Dime Steeps Its Staff in a Sales Culture @sh#Detailed Customer Research Helps Thrift Peg an Individual's Profitability
Senior, Adriana, American Banker
Dime Bancorp's planned merger with Hudson United Bancorp is only the most visible aspect of its strategy to transform itself into a commercial bank.
The $22.3 billion-asset Dime also has been pursuing its metamorphosis on a more basic level -- literally customer by customer.
Since starting a major data base software initiative in 1997, New York-based Dime has sought to attract the "right" new customers while retaining the older, conservative, branch-dependent people that have traditionally driven thrift profits.
The right customers, according to Dime executive vice president Peyton Patterson, are younger consumers who are credit-driven, use debit cards, and bank through low-cost channels like the telephone and Internet.
Ms. Patterson was charged with getting more of these customers three and a half years ago when she moved over from Chase Manhattan Corp. to take charge of retail banking. With 20 years of retail banking experience and an intimate knowledge of the competition, she put into motion an aggressive customer acquisition plan.
Besides Chase, Dime is fighting against megabanking conglomerates like Citigroup and FleetBoston Corp., as well as sizable regional thrifts like Astoria Federal. The 140-year-old Dime currently has dealings with 700,000 New York-area households and a 6% share of deposits.
With 124 branches -- one-third to one-fourth the number of Chase or Citibank -- Dime feels pressure to stand out.
"Our people must work harder to get more customers," Ms. Patterson said. "The level of service at the branches and other channels must be greater."
Bill Bradway, research director at Meridien Research in Newton, Mass., said Dime has "a tall order." Its regional status and the need to compete with the likes of Chase and Citi on a more modest budget is challenging enough, without having also to manage a major culture change, he said.
Ms. Patterson dived into the job by first dissecting the data base to determine profitability per customer.
"We really peeled the onion and segmented the types of customers we have, to understand the profit dynamic beyond the obvious criteria," Ms. Patterson said.
To demographic data such as age and income, Dime added financial and lifestyle characteristics like the cars its customers drive, the neighborhoods they live in, their number and types of brokerage accounts, and the magazines they read. It acquired the data from research sources such as ADC Lifestyle and MRI.
Dime then divided its customer base into three tiers -- most profitable, potentially profitable, and not profitable.
To retain its most profitable customers, Dime introduced services such as private banking. For the middle tier, it adopted a strategy to sell additional products and increase profitability. It gave the unprofitable customers incentives to use less costly channels such as the telephone and introduced new pricing schemes, including additional fees.
Through surveys, Dime got information that let it develop offerings tailored to different segments. The company was surprised to find, for example, that clusters of customers in Brooklyn want different services from those in New Jersey, and very different services from those in Long Island.
In addition to analyzing its customer data, Dime invested in product development, including consumer loans and core deposit accounts, and in service channels, including a telephone bank and a forthcoming Internet channel.
Dime made a multimillion-dollar investment in software from Charlotte, N.C.-based Broadway & Seymour, which was subsequently acquired by Science Applications International Corp. …