1. By Frank Peterson Jr., Vice President MGI Jorge Restrepo, President EurekaFacts Direct Marketing Optimization:The story behind the first Billion dollars Presented at the 2006 Direct Marketing Association Conference

2. The Story

Virginia Commerce Bankis a Virginia state-chartered bank that commenced operations in May 1988. The Bank pursues a traditional community banking strategy, offering a full range of business and consumer banking services through sixteen branch offices, two residential mortgage offices and one investment services office.

VCB has grown significantly since we started our campaign in 2003. Assetsgrew from $780 million in 2003 to $1.8 Billion in 2006.The winning strategy, owed to strong management and a reputable brand, includes direct marketing in its mix.

A targeted direct marketing effort using data analysis and creative genius contributed to this outcome.

This success story shows how optimized direct marketing can be part of a winning strategy. The information presented will discuss key elements of the marketing optimization process.

3. The Landscape

Aggressive promotion by many competitors, some very large.

New players entering the field and consolidation of others through mergers and acquisitions.

Competition for new customers in the market can be extreme.

Increased distrust in corporations and their offerings.

4. The Campaign

Integrated marketing campaign where direct mail is the catalyst for response.

Built on strengths of the brand.

Utilize available data and personalization technologies to market one-on-one.

Support offers with materials including web site, POP materials, staff involvement.

Prioritize and implement a constant effort.

Test, measure and improve.

5. Components

Customer profiles.

Segmentation, targeting and positioning strategy.

Developed a set of offers that increased loyalty and increased deposits among current customers.

Developed an acquisition strategy that brought new customers.

Direct marketing to strengthen service penetration.

Supporting communications include POP, web and other materials.

Campaign evaluation.

6. Customer Profiling

Develop customer profiles with demographic, attitudinal and usage data

• Data overlays to better understand the demographics of the customers

• Understanding of the lifestyles

• Product/Service usage

• Understand other key factors such as geographic location

Identify threats and opportunities

• Identify hot buttons & barriers

• Understand context

7. Segmentation

Identify the market segments and niches

Segment the customer database using demographic, attitudinal, behavioral data. True segments are:

• Homogeneous within, heterogeneous across

• Respond similarly to marketing stimuli

• Can be reached

Evaluate possible segmentation schemas and pick target segments.

Characterize segments.

Identify predictors of response.

8. Customer data Usage Demographic, household data Geography, geo-demographics, etc Targeted offers Targeted offers 9. Offer Targeting

Identify optimum offers per segment

Develop offer sequence

Support personalized one-to-one offers within a segmented marketing approach

Provide optimum mix information

10. Continuous Improvement

Success achieved through test and measure

Monitor key business measures

Direct mail optimization / campaign metrics

Testing includes offer, package, list, timing

11. Lessons Learned

Define clear objectives

Build and deliver on your brand promises

Segmentation, targeting and positioning is key

Make maximum use of data, creative and personalization technologies

Integrated campaigns across channels have higher impact

Loyalty building is an ongoing effort

Test, monitor and improve

12. Discussion Questions &Discussion