Union Federal Sees Return on E-Mail Investment

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Like many financial institutions, Union Federal Bank faced a few challenges with online marketing: It had no effective way to capture e-mail addresses for customers and prospects, nor did it have a system to deliver targeted e-mails and track the effectiveness of campaigns.


The Indianapolis-based bank had e-mail addresses for only 13 percent of its retail customers as of Jan. 1, 2003 -- those who were registered for online banking services. Furthermore, the bank could communicate with these customers only via text e-mail, not HTML with dynamic content.


"The consumer banking division was most affected by this problem," said Preston W. Thornton III, assistant vice president of Internet sales and development at Union Federal.


Essentially, the bank lacked three components to create an effective e-mail marketing program. First, it did not have a database that enabled segmentation and data capture from various sources. Next, it lacked an e-mail software system to manage e-mail communications. Finally, there was no relevant financial content.


Union Federal turned to Neighborhood Email, Indianapolis, to solve these problems. The e-mail marketing firm's list manager system gave the functionality to build Union Federal's database and deliver dynamic, targeted e-mail newsletters. The newsletter was another means to capture customer e-mail addresses.


Equally important, the bank built a financial services microsite with the Indianapolis Star newspaper called the Money Center. The location was www.indystar.com/moneycenter.


"Our strategy was to use articles from the Money Center as the primary content of our e-newsletter," Thornton said. "The e-newsletter would carry the same branding and look and feel as the Money Center."


Readers could sign up for the newsletter on the Money Center site as well as the bank's site, at www.unionfedbank.com. This obviously would help build a database of customers and prospects. Several contests were run through 2003 to encourage newsletter registrations.


The first Money Center online newsletter was sent in March 2003, followed by drops in May, August and October. The first mailing went to readers who had registered for the newsletter on the Money Center and bank Web sites. In May, the bank began importing e-mail addresses from its online banking database into its Neighborhood Email file.


"This database now represents 24 percent of our retail customer database," Thornton said.


All told, Union Federal sent more than 20,000 quarterly e-mail newsletters last year.


With this new online marketing program, the bank is building an e-mail database that is easily segmented and used for ongoing campaigns. The newsletter also is useful for driving traffic to specific product pages on the bank's site. And results are easily tracked to make logical assumptions about customer preferences and needs.


Results so far are satisfactory. The average open rate is 39 percent, the average click-through rate is 5 percent and the average undeliverable rate is 8 percent.


Founded in 1887, Union Federal has 500 employees in 38 branches in Indianapolis and contiguous counties. Eighty percent of its customers are consumer and the rest commercial.


Going forward, the bank will produce the newsletter at six-week intervals, mailing to its entire database, and incorporate other targeted offers to smaller customer segments. The smaller campaigns will depend on the bank's sales calendar.


The bank also will integrate more data from its direct mail-based marketing customer information system into its e-mail database and establish a system to automatically import such data. This will help further segment its database and better target its offers.


E-mail newsletters have become a fixture in Union Federal's marketing plans for retail customers. The bank in February began a commercial online marketing effort. E-mail will push deposit accounts, lending products, investments and commercial products.


In addition, Neighborhood Email will help the bank append e-mail addresses to its postal-only addresses to build the database.


"We actually plan to increase the role of e-mail in our overall marketing and communications strategy, primarily because it's so inexpensive and easy to quantify," Thornton said. "Our next goal is to acquire e-mail addresses for current customers who are not currently online banking users or e-newsletter subscribers. Neighborhood Email will be assisting us with this initiative."


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