How more accurate data is helping FIs acquire more business banking and merchant processing

On today’s episode, we’re going to delve into the world of data-driven marketing for business banking and merchant services. Joining us today are experts from FMCG Direct, a full-service omni-channel marketing agency specializing in financial institutions, and Enigma Technologies, a data provider offering detailed insights into the health and identity of small and medium businesses.

Our guests today include Elissa Rodd, Head of Data and Data Science at FMCG Direct, Tucker Triolo, Director of Performance Optimization at FMCG Direct, and Scott Steinberg, Chief Operating Officer and Chief Product Officer of Enigma Technologies. Together, they share their experiences and perspectives on leveraging accurate data to enhance marketing campaigns and drive business customer acquisition in the financial space.

We explore the challenges in acquiring precise data, the unique approach of FMCG Direct in pay-for-performance campaigns, and the transformative impact of Enigma’s data on merchant acquisition strategies. Our guests also shed light on the evolving trends in the industry, the importance of personalization, and the increasing focus on vertical payment solutions.

Whether you’re a financial marketer looking to enhance your strategies or a business owner navigating the complex landscape of business banking and merchant services, this episode provides valuable insights and predictions for the future of data-driven marketing. Let’s dive into the conversation with Elissa, Tucker, and Scott.

The big ideas

Big Idea 1: The power of data in financial services marketing

‘As businesses navigate through complex transactions, having a robust data strategy becomes a game-changer.'”

Big Idea 2: Big data providers don’t go deep enough

“The B2B space is totally different than B2C. The data out there is really fragmented. You’ve got a few big players who are great at getting the firmographic data. You can whittle down your selections and get maybe a hundred or so attributes that allow you to do modeling. That’s not super deep”

Big Idea 3: Data can significantly increase ROI in business banking and merchant services marketing

“The merchant services account opening rate has increased by roughly three times since we started integrating the Enigma data in.”

Big Idea 4: Identifying the right targets creates a halo effect for other products

“Outside of just the merchant impact, we’ve actually seen lift across virtually all of the other major product categories. So things like checking, high yield deposits, lending, credit card, we’ve seen kind of a 2x lift in response across all product types.”

Big Idea 5: Increasing verticalization in payments providers and targeted marketing

“What’s happening is there’s an increasing number of merchant provider payment solutions that offer really tailored solutions for a particular vertical first, more Toast, less Square. We’re seeing that happening across a proliferation of industries — there’s specific vertical payments solutions now for hair salons, for beauticians.”

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The following excerpts were edited for clarity.

FMCG Direct and its merger with Deluxe

Elissa Rodd, Head of Data and Data Science at FMCG Direct: FMCG Direct was a boutique marketing agency that was bought by Deluxe in 2016. So we became part of the Deluxe family. We are now part of the data solution organization. At a really high level, we are a data driven, full service omni-channel marketing agency. We’ve been in this space for over five decades now. Fun fact: we actually started out in management consulting and our primary clients at the time were banks. And while we were helping our big clients, we realized that they had a really hard time finding good marketing partners who really understood the unique challenges, needs, and nuances that marketers require. So we decided, rather than refer a substandard partner, we would actually build it ourselves.

And so that’s what we did. We brought in all the capabilities in house and built a full service marketing agency specifically to support financial institutions. Our main clients today are still financial institutions, although we’ve kind of spread out. We now work in all industries and verticals, but it’s still our focus.

Helping financial institutions achieve marketing goals and ROI

Elissa Rodd, Head of Data and Data Science at FMCG Direct: At a really high level, we do two things: first and foremost, we help our clients to achieve and realize their marketing objectives, whether that’s a certain cost per account that they’re looking for ROI goals, new accounts opened, new product launches, whatever it may be, that’s what we’re really here to support. The second thing that we’re obsessed with is producing really high return on investment. We really want our clients to get the most out of their marketing budget — nothing frustrates us more than wasted marketing spend, spending money on leads and creative design and things that don’t work or don’t convert and don’t get you where you want to go.

But in terms of business banking marketing, specifically, we really focus on all business products from deposit gathering to new merchant services accounts to loan acquisition. We focus on deepening customer relationships, so everything from cross sell to retention, and then also helping our clients find their next best new customer. We literally do everything. We start with campaign design and strategy. What’s the campaign going to look like? What are the target goals and benchmarks? Then we do all the data sourcing, the audience selection, we build custom models to help predict response. We do print production, deployment, creative design, and then we take it all home with Tucker’s team who does all of the attribution reporting measurement to see how well did we are doing. Then all that feeds back into a new loop in which we’re constantly optimizing our campaigns.

Pay for performance marketing model

Elissa Rodd, Head of Data and Data Science at FMCG Direct: We believe in what we do very strongly, and we’re really good at it. We’re obsessed with it. So we do a lot of pay for performance campaigns, in which we take on all the risk of the campaign. So the client tells us what they want to do, what their target is, the product they’re going after, and we do everything. We fund all the postage cost or the digital activation costs, the data costs, and then our clients basically pay us a bounty, a fixed amount on each account that we bring in. There’s literally no risk to them. We’re willing to do that, because we’re really good at what we do.

What commercial banks need right now to improve their marketing

Elissa Rodd, Head of Data and Data Science at FMCG Direct: There are two things that come to mind off the bat. The first is data and getting good data. The B2C space has amazing data. Consumers freely give our information away all the time — we click little boxes without realizing that that allows companies to sell our data. And so there’s thousands and thousands of attributes on consumers.

The B2B space is totally different. The data out there is really fragmented. You’ve got a few big players who are great at getting the firmographic data, the base data that you need that gives you some basic targeting. You can whittle down your selections, and get maybe a hundred or so attributes, fill in features that allow you to do modeling, that’s not super deep.

Then on the flip side, there’s tons of small specialty niche data partners that offer really cool data that can help supplement and really expand on what you can get. But the problem is, those data sets are in different places, you have to link them, and business entity resolution is tough. From personal experience, I can tell you, it’s really tough. Because a business will often buy products in their legal name and their registered name but their DBA name is the business owner. You end up having three or four addresses, three or four names, three or four telephone numbers. Being able to stitch together all that data is really hard. So just getting really great data is tough.

That’s one thing I think we do really well because we spend a lot of time perfecting and also finding all the fun niche providers like Enigma.

The second thing I’d probably highlight is, loyalty is up for grabs more than ever before in the FI space. We can all remember from Spring/Summer of 2020 and COVID seriously hurt B2B businesses, especially on the smaller end of that scale. So a lot of businesses are rethinking their relationships with their banks. They’re looking for partners, they’re looking for people who are going to weather the storm with them. There were also a whole bunch of new businesses formed because of the changing needs and demands that COVID created. So we’re still seeing really high switching within the B2B space and banking specifically that we haven’t seen before.

As marketers, it’s really tough because you really have to be on your game because your own customers are at risk for switching. But then there’s also a huge population of businesses that are actively in the market that weren’t there before.

Rising buyer expectations in B2B

Tucker Triolo, Director of Performance Optimization at FMCG Direct: Another one I’d add is buyer expectations in the B2B space. They’re evolving and almost mirroring what we’re seeing on the B2C side even more, where business owners, B2B buyers are expecting more personalized journeys, kind of similar to what they’ve seen in their consumer experiences. That’s something that’s been coming across in a lot of surveys that we see of B2B marketers.

They’re continuing to report on a pretty regular basis that targeting the right audience and effectively delivering personalization at scale are major challenges. Compounding that challenge is a self reported lack of proficiency in data and analytics. And if you think about merchant services, that’s a great example of a product where finding the right audience can be really difficult. It can just be hard to know if a business needs merchant services or not. You can roll it up to the industry level and focus on areas where there’s generally more of a need, industries like retail restaurants, B2C services, things of that nature. You can build lookalike models, but it remains a challenge. And that’s why it’s great to have the data that Enigma gives us. It gives us those answers without us having to make those kind of generalizations across businesses.

How the data industry is responding to challenges in business banking

Elissa Rodd, Head of Data and Data Science at FMCG Direct: I think one way the industry is responding is by heavily ramping up marketing. We like to tell our customers that switching is up for grabs. You need to be on your A game, but your customers are someone else’s prospects. So you can bet if you’re not talking to them, someone else is talking to them as prospects. We heavily recommend that our clients talk to their customers very often, so that they’re top of mind, and they’re getting ahead of things.

The second thing is really good data, data like Tucker mentioned, like the merchant data that really gets you to the segment you need without wasted marketing spend. We also have a specialty list that we use for business trigger formations. So brand new businesses that have just registered with like the Secretary of State, or just occupied a new commercial real estate location. Those are great targets, because those are hand raisers where loyalty is up for grabs, when you know there’s a lot of switching. These are really great targets because they’re brand new businesses, you know that they’re going to need a checking account, they might need a loan, they’re going to need merchant. So we do a lot of marketing with with our trigger data and with really niche data that helps solve some of the problems we can’t solve outright.

Where Enigma’s data can help

Scott Steinberg, Chief Operating Officer and Chief Product Officer of Enigma Technologies: As Elissa and Tucker alluded, Enigma is a data provider. We provide data and insights about the health and identity of small and medium businesses in the US. What’s unique about Enigma compared to some of the providers that Elissa talked about is that we have a really detailed understanding of the processing and behavior of merchants. Enigma sees about 40% of all credit card and debit card transactions in the US. And we use that information and transform it to understand what the processing volume is and activity of each merchant in the US.

We’re defining a merchant here as any business that accepts credit cards as a form of payment. So you can think of restaurants, retail stores, those are going to be merchants. Your professional consulting firm that is getting paid over and ACH or wire — that’s not going to be considered a merchant in this definition. So based off all that data, Enigma has really granular insights into merchant behavior. The most simple one is, is this merchant actually active? You know, it sounds like a really simple question to ask. But given the dynamic nature of small medium businesses in the US, there’s actually pretty high turnover for which merchants are operating and which ones aren’t. A lot of marketing dollars can be wasted by just not knowing the answer to that question.

But then it goes much more granular than that, like, what’s the actual processing volume? Is it going up? Is it going down? What’s that growth rate? How many new stores are being opened? How are those stores performing given the seasonality of the business? Marketers can get into information that can be really useful for prospecting for merchant services, such as, what payment provider they’re using. Often when we talk with merchant services teams, they say that they can really win business from X payment platform. And Enigma can provide that insight into for most payment platforms, payments providers being used, which the small business is using. So really detailed understanding of merchants and the identity and health of of those merchants.

Enigma data can be used across many different use cases. It can be used for underwriting small businesses. It can be used for onboarding small businesses and performing KYB. What we’re talking about here is how this data can be used for prospecting small businesses and driving effectiveness and efficiency and marketing campaigns.

FMCG Direct wasn’t our first customer, but definitely in the top 10. They’re one of our favorite cloud customers, both because of how similar we see the world in terms of the challenges around data and think about focusing on trying to drive impacts. But also, how quantitative they are, and how much awesome insight we’ve been able to generate together about where this data can be most impactful.

How data is powering real life customers: A case study

Tucker Triolo, Director of Performance Optimization at FMCG Direct: I’ll tell a story about a client of ours. It’s top ten Bank, who we’ve worked with for many years on the business banking front, and with a specific focus on merchant. Many of our campaigns we have with this bank, we receive additional campaign funding directly from the merchant services line of business, in tandem with the BU’s marketing budget. Those dollars give us the directive to build audiences within our campaigns that have an especially high propensity for merchant services.

So for the construction of this segment, in the past, we would lean into some of the targeting levers that you might suspect, things like annual revenue, certain industry clusters, that are a little bit more high octane for merchants, and building lookalike targeting models. But a lot of those things are really just leaning on more general firmographics, and predictive behaviors, rather than actual observed behaviors. We just didn’t have a lot of data on prospects that was specifically oriented towards merchants.

So about a year and a half ago, we began testing the unlimited data in these campaigns instead, which gave us that visibility that Scott was talking about into actual merchant business activity, real transaction data. We didn’t have that previously. And it even gave us new businesses that we hadn’t really seen before in our own data. Alongside that, we got new insights on these businesses, things like annual card revenue, business seasonality and what points in the year they’re experiencing peak activity, and information on the health of the business — these were all things that we were able to kind of work into our targeting approach.

The results have been really outstanding. The merchant services account opening rate has increased by roughly three times since we started integrating the Enigma data in and notably, outside of just the merchant impact, we’ve actually seen lift across virtually all of the other major product categories. So things like checking, high yield deposits, lending, credit card, we’ve seen kind of a 2x lift in response across all product types. So it’s really been great to see the data perform effectively not just in its intended use of driving improvement in merchant acquisition but also having a material ancillary effects across the non target product categories as well.

How this data is lifting FI marketing of business banking and merchant services

Elissa Rodd, Head of Data and Data Science at FMCG Direct: We know for a fact that the big data players don’t have full coverage of all businesses. Just 30 million businesses, so they’ve got a good chunk of it. But there’s always businesses that we don’t see because they’re too new. And they’re not showing up yet, or they’re somehow under the radar. We think Enigma is finding businesses — not just random businesses — businesses we know are in business, because you’re literally seeing swipes at a credit card terminal.

So we’re getting leads that we’ve never seen before and they probably haven’t been saturated with marketing, right? They’re the unicorns that you’re always looking for. The people who don’t get 10 pieces of mail, but they’re getting your piece of mail. That’s probably a big driver: the fact that these leads don’t get as much marketing. And so when we get in the mail, or we call, or we email, we’re top of stack, whereas we might be further down in other places.

We did a lot of back testing with Enigma before we onboarded them to see if our hypothesis was correct. And it was, and it’s proven that way. But now that we’ve seen it perform well in other product lines, we have literally brought it into every campaign that we run, because the data is super powerful in driving conversions.

Why there’s a lift across all products with better data

Tucker Triolo, Director of Performance Optimization at FMCG Direct: I think that it’s about marketing saturation, and the fact that these businesses that we’re seeing are sourced from Enigma and not elsewhere. I think that that is additionally proven out by how it looks in the results. We measure everything on our end on a net of control basis. For each of our campaigns, if we intend to target a million businesses, we’ll actually select the best, say, 1.2 million businesses and randomize them, so that a million of them are receiving the marketing, and the other 200,000 are not receiving anything, and they’re kind of our statistically identical control.

We’ll look at both of those groups over the same amount of time. And look at the behaviors of both of those groups, how many accounts each of them are opening, so that we have our baseline sort of expected activity of account opening and account funding, and compare that to what the marketing generated to see what we generated on what we call a ‘net of control basis’. And, and not only are we seeing Enigma outperform other sources in terms of generating that 2x lift. But on a net of control basis, the lift is actually even more pronounced where there’s greater lift over control than we see with our other sources. Typically, a of lift for us might be in the neighborhood of 40% to 50%. With the new data, it’s even larger than that. So I think that kind of doubles down on just the fact that these are businesses that are not receiving much marketing efforts elsewhere, which allows us to hone in and drill down on that.

Why it’s important to reach out to businesses at the right time

Elissa Rodd, Head of Data and Data Science at FMCG Direct: We’ve been playing around a lot with Enigma data in trying to make some sense of the triggers. So businesses that are in peak processing months, or businesses that are in slower processing months — if they’re a bit slower, than they have more time to think about banking and maybe they need a loan, or maybe they have time to switch their merchant processing, which might be a headache when it’s super busy. So we do use a lot of those metrics that Enigma provides to look on the back end to inform selections moving forward.

What we know from some of these businesses is they’re super active and healthy. So it makes sense that they need a lot of products. And if we can get in the door with one product, then often, we see a halo effect where they don’t just open up the merchant, they open up a checking account or a lending account, or maybe they’re not ready for the merchant, but the checking account offer is very attractive.

Tucker Triolo, Director of Performance Optimization at FMCG Direct: We are starting to look more closely at that specific piece of seasonality and when businesses are really responding, and we’re starting to see some kind of interesting insights emerge around that. We’re seeing trends of businesses being more responsive at the kind of opposite end of the year from their peak, where they might have a higher propensity to respond if their peak seasonality is in June, you might see them more likely to respond in December, just from some of the data we’ve been seeing in our campaigns recently. Its actual observed data, not something that we’re just predicting based off of a number of attributes, which is, I think, where the value really is.

2024 plans to help FIs market better

Scott Steinberg, Chief Operating Officer and Chief Product Officer of Enigma Technologies: I think Enigma sees a little bit of a different perspective than FMCG Direct, in that FMCG direct does work across a ton of different industries. Predominantly, you guys are working with very large banks. Enigma does work with many very large banks on our own, and in partnership with FMCG Direct, but we also work with a lot of fintechs, and a lot of payment solution providers. I think one of the things that we’re seeing in the payment space is this overwhelming drive towards verticalization. I think a lot of people believe that horizontal platforms, like Square, for example, are a little bit of the way of the past.

What’s happening is there’s an increasing number of merchant provider payment solutions that offer really tailored solutions for a particular vertical first, more Toast, less Square. We’re seeing that happening across a proliferation of industries — there’s specific vertical payments solutions now for hair salons, for beauticians. Toast is a great example for restaurants. TouchBistro is another one.

What we’re seeing now is that more of the horizontal providers are responding by starting to think about building product in more vertical ways. So I’m not saying like Square’s out of the game — I think what we’ll see is companies like Square and more of the banks needing to think more in terms of vertical. I think that gets to Tucker’s point earlier about personalization and targeting. I hypothesize that in 2024, we’re going to see a lot more campaigns that are super tailored and specific to industry verticals, to compete with that verticalization. That’s happening more broadly in the in the merchant space. We’ll see. It’s just a hypothesis, but that’s where I bet my money.

Tucker Triolo, Director of Performance Optimization at FMCG Direct: We’re actually already starting to see that with some of our clients having more of a focus on industry specific targets, industry segment focused campaigns.

Scott Steinberg, Chief Operating Officer and Chief Product Officer of Enigma Technologies: That’s where I think, frankly, you guys are positioned really well on ecosystem because you have so many different data providers, like Enigma and others that you classified as more niche providers. You guys also have relationships for data that can be really good for other industry verticals that I think would be really hard for large banks to go and source all of that on their own. So I think you guys are positioned super well to help banks with that movement.

Elissa Rodd, Head of Data and Data Science at FMCG Direct: My team is spending a lot of time doing research on new potential data partners, because more and more of our customers are recognizing the power of really good data, not solely predictive data, but first party, sourced, self reported data. And so we’re spending a lot of time trying to find very unique sources.

The other trend for us is a continued focus on omni-channel marketing and really reaching customers where they are, not just using a direct mail channel or digital channel but making your targeting really tailored to the end user.