California Federal lures new depositors on the strength of an upscale marketing effort.

California Federal lures new depositors on the strength of an upscale marketing effort

Los Angeles-based California Federal Bank has taken to the television airwaves in an apparently successful effort to lure high-end, up-and-comer customers out of the consumption cycle and into the institution's specialized saving program.

One CalFed ad for the account shows a professor who describes a typical young upscale couple's large expenses -- a penthouse apartment, two cars and vacations -- as the items are flashed on a monitor behind him.

Then the professor says, "seems like a perfect life . . . 'til you look at their savings." Suddenly, a paltry $13.57 flashes on the monitor.

The message has hit home with many baby boomer viewers who have seen the commercial and gasped, "oh my God, that me," said Patrick Adams, vice president and management supervisor at the Los Angeles office of the Della Femina McNamee Inc.

Since the account was introduced in January, customer interest has been brisk and the institution has met its sales target for 1990, said Laura Kalb, CalFed's vice president and director of deposit product management.

Adams says he thinks baby boomers like the account because their traditional lack of savings is probably caused by a lack of discipline, not a lack of funds. An electronic cash transfer offers them a "relatively painless method of saving," he added.

The account's success may convince other banks and S&Ls to consider integrated checking and savings accounts for young professionals in the 25 to 35 year-old range -- a group banks often consider credit hungry and asset poor.

Because of the group's lack of sizable deposits, just 19 percent of U.S. banks and 4 percent of U.S. thrifts have packages geared toward young households between ages 25 and 35 earning more than $25,000 annually, according to a survey by the Raddon Financial Group, a bank marketing firm based in Westchester, III.

But Raddon has described these people as the "second most profitable market segment [for banks], trailing only the upscale market [people 35 and older earning more than $50,000 annually]."

CalFed's Automatic Saving and Planning account is one of few bank products around the nation that is targeting these young households. The account forces free-spenders to save by choosing a set amount that will be automatically transferred each month from their checking account into savings or certificate of deposit accounts, explained Kalb.

Customers can open an ASAP checking account with a $100 deposit and a ASAP savings with $200. There is a fee for the checking accounts, but the fee can be waived with a minimum balance in the checkings or savings.

Targeting the baby boomers is quite a departure in traditional bank marketing strategy, said Terry Utterback, a bank marketing consultant.

"Banks like to target people with deposits and large balances," said Utterback, "but yuppies don't have a lot of extra money to put in the bank."

But Utterback said CalFed is trying to develop a relationship with younger depositors and encourage good saving habits.

Kalb agreed that one of the account's objectives was to build relationships with younger customers because that is one of the institution's corporate goals. However, she noted that older customers have also signed up for the account.

Robert O'Meara, Raddon's vice president, said that he is seeing more thrift advertising around the country aimed at younger customers because most S&L's depositors are 50 years and older and the institutions are trying to "reach a new generation of customers."

These thrifts' aim, explained O'Meara, is to attract these customers with these accounts and hopefully sell other services such as auto loans and CD's in the future.

Another reason why the baby boomer generation likes electronic transfer accounts is that it is also more comfortable with new bank technology, said Cindy Wilson, spokeswoman for the Chicago-based Bank Marketing Association. After all, younger depositors have eagerly adopted ATM machines, she added.

Although the product is innovative, CalFed did not say "let's create a product and then go for the hard sell," said Kalb.

By consulting with consumers during the account's planning process, Kalb added several features including the flexibility to skip a month's transfer and a guarantee that the transfer will not overdraw the depositor's checking account.

Kalb explained that banks have offered automatic savings transfers before, but the plans did not have the flexibility and options offered on the CalFed account.

The specialized account is available at CalFed's 141 California branches and an additional 61 branches in Arizona, Florida, Georgia and Nevada through Cal Fed Inc., California Federal Bank's parent, with $23 billion in assets and $16 billion in deposits.

PHOTO : Up and coming: CalFed's ASAP marketing campaign scores success