring a customer based on his or her potential lifetime value. Already the team has discovered many flat optimums – for example, a space where the long-term value can essentially be optimized with different combinations of marketing spending. This allows the bank to choose the best scenario among those that could further optimize acquisition or accounts as well as short-term revenue. As Wachovia builds these complex models, many of which have never been created on such a large scale, Thorpe says he is grateful for the help of SAS’ research and development teams: “SAS is always inventing new solutions and new analytics that help us grow our business.’’ Copyright © SAS Institute Inc. All Rights Reserved. |
Dan Thorpe
Senior Vice President Wachovia
Challenge:
Wachovia wanted to more effectively manage its marketing dollars and understand the lifetime value of its customer households.
Solution:
SAS provides the tools and modeling capability to create marketing tests and develop lifetime value models for Wachovia’s 11 million consumer households.
Benefits:
Wachovia discovered that by increasing its spend on online advertising, it could decrease its spend in traditional advertising categories (radio and television) while retaining existing customers and attracting new ones. "We want to better understand whether our marketing dollars are being used effectively, and SAS helps us do that." Dan Thorpe, Senior Vice President, Wachovia Read more:
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“Over the years, customer loyalty has become a more important measurement than customer satisfaction,’’ says Kelly Campbell, Senior Vice President and Director of Customer Satisfaction and Loyalty Performance Measurement and Improvement for Wachovia. “This is because loyal customers stay with us longer, buy more products and services, create good word-of-mouth referrals, and reduce customer acquisition and servicing costs. We see customer loyalty as a continuum where you move from being not loyal to being completely loyal, or somewhere in between. We’ve used SAS to better define actionable areas on that loyalty curve to target particular customers.’’