Episode Transcript
[00:00:00] Speaker A: Hey, everybody. You're listening to Top Quartile, where we bring you stories from the front lines of growth in community focused financial services.
[00:00:09] Speaker B: All right, welcome back to Top Quartile. Tim, Great to have you on the show again for your quarterly appearance.
[00:00:15] Speaker C: Man, it's always great to be back.
Yeah.
[00:00:19] Speaker B: And so we got some kind of special news this time.
What's the catalyst for this show?
[00:00:27] Speaker C: Yeah, we are super excited to reveal or announce that Infusion has just gone over 10 billion in deposits and loans generated for its clients since our inception 15 years ago.
That's a huge milestone. Obviously, we like to think we've built a nice little regional bank just in terms of the response volumes we're able to generate for clients through our programs. So really exciting.
Threshold across.
[00:01:01] Speaker B: Yeah, huge threshold. Huge milestone. And like you said, I think we're, you know, there's a $10 billion kind of, you know, magic milestone in terms of size of a bank that. That if you add those, all those up that were there. So, you know, why is that significant for clients?
[00:01:19] Speaker C: Well, you know, I like. Like to start by just saying, you know, mission statement. There's a mission statements out there.
Companies have them. A lot of times, no one in the company could tell you what their mission statement is, or it's so nebulous that it doesn't really mean anything.
Our mission statement here at Infusion is that we exist to help community banks and credit unions thrive by generating deposits and loans through our programs.
And so it is really cool to see to be able to pay off a mission statement in the tangible way, because it's one thing to say that, but to actually have 10 billion in deposits and loan balances that we can account for, every single one of that is paying off your mission statement. And so a lot of work by a lot of people went into doing that.
To answer your question, I mean, part of the mission statement is helping community financial institutions thrive.
So for our clients to be able to sustain and grow their businesses, they've got to have deposits and they've got to have loans, and there are times when they need a lot more of one than the other.
Right now, a lot of folks need deposits more than they need loans. That was not the case a year ago. Whenever the case is.
Has been over the years, we've been there for our clients as a trusted partner to drive growth in those categories for our clients.
The cool thing is this is not, you know. Well, we got a couple of your giant campaigns here that are really making up most of it. These are thousands of small campaigns that add up.
You know, one of our analogies is get up a sit every day rather than trying to get a home run.
This 10 billion is thousands of base hits for hundreds of community financial institutions that have added up to $10 billion. So, you know, the lifeblood of any community financial institution is not investment banking, it's not exotic financial instruments, it's deposits and loans.
And so that's why it's exciting for us. It pays off our mission statement, but it's vital to our clients as well.
[00:03:42] Speaker B: Yeah, very well said. And so when you think about those base hits adding up, what are the, you know, what are the silver bullets that are being used or you know, to the magic formula to drive those results?
[00:03:53] Speaker C: Well, you know, if you think about the, the basic equation of how you get to 10 billion, there there are two components.
You have to have accounts that are opened and then you have to have balances in those accounts. And so that goes directly back to kind of our operating premise, which is that any successful targeting methodology involves capacity and propensity. Does the target audience have the means to buy the product and do they have the inclination to buy the product? And so getting there is really effective use of those criteria because we had to use very strong propensity to buy data to get the number of accounts you need to get to 10 billion.
But if those accounts were funded in a very low balance, anemic way, they still wouldn't get you there. So you have to sell accounts to where we have the capacity to fund those accounts at a meaningful level. And so it really goes back to the heart of what makes infusion unique. Our data assets that allow us to target in on where we can help clients direct their resources to get the best impact. So yeah, it's generating accounts, but accounts that are funded and that drives back to data criteria that predicts likelihood of getting that account opened and likelihood of that account being funded in a meaningful way.
[00:05:18] Speaker B: Yeah, so it's a great answer of, you know, a lot of times people think about a silver bullet or, you know, kind of this wave, the magic wand, and it just happens. What you've described is, is the reality of the silver bullet or the magic wand is it's a very disciplined process grounded in very practical analytics.
[00:05:40] Speaker C: Yeah, the word discipline we use probably more than anything else. And that goes back to the basic versus home run strategy.
Everyone knows if you put a, like right now, if you put a high enough rate on a deposit, you will, you will generate balances.
We don't do that. We you, we use data to identify high propensity targets and use more modest pricing to get growth that's more challenging. But it requires that discipline.
So when we say discipline there are some sub components of that there. One is starting with an empirical foundation that you can better plan off of.
Two is building a plan that is achievable and that is fundable in your budget environment and that is material in terms of the impact it has. And then you have to. Any plan that you don't execute on is not worth anything. So you have to be able to execute.
That's a key part of the discipline.
A lot of clients struggle to execute. That's why we exist to be an extension of our clients teams to help them make sure they're executing consistently on schedule.
And then you got to track the results of what you do or else you don't have any idea whether you're a 10 billion or 1 billion or 5 billion or 500 million.
So one thing you could say is the fact that we know it's 10 billion is a testament to our commitment to tracking everything we do.
But all of those things and tracking is just a sub discipline of all of us pro that process, analyze, plan, execute, track, revise plan and then ultimately come back and analyze. You know, again, are we moving the needle? Are we achieving what we, what we planned to or thought we would achieve?
Yeah.
[00:07:27] Speaker B: And so you know, that's really key.
[00:07:29] Speaker C: Right.
[00:07:30] Speaker B: So we're not, I think clients who that, that have been with us a long time or may have just started with us see the value in having a partner with that tracking history to inform strategy. It kind of jump starts their test and learn. It gives them a rich, particularly community financial that may not have the same scale as a, as a thing but have a lot more heart. And we love working with, you know, community banks and credit unions with a lot of heart that are making a difference in community gives them, but gives them access to scale and insights and testing and learn. So let's talk a little bit about. Obviously we're not going to get into the depth of a 30 minute or 1 hour deep dive tracking review that we do with clients every quarter. But what are some of those key lessons Learned? We've learned one or two things in tracking 10 billion of results across thousands of campaigns. What are some of those key lesson learned? We talked a little bit about audience selection but you know, talk a little bit about the capacity and how that plays in there.
[00:08:33] Speaker C: Yeah. So one of the simplest concepts that I think anyone could get Their head around pretty easily is more targeted, more frequent, as more effective than less targeted, less frequent. So when you, when you use more, when you use less targeted forms of promotion, you just, the fact is you're going to have more waste in your spend.
Your audience is going to include a larger number of people who don't have the means or an inclination to buy the product.
So starting with that high frequency, highly targeted is the base. Then when it comes to capacity propensity, you know, there, there are different flavors of capacity propensity. For example, propensity to buy includes institutional metrics or institutional criteria as well as category criteria. So institutional affinity.
I've demonstrated a commitment to your institution, a comfort level with you, I'm committed to you as a financial partner.
There's various indicators of that that are predictive of response to virtually any type of offer. But then there's also category specific CD buyers buy CDs, installment loan buyers buy installment loans.
You have, you know, capacity, I'm sorry, category predictors of propensity to buy.
And then you know, on the capacity side, on the various indicators of that really correlate with life stage where, you know, am I in that stage of my financial life where I'm primarily concerned with managing the value of my personal assets, where I'm in my core active borrowing years, or am I just a pure transactor? And making these distinctions allows us to be able to put relevant messages where that person has a financial capacity to benefit from the offer they're being presented. So there's a lot more detail in there by product category and so forth. But that's the basic concept.
[00:10:42] Speaker B: Yeah, and just to emphasize, like you said, it's informed by not just theoretical sort of demographic indicators, but real tangible actions and reactions across thousands of campaigns at specific types of campaigns.
[00:11:00] Speaker C: Yeah, and it's been really, really interesting to see how consistently certain criteria predicts outcomes whether you're a one branch credit union or a 500 branch bank.
Very, very, very different types of organizations. If you look at response by certain criteria, you see the exact same linear patterns. And so you can see that for institution to institution, but you also see that hold up over time. You know, you go back 15 years and you see the same sort of response correlations to let's say, CD offers that you're seeing right now with rates, rates going up, you know, when in a very different economic environment, different generation is responding, but the criteria is still consistent. And so it's remarkable.
And that's really what allows us to do performance based Marketing. And I meant to mention that at the beginning, one of the other things to say about the $10 billion is virtually all of that has been generated on a pay for performance model where infusion invested the resources to go out and get those balances and clients only paid for what came to the door.
And I think that adds another layer of credibility to this whole milestone.
[00:12:23] Speaker B: Yeah, and we get feedback all the time of clients saying we love the pay performance because it really makes sure that we're partners, we're are vested in the same outcomes.
[00:12:32] Speaker C: Right.
[00:12:33] Speaker B: We're not invested in doing activity that are ultimately unproductive.
Right. So we talked about audience selection, that's the foundation.
What about some offer structure? Just examples of lessons learned.
[00:12:45] Speaker C: Yeah. So I mean you start with a really basic marketing premise that applies in almost any industry. Which is the more tangible value that you communicate, the more likely you are to get a direct result from a particular offer or message you're putting in front of a customer. And so that's really what we try to focus on is what's the financial value of what you're offering and how do we communicate that in a way that is as tangible as possible to the individual.
So when you're talking about loans, you're talking about certainly rate because that's essentially what is the cost of the product. How does that compare to what alternatives I have? But you're also at the same time wrapping around that really important positioning that hey, we know you're unique. We know you have a variety of different parameters in which you bank. We have a variety of ways of addressing your particular lending need at this point in time. Come on and sit down with one of our specialists that we'll figure out just how to address your needs. So even in that positioning, it's not a rate per se, but you're saying you're communicating that there's a consultative process there that is friendly, welcoming and so forth. Takes into account your uniqueness. You know, the deposit side, obviously right now rates are going crazy with all the rate increases we've had. And so there you want to be able to again offer something tangible that a client can determine, customer can determine here this is a financial value to me.
But you want it to be relationship based growth versus a commodity type product sale.
Checking's the interesting component because checking to commodity, everyone has on a checking account and every institution has offers checking. So how do you differentiate? And I think there it depends on these propensity to buy factors. And where do I need to create propensity where it doesn't exist.
I need to get a little bit more aggressive in terms of what I'm willing to offer someone to move their direct deposit over to my institution.
I think one of the things we've seen the last few years is clearly communicating that your checking product is free.
Whether that's contingent or just purely free.
The lack of fees is really a key part of the message. So again, all of those are tangible, economic the value when it comes to lending, you don't have to have the best loan rate in the market, but you do have to communicate what you have to offer so that your customers know they're going to get a good deal. And even if by the way, you're promoting a home equity and they don't have enough lendable equity, that rate still conveys the fact that you have good rates and that even end up doing a mortgage refinance or an installment loan. I'm going to get a good deal.
[00:15:37] Speaker B: Yeah. And just to emphasize something you said like checking, that's where the intersection of the, of the capacity propensity factors and the offer discipline is a, is a great. So you know, for certain segments, the way they qualify, you know, they're more attractive to some of those fee, those premium features and so they know they have the balances to not have to worry about a monthly fee. And so we lean into some of those differentiating premium features.
But for some of the lower, the kind of pure transactors, what we've actually found after tons of test and learn is they're much more fee sensitive than feature sensitive. And so they tend to gravitate to the no frills, no monthly fee, no minimums. And so that's where just thinking about where the bank's value proposition and emphasis is related to those capacity propensity factors, you know, we've got, we bring to bear a lot of lessons learned that are relevant to, you know, wherever somebody sits in their strategic emphasis.
[00:16:44] Speaker C: Yeah, and I think that's, you know, one of our key unique assets is our campaign tracking database.
Thousands of campaigns is updated every day with fresh data from campaigns that are being completed on a day to day, week to week basis. And this allows us to say historically this is the offer that best aligns with this segment for these types of products.
You know, one of the real tangible economic value we're bringing to clients right now is helping them set their, their CD rate pricing when they're not overpaid by 25 or 50 or even 75 basis points because they're matching the rate of someone down the street, you know, that's the way deposit rates get set up, fortunately in most markets is what are they paying down the street. I need to be somewhere around that rather than saying what are my audiences of high propensity buyers and what are those segments responding to in terms of price point and how can I set my pricing based on a data analysis that I can be confident in two really different ways of going about it. That has substantial tangible impact on your current net interest margins, but also your ability to retain that funding downstream.
As rates, you know, change and you know, rates end up going down within the next year, it's going to create some really unique challenges with a lot of the CDs maturing in the second half of 23 and 24.
[00:18:14] Speaker B: And then, and so we touched on this a little bit. So there's a, there's a, all these pieces fit together but you have the offer or you know, what's the, what's the value value proposition you're offering and then how's that position? So some maybe touch on some of the best practices we've learned on creative and positioning the message.
[00:18:31] Speaker C: Yeah, yeah, for sure. I mean, again, part of our effective marketing, regardless of channel, is concision, you know, concise message, a lot of white space where it's very clear to the audience what, what the proposition is.
And that's regardless of what type of product you're, you're promoting.
One of the really interesting things about the 10 billion and the history of that 10 billion is in our 15 year existence. The first 10 years or so were almost exclusively direct mail and email channels because digital was still in its infancy. And particularly the ability to use targeted digital to, you know, selected audiences.
The 10 billion, I believe, Dan, and you can correct me on this, I believe, I know in 2021 we did over 2 billion.
Might have been as much as 3 billion in 2022. So roughly half of that 10 billion has just been in the last couple of years. I mean, confident in saying that. Yeah, and there are reasons for that.
Our business has grown dramatically as we've worked with more and more clients across the country. But also we've been able to vastly expand our channel mix. And one thing that we've seen is the more ways I can show the message to the audience, the more likely I am to get a response.
So Omni Channel is a buzzword, but it is real in terms of its impact.
And again, it's one thing for me to say that if I was charging clients based on Just pure production. I might even have an incentive to say that because the more channels that I'm charging for, the more I could charge. Being a performance based when I pay to execute through a channel that doesn't produce results, it costs me money and I don't get to bill a client. We don't like that. And so we work continually to optimize that mix.
And we really find combination of digital with selective use of direct mail really works. The digital creates engagement that we can measure and learn from.
So that's I think the biggest thing in terms of learnings about how you put the message out there is being able to bring that Omni channel component.
And again that requires resources to be able to execute at the same time within one campaign on four or five different channels. We do that every day and we help clients be able to do that and then measure all of those and bring it back into an analysis where you can determine what I learned.
And so I think the consistent look and feel.
Someone walks out to the mailbox, there's a postcard with home equities on a special warrant that's right in front of them. They see that, they go in later that evening, they log into Facebook, there's the same branded message in their Facebook feed. It recurs through their feed throughout the campaign as a reminder that the offer is there. They get an email a few days later with the same branded message. They don't look the email. Within a week, they get a retargeted email and then they may see the same message on the streaming TV services that I have supported through Ottoman. And so it's a combination of those things that not only gives you general branding but gives you very specific reinforcement of a financial value proposition and all that we can measure and bring back into what did that all yield at the end of the day. So that's been really the biggest thing the last few years is really digging into the channel mix, learning how different channels interact with each other, how they perform for different types of product offers, how to optimize those against a client budget to generate the results that clients need to get out of these campaigns.
[00:22:34] Speaker B: Yeah, and I think just to your point about channels, classically in
[00:22:41] Speaker C: the old
[00:22:41] Speaker B: direct mail world you talked about the three legged stool of of list offer Creative. Well now we really added the, that fourth stool which is channels because it's like, like you said, I mean direct mail's a small fraction of the total impressions delivered in campaigns. And this, the power of this first party targeted, some people call it addressable omnichannel. But it's the idea of this is really that, that classic idea of putting a very relevant message in front of a audience that, that, that cares about that message at the right time, at the right frequency and then being able to measure that impact. So talk, talk a little bit more about just you know, the kind of the measurement.
[00:23:25] Speaker C: Well, you know, I think that you know the, the future of the cookie is obviously highly in question.
But if you think about a cookie, the cookie and you, and you go back to our fundamental capacity propensity equation. Okay, the cookie is an indicator of propensity entity because someone has been on a website where it appears like they're potentially looking for a product that might relate to what you can offer. So there's value there, there's propensity to buy indicators there, but it gives you really no sense of the capacity that person to actually buy the product.
And so first of all it's limited and of course targeting based on cookies, you're downstream, you don't know if the product's already been purchased, which is actually an annoyance. If I start getting agile, something that I've already done, I've searched for hotels before and I start getting these messages about a hotel in that location, it's like I've already been there actually, I don't need to go back.
So you have these limitations with first party data. You lean on the capacity propensity, the historical performance of these segments, of these audiences for different types of offers until you create that file based on that historical proven performance and then you take that file and then you match that file to social media channels, to streaming tv, to IP address databases and then you're going to get, you know, your match rates right now are continuing to approve maybe 80% but there you've got an audience that you've selected based on proven data and then that's who you're targeting versus following someone around in an online, you know, type of environment. And that makes that can make all the difference in the world in terms of the results you're able to get out of your campaigns.
The other factor is because I selected that file and I copied all kind of attributes onto that file, pre campaign attributes. I can take an updated data file at the end of the campaign and match it to that campaign file and actually track accounts opened by those folks in the categories promoted named other categories.
And I can look at how those correlate buying behavior correlates with changes in overall deposit, loan balances and other types of halo effects.
And that's really, that's how A, you know whether you're getting to 10 billion or not, and B, that's how you can really correlate the engagement metric. Did someone see this and click on it to whether or not they actually opened the account. And if you think about, and a lot of you watching this have probably either just been through or in the middle of or going to be upgrading your online account opening, the difference between a 4 to 1 and a 2 to 1 ratio between clicks and accounts opened can make all the difference in the world in terms of marketing efficiency and return on investment.
But if you're not tracking that, you don't even have any. You had no idea where you are on the spectrum and how your conversion rate compares to what others have.
It's more difficult to build a business case to invest in the technology to have a really efficient online account opening if you don't know what the potential lift is. And so those are all things that we're looking at every day to say, how do I go from getting someone interested to actually getting that account on the books? To do that, you have to be able to track the accounts that are actually opened and then correlate that back to the clicks that. I think digital has almost made it easier for banks and credit unions to not do the account open tracking because they've got the click tracking and they can say, well, if I don't get to that, at least I have the click tracking tracking gets redefined as basic engagement metrics, but you don't know how much of that actually led to opened accounts. And so it's really critical to close that loop completely and not leave half the loop open in terms of correlating the engagement you create with the actual products that get purchased.
[00:27:24] Speaker B: Yeah. And even in banks we've worked with that are purely online opening, I think one key thing about our approach is because it's an omnichannel media approach and an on the channel response approach, one thing we found is the click path can get broken. Right. And so just one practical example is, you know, somebody may open their email and do some tire kicking on their mobile phone, but then, you know, on their lunch break at work, and maybe it's on, maybe it's at home, but it's on the office vpn. So it's showing up as a totally different geography, totally different network.
Then they go to the bank's website off without, without any kind of click, go to that website, buy the product.
Those two events may not be, may not be Connected if you purely are relying on click path tracking.
But in the methodology that we're talking about where it's, where it's grounded in first party specific, addressable targeting, it's very robust in understanding the interactions of the omnichannel media mix and how that plays into response, where even in a pure digital sales channel there are interruptions that can happen, ad blockers, all those things. And so that's where the power of the robust methodology that we're talking about really comes into play and provides a lot of weight to stand on and a lot of rigor. When we talk about both measuring the $10 billion but also informing clients and working with them to provide them a lot of smarts on really separating that signal from the noise.
[00:29:20] Speaker C: Yes. Yep.
[00:29:23] Speaker B: So.
So Tim, any other final thoughts as we talk about, you know, kind of celebrating this milestone and really leaning into why it's significant for clients?
[00:29:37] Speaker C: Yeah, you know, again, the bread and butter.
The vast majority of income derived by our clients is deposit loan balances and the ability to balance those out in a profitable way.
And that's what we do is to help them help grow in that category. But not just putting dollars on the books, doing it in a way that's sustainable over the long term because it's rooted in relationships.
So I would say it's great to look back and see 10 billion more exciting things, really to look forward because at the current trajectory we could hit 20 billion within a couple more years. And if we do that, the impact for our clients is going to be substantial in terms of their ability to sustain their, the base of customers. They have to grow their profitability to deliver more value to customers.
You know, there's been a lot of speculation about the future of community banking and community financial institutions with fintech and the concentration of the large banks in terms of certain types of accounts.
But the results that we're generating show that community financial institutions play a vital role in supporting their communities. They're thriving.
They actually a lot of what they're able to do through our programs are things that the large banks struggle to do because of, oh, they're so unwieldy and bureaucratic silos. And so, yeah, silos. And then the fintechs are finding out it's a lot harder to be a bank than they thought it was and to know your customer and everything else that goes along with to being a bank. And so we're just going to keep our head down, keep driving every day more results for clients.
And I can't wait to see, you know, the next 5 billion, the next 10 billion hit hit the books because that means certainly infusion thriving. But, but our clients are thriving and we're living up to our mission statement, which is again, to help community financial institutions thrive by generating deposits and loans.
[00:31:58] Speaker B: Yeah, very, very, very well said. And, and it is so cool to do those quarterly tracking reviews and those annual comprehensive reviews that we do with clients to see the progress and to have those have that impact, to say, okay, here's the things that we think are working well or things that we need to tweak and have that dialogue. And clients love that kind of partnership and helping get them to get to where they're trying to go.
You know, it's a next level of support and extension of the team that. And so we'd love to keep doing that for clients. And it's certainly an honor when others reach out and want to tap into that expertise as well.
[00:32:44] Speaker C: Absolutely, absolutely.
[00:32:46] Speaker B: Let us know what you think of this show and the insights and look forward to talking later.
[00:32:51] Speaker C: Absolutely. Thanks, Sam.
[00:32:52] Speaker A: All right, that's it for today on Top Quartile. If you haven't already, be sure to subscribe to Top Quartile wherever you find podcasts on on any podcast app. And while you're at it, we'd really appreciate a five star rating. And if you're interested in getting an opportunity assessment, head over to infusionmarketinggroup.com to learn more. Thanks for listening.
