Magazine article Marketing

Fortune Hunters

Magazine article Marketing

Fortune Hunters

Article excerpt

Nigel Cassidy looks at how marketers are targeting the lucky recipients of recent building society windfalls

Another week, another windfall. Anyone who's with the Woolwich is in the money this week, because last Monday it was the turn of another two-and-a-half million people to be showered with pennies from heaven. And they may not be the last - many more are set to strike it rich in what could generate one of the biggest spending booms since the 80s.

Alliance & Leicester, Halifax, Norwich Union and now Woolwich - never before has so much free money been dished out to consumers.

And never before have marketers been so well equipped to systematically target the lucky recipients of those who are in the mood to spend.

Although they may not have realised it, many thousands of Woolwich customers have already had at least one mailshot from companies determined to be the first to make helpful suggestions as to how they should part with their cash.

Economist Michael Hughes, of BZW, puts the total benefits to individuals at [pounds]30bn for this calendar year. A proportion will clearly be saved or recycled into the windfall accumulator: betting on the next mutual organisations to go public. If the latest estimates from the likes of Halifax are to be believed, around a quarter of the shares given away are sold immediately.

Even if only half of that sum is actually spent, Hughes estimates that represents an extra 1% on consumer spending. It is a cash injection at least as potent as cutting 5p off the basic rate of income tax. As the group economist at Charterhouse, Richard Jeffrey, memorably put it, this is the nearest thing we have had to a massive helicopter drop of cash on in the UK.

The City is concerned that the windfalls are fuelling an already overheating economy - a spending spree we may all have to pay for in the form of more expensive mortgages and business borrowing if, as threatened, the Bank of England raises interest rates to calm things down.

Evidence so far suggests the extra spending is mainly going on holidays and home improvements, with smaller sums on cars and, especially among young people, on clothes. Although it is early days, many analysts have been surprised at where the money is going.

Steve Lomax, associate director of MORI Financial Services, says: "I think there is a difference between what's happening and what was said, because of the ease of reinvestment, especially in PEPs and because the size of the share payouts has been higher than expected.

"You also have to consider that a lot of these beneficiaries are first-time shareholders and are probably fairly ill-informed about what to do with their shares."

With marketers queuing up to sell to this group of spend-happy consumers, who, on average, have received [pounds]1500 each, companies with databases of share recipients are sitting on a goldmine.

Data-owner ICD, a major player in the field of collecting and handling consumer information for manufacturers, retailers and service providers, has built a database of windfall recipients with additional analysis from lifestyle data. It is called the British Savers Database.

Digging deep

ICD has cross-referenced the share registers of the former building societies with the 7.5 million individuals it has already tracked in its existing databases.

What emerged from this Byzantine merge-purge is not only a valuable list of names, but factual analysis of this group's behavioural consumer traits. Using a special index, an organisation can discover how its own customers' interests and demography may deviate from that of all the individuals on national lifestyle databases. …

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