Washington Mutual Finance plans to roll out a direct mail program selling home-equity loans to finely targeted segments.
A successful March test went to 100,000 customers, said Rick Erwin, managing director of RR Donnelley Financial, which conducted the campaign. The July rollout will go to customers and prospects.
Washington Mutual faced a serious problem when it started thinking about the program: Falling response rates in the sub-prime home equity market, Erwin said during a session at Chicago DM Days & Expo.
The first thing the company did was to append demographics and summarized credit and lifestyle data. It then broke out segments within its responder base.
Next, it enriched the segment profiles with attitudinal data gleaned from RR Donnelley Financial’s consumer panel. (Clusters identified from the 10,000-person panel will be Experian’s Insource consumer database this summer).
Through its panel, the company identified two kinds of customers: Budget-minded and blue-collar families.
"The sub-prime market is not a monolith," Erwin said.
The budget-minded people like to speak to someone face-to-face, and they tend to procrastinate when making decisions. They are cautious with their money, and tend to worry about the speed of getting a loan.
Blue-collar people, on the other hand, are willing to use the Internet and other direct marketing channels. And they are more financially savvy and willing to take risks.
The copy for the test mailing was tailored for up to five segments.
For example, an envelope teaser for the budgeted-minded people said, "Great News" You’re pre-selected to receive a home equity loan in 14 days."
Copy aimed at blue-collar families said, "Try a fresh approach. Take charge of your finances with a home equity loan."
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