Learning from history.

• Author: Coffey, John J.
• Position: Database Marketing - Use of relational marketing databases to look at customer's financial patterns

Your customers have different financial needs depending on what stage of life they are at. These stages are similar for each of your customers, and they generate similar patterns.

While in the past it was possible to review a customer's financial patterns and how he or she changed from month to month and from year to year, it was just not a practical exercise. You would have to sift through reams of microfiche stored away in some dusty warehouse. Now, with the advent of relational marketing databases, it is possible to not only review a customer's financial patterns over time, but even predict in real time what customers are going to do next based on the actions they have taken in the past!

Something old, something new

Relational marketing databases have evolved rapidly in the past 15 years and are now more powerful than ever. The oldest of these technologies is the tried and true Marketing Customer Information File or MCIF.

Using an MCIF, you can perform research on a group of customers who have a similar "life stage" demographic code based on age and income. For instance, if you are interested in studying your wealthy, middle-aged customers, you can examine the past product usage of the profitable customers in this segment to understand why these customers are so profitable. For instance, they might be profitable because they have a high balance in their home equity line.

You can then examine the product usage of the unprofitable customers in this segment. You might discover that they have a home equity line, but the account is inactive. After this research has been completed, a marketing campaign would then need to be designed to increase these customers' home equity line balances. In order to do this, you would need to ship the research file to your direct mail house, have a graphic artist and a copywriter design the direct mail piece and then have the direct mail shipped. In addition, you would need to inform your customer service representatives (CSRs) and tellers that this direct mail had been shipped, and you also might need to train these people on how to close and record the sale.

To complete this process, you would need to use the MCIF to gauge the success of your...