Magazine article American Banker

This Bank Knows Its Customers by Lifestyles; West One Is Seen in Its Markets as a Megabank, Yet It Likes to Think of Itself as a Community-Oriented Institution

Magazine article American Banker

This Bank Knows Its Customers by Lifestyles; West One Is Seen in Its Markets as a Megabank, Yet It Likes to Think of Itself as a Community-Oriented Institution

Article excerpt

Size is a relative thing, and that's a predicament for West One Bancorp.

With $8.8 billion of assets, West One is not exactly an industrial behemoth. But in the markets in which it operates -- Idaho, Utah, Oregon, and Washington -- where credit union and small thrift institutions far outnumber commercial banks -- its size is enough to make customers and prospects think of West One as a megabank.

Yet executives at West One like to think of their organizations a community-oriented bank, said Theresa Hasman, assistant vice president and data base manager.

"West One has a community, banking strategy," the said. "We want to be out in the community and understand who our customers are."

That's tough when you're operating in flour states and diverse socio-economic environments. So West One turned to a sophisticated form of market segmentation known as lifestyles segmentation.

The process seems to be serving the company well, helping it retain customers in markets where it has acquired smaller financial institutions and boosting its overall success at cross-selling banking products.

"We needed a better understanding of our marketplace" said Ms. Hasman in explaining the decision to use lifestyles segmentation.

Lifestyles segmentation allows West One to tailor its marketing efforts to specific customer segments, neighborhood by neighborhood. "It helps us determine if there is a market for certain products," said Ms. Hasman. "It helps us determine how to present West One products based upon particular market needs."

This is not a new approach to segmentation, but it's one that appears to be gaining converts, according to Eddie Pickle, president of Claritas Financial Services Group, Arlington, Va. Claritas developed the data base and software that West One uses to analyze markets by lifestyles.

The critical factors of lifestyles segmentation are wealth, income, age, homeownership, and business ownership. Or as Mr. Pickle describes the criteria: How big is your stash? How fast is money flowing into your stash? What are your prospects for financial growth, and what do you own?

Factors such as education and children are secondary in this process, Mr. Pickle noted.

The neighborhood-by-neighborhood approach to market analysis makes sense, explained Mr. Pickle, because people of similar characteristics tend to live near one another.

For example, blue-bloods don't tend to live among blue-collar workers, and white-collar professionals don't typically live in the same neighborhoods as students.

"Your neighborhood does say a lot about your lifestyle," said Mr. Pickle. "It correlates with your financial behavior."

Claritas draws upon data compiled by the Census Bureau and local sources to offer detailed analyses of the consumers who live in a particular market -- their average household incomes, the types of financial products they use, the radio stations they listen to, etc.

West One -- integrating that information with its internal customer files -- can identify the types of products that would best suit certain customers and determine how best to reach those customers, explained Ms. Hasman.

"The whole purpose of market segmentation is to give the large institution the ability to speak to and work with customers in a manner akin to the community bank," said Mr. Pickle. "It allows the bank to develop products and services that speak the language their clients want to hear."

For West One, that ability means zooming the eye of its marketing camera into the branch office, a process Ms. Hasman calls "market management." Hasman calls "market management."

Drawing upon segmentation data from Claritas, Ms. Hasman and her colleagues at West One headquarters in Boise, Idaho, can give each branch manager an information package profiling individuals in their markets. Branch managers can then analyze opportunities to sell each product offered by West One within their particular markets, and they can direct marketing activities accordingly. …

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