CASE STUDY: Advanced
Interest Certificate of Deposit
OBJECTIVE:
Generate CD balances by attracting new
customers and utilizing consumer segments to market to existing members.
Product
Profile:
The Advance Interest CD pays the
customer in advance for a full years'
interest. The interest can be paid by check or
deposited into another account at the institution.
This product should be marketed with the intent of
putting the customer's earnings to work by
depositing their upfront interest into an interest
bearing checking, money market or savings account
while the institution enjoys increased cross-sales
and balances.
Product Structure for Case Study:
Term:
12
Months
Pricing:
Approximately 50 basis points
below market
Min/Max Balance Restrictions:
$10,000-$250,000 New Money Only
Penalty:
Forfeiture of dividends paid upfront. This
would be taken from the principle
Upfront Interest Distribution:
Paid 20 days after
Certificate of Deposit was opened
Marketing Efforts:
Ads
in the local community newspapers
Customer Newsletter
Targeted direct mail:
Upscale
Three or more
existing CDs
$35,000 or
more in deposit balances
Customers that
respond to aggressive CD promotions
Product Deployment:
A kickoff party was held with staff to ensure
product knowledge and comfort level. This
included role playing and emphasis on the "New
Money" restriction.
Results:
Number of new CDs opened in the first three
months:
361
Number of new customers opening these CDs:
85
Total deposit dollars in this product in the
first three months:
$14,890,000.00
Percentage of new money in this product:
95%
The
financial institution profiled in this case study
was very pleased with the promotion. In 79 days they were able to achieve
74.5% of their annual deposit goal while pricing
25-50 basis points lower than their market.
At RFG we take pride in
providing research-based solutions that are
effective and easily implemented. We are dedicated
to exceeding our client's expectations and ensuring
that they receive value from their relationship with
RFG.
Since 1983, Raddon Financial Group (RFG) has provided primary
research and marketing solutions to the financial
services industry. Headquartered in Lombard, IL, RFG provides research solutions to over
1,000 financial institutions nationwide.
