Zions Bank Continues to Improve Onboarding Process by Expanding Channels and Touches

Instead of simply sending a single letter to new account openers to thank them for their business, Zions Bank has expanded their onboarding program to include a 30 day 'engagement' mailing and a 60 day 'cross-sell' mailing. In addition, they utilize their centralized call center for follow-up and reach all new customers with email to reinforce the written communication. This integrated focus towards new customer communication has resulted in a significant reduction in new customer attrition and enhanced cross-sales of services.

Segment Your Customer Base For Reg E Communications

The recent changes to Reg. E, impacting how financial institutions can levy fees for overdrafts caused by one time debit card or ATM transaction, have created a period of both challenge and opportunity for financial institutions. Due to the almost certain negative impact on a bank’s fee revenue and potential customer confusion about this new regulation, it is important to be able to effectively and efficiently implement these new requirements, maximizing account holder opt-in responses while providing a positive customer experience.

In this month's ABA Bank Marketing Magazine, Robert Giltner from Velocity Solutions suggests that financial institutions should start their communications process with a mass mail and email campaign to all customers explaining the new regulation. While I agree that all customers should be provided a clear understanding of their options, I don't agree that an all encompassing direct mailing should be done from a cost perspective.

Every customer should not be treated the same. Research shows that while most customers do not like the fees associated with overdrafts, there is a percentage that rely on overdraft coverage to meet current expenses or avoid embarrassment caused by inadequate record-keeping. To achieve the highest possible opt-in response at the lowest possible cost, I believe a segmented and integrated communications process should be used, leveraging multiple communication and response channels and focusing resources where they will have the greatest impact.

Instead of treating all account holders the same, most financial institutions I have talked to will be communicating most aggressively to the 10-15% of the customers who have the highest incidence of overdrafts, connecting with those households that the FDIC found to be the highest users (and fee generators) in their 2008 Study of Bank Overdraft Programs.

Some firms are even trying to determine which owner on an account is responsible for the majority of the overdrafts. By using all available communication channels (direct mail, statement inserts, email, POS, phone, and branch level communication), banks are hoping to communicate the benefits of opting-in to the customer, thereby minimizing the fee income impact of the regulation while improving the customer experience. The majority of the customers who do not overdraft their accounts will be more efficiently reached using a series of statement inserts, statement messages, branch level POS, ATM messaging, email, etc as opposed to postal mail.

I believe the most difficult challenge may be after the regulation takes effect in August, when customers who were not frequent overdrafters experience their first rejected ATM transaction or debit card purchase.

It's Time to Require Email Addresses as Part of Account Opening Process

I have been in banking long enough to remember the roadblocks that stood in the way of collecting birth dates from customers before the government required this information as part of the customer account file. New account representatives complained that collecting the information was intrusive and impacted the privacy of the customer even though the information was already collected as part of other financial institution transactions (insurance and investments). Once the government required collection of this insight, the barriers came down overnight and marketers were immediately armed with an important tool in modeling households and targeting messages.

While it is doubtful that the government will ever mandate the collection of email addresses, now is the time to add this to the information your bank requires as part of the new account opening process. While some people won't have an email address to provide, this communication option is beneficial for both the customer and the bank.


With an email address on file, the customer can be informed immediately if there is potential fraud or identity theft on their account. They can also be informed of special offers and can help reduce the environmental impact of postal mail.

From the bank's perspective, the cost of mandatory and promotional communication is reduced immediately, while the ability to react to time sensitive opportunities and threats is enhanced. For instance, there is a western bank that can communicate with up to 60% of their customer base right after financial results are released, answering any questions that may be of concern. They can also immediately respond to competitive opportunities ranging from rate changes to mergers and acquisitions.

I am aware of at least two large financial institutions that are now requiring the collection of email addresses from customers with minimal negative impact. In fact, since communication includes community announcements and financial education opportunities, the opt-out rate on email is minimal.

The ability to collect (and effectively use) customer email addresses is already a competitive differentiator for some progressive institutions. How long will it take for other banks to catch up?

Five Steps to Improved Customer Engagement Through Email

According to Peter McCormick, co-founder of one-to-one communications firm ExactTarget, there are five steps for engaging customers via email.

1. Express Gratitude: According to McCormick, fewer than 50% of marketers send a welcoming email thanking a customer for accepting communication from a brand. This should be the first step after a customer provides their email address. This communication also sets the tone for future dialogue so this is a great time to include a coupon for expansion of the banking relationship and/or a research report or white paper for a B2B client.
2. Take a Genuine Interest: Let the customer tell you about their communication needs and interests to enable more relevant content delivery. A preference center can achieve this where a customer expresses what they want to know going forward.
3. Let Customers Talk and Share: Embed social network icons directly within your email that is sent so your customer can share offers and research with friends. In addition, invite customers to contribute to your bank's blog.
4. Know Your Brand Advocates: Reward those customers that respond to emails, contribute to blogs and share your offers. Expand the loyalty and engagement by inviting those customers who are brand advocates to special events where they can further discuss and share their experiences. Email provides the springboard to a much stronger social media strategy.
5.  Build a VIP Area: Create private subscriber-only access to social networking groups, events, and special resources that address the needs expressed in step 2. This heightened level of engagement not only rewards the customer for their loyalty and engagement, but also provides a source of insight not available through traditional channels.

There is no doubt banks are getting better at leveraging the power of email and social networks. The most progressive organizations are now beginning to differentiate their email communication based on customer engagement and benefiting from improved insight which can assist in future customer service and product development.

Be Careful of 'Mental Opt-Out' With Email Marketing

For those who read my Blog, you know that I feel strongly that the email channel is significantly underutilized by the banking industry. Not only do marketers not effectively leverage this channel in conjunction with other direct and mass marketing options, most banks do a terrible job at even collecting email addresses in the first place.

Unfortunately, for those who have begun to use email marketing in support of customer communication efforts, some have gone to the opposite extreme by viewing email as a 'free' marketing tool without giving adequate thought to the importance of relevancy. As many realize in their daily scanning of their email in box, overusing the email channel can have a detrimental effect of the value of this channel and negatively impacting the overall customer experience.


It was with great interest therefore that I read a recent op-ed in DM News written by Mark Smith from Portrait Software discussing the mental opt-out that occurs when a company bombards a customer with too much untargeted email marketing communication, only to have the reader open the email and then quickly hit the "delete' key. The impact of multiple irrelevant emails is to either explicitly receive an opt-out to future email or to implicitly lose the intended reader's trust and attention for future communication that may have been of interest.

As Mark mentions in his op-ed, if you get a reputation for sending irrelevant communications, you are basically asking for mental opt-out. And just because a customer's name doesn't appear on the do-not-contact list, it doesn't mean they are paying attention.

As financial institutions get more comfortable with this channel, it will be important to ensure that adequate targeting is done and that the focus of each email is to positively impact lifetime customer value.

Reg E Opt In Results Better Than Expected

As I travel across the country and talk to bankers about their early Reg E opt-in results, many are experiencing significantly higher than expected acceptance rates. In fact, some banks have indicated that they have achieved opt-in rates of as high as 85% or more from the highest impacted segments (those who have the highest use of overdraft coverage) and more than 95% from new customers who are opening a new account.

This level of acceptance should provide some comfort to financial institutions who have been concerned about a massive outflow of fee income as a result of Reg E beginning on August 15. Alternatively, this level of opt in sets the bar rather high for those organizations who have either not begun their Reg E communication or had thrown in the towel expecting customers to opt out on a massive basis.


In talking to those bankers who have achieved best-in-class results, here are the consistent strategies for success:

• Connect with customers using as many channels as possible - While response to statement inserts, direct mail and ATMs has not been as strong as the outbound telephone, 1:1 branch contact and email channel, the most successful banks have used all channels to provide a clear understanding of the regulation and to generate response.
• Use all outbound phone capabilities available - When a direct connection is made with a customer discussing the option of 'keeping their coverage the same' and 'having the assurance of no surprises', success rates have approached 90+%. Banks are using all of the resources possible to make these calls, including branch call nights, outsourced providers and leveraging inbound call resources.
• Expand communication beyond high opportunity segments - Instead of only connecting with high OD households, the most successful organizations are reaching out to all of their customers regarding opting in. While not having the same immediate financial impact, this communication emphasis will avoid potential negative customer experiences in the future.

As a result of the strong results achieved to date by those banks who started early, most of the financial institutions I have talked to have communication strategies that extend well beyond August 15. While the regulation takes effect on that date, most banks are going to continue mailing and call efforts until they have reached as many households as possible. Obviously, knowing that an 80+% acceptance rate is possible provides the financial incentive to not approach this effort casually.

Effective Onboarding Begins with Good Insight

In 2003, the BAI released a research study entitled, 'The Ninety Day Window of Opportunity', where interviews, deposit statistics and segmentation models revealed that nearly 75% of all cross-sell opportunities and the vast majority of attrition occurred in the first 90 days of a new customer relationship. These findings continue to be verified in the marketplace, with expanded concern recently around the lack of funding, engagement and use of new products by these new customers.

More than ever, financial institutions need to begin the onboarding process by capturing an accurate and robust view of the customer which can be used across the organization to enhance the customer experience and expand the relationship with the bank. In short, to optimize the customer experience during the first critical months and year of the relationship from both the customer's and bank's perspective, you need a 360 degree view of the customer. With online account openings, this process becomes even more critical.


Unfortunately, with so many data entry points and so much emphasis on operation efficiency and regulatory requirements, the capture of many key elements of customer insight gets overlooked or is done inconsistently by the front line. Beyond address, birth date, gender and identification information, financial institutions need to begin to collect insight such as email addresses, primary decision maker on the account (it is often the female in the household even though we usually address correspondences to the male), the preferred channel of communication (which is often email), the reason for coming to the bank (move, dissatisfaction, previously unbanked) and what services they use elsewhere (the holy grail of insight). Of course, with more and more of the collection process occurring online, organizations are under increased pressure to validate this insight (especially the address).

With this insight, you are in a much better position to communicate with the new customer in a personalized and relevant manner, using the right channels to the best person in the household offering a service or solution that is geared to their needs. These communications should begin on day one and continue throughout the early stages of the customer relationship enhancing the customer experience and increasing loyalty and retention. Multiple channels should be utilized to improve effectiveness and measurement of all touches should occur to gauge the ROI of the process.

Onboarding Communication - How Much is Too Much

As I discuss multichannel new customer onboarding program development with financial organizations, it doesn't take long before the client asks about how much communication is too much early in a new relationship.

Interestingly, according to our research at Harland Clarke as well as research from J.D. Power, the number of new products sold and the customer satisfaction ratings both increase as the number of contacts increase during the first 90 days. In fact, according to J.D. Power, the average number of accounts sold increases from less than 2.5 to more than 3 if the customer is communicated with 4-7 times or more. In addition, the satisfaction ratings increase by more than 10% if more connections are made with the customer who opened up a new account.


Unfortunately, there are still several institutions who do not have a robust communications sequence with customers who open a new account, which impacts new customer engagement, cross-sell potential, customer satisfaction and even retention. For those banks that effectively reach out multiple times using email, phone, and direct mail, the results are consistently better across the board.

One of the strongest onboarding programs I am aware of is at a regional bank in the west. Their robust onboarding process proactively takes control of the customer experience for the entire first 90 days, stressing engagement and by offering products and services that are best matched to the customer's needs. The process begins at the new account desk, where there is a selling mentality but also an emphasis on collecting key information that will assist in future communication with the customer. Email addresses are collected from as many as 85% of customers opening new accounts, which is significantly above industry averages and which allows the bank the leverage for multi-channel communication throughout the entire customer lifecycle.

An initial email that is delivered in the first two days of the new relationship discussing what the customer can expect from their bank in the upcoming months are to provide key contact information if there is a problem. This is followed by a branch personalized Thank You letter with a series of engagement service offers. Subsequent communication (beyond standard debit card mailings, etc.) include a welcome call on day 15, an engagement reinforcement letter and email on day 30, and a cross-sell direct mail and email communication based on next most likely product modeling on the 60th day of the relationship.

The bank has found that the ability to offer integrated, multi-channel communication is critical in their quest to achieve the best engagement and sales results and to reach the highest levels of customer satisfaction. Delivering early, relevant and persistent communication has help them improve retention by more than 5%, significantly increase engagement levels and improve both cross-selling and balance build efforts compared to their control group. They achieve these results by 'touching' the new account opener 6-8 times during the first 60 days and by using personalized jump pages to enhance the experience.

While the planning and development for this program was definitely more extensive than a single touch welcome program, the return on investment using all metrics validated the effort.

How many contacts does your bank use to onboard new customers? What channels do you use to reach and engage the customer?

Banks Need to Build Foundation for Effective Multichannel Marketing

While the BAI Retail Delivery Conference in Las Vegas doesn't officially begin until today, hundreds of attendees participated in a series of pre-conference workshops, including a session entitled, "Improving Acquisition, Onboarding and Cross-Sell Effectiveness with Multichannel Communication" which I was lucky enough to present with Matt Wilcox from Zions Bank and Tal Harry from Richter7. The workshop was attended by representatives from banks of all sizes and in various stages of multichannel marketing development.

During the session, we had several formal and informal surveys to determine where this limited cross section of the banking industry was with regard to their marketing mix.

Interestingly, while the majority of the banks are regularly using web banners and email as part of their marketing initiatives, less than 25% use paid search or jump pages with their campaigns. Even more surprising:

• Almost half of the banks in attendance still do not have a formal, multi-step onboarding program. This is surprising given the amount of attention given this strategy in the trade press and with market leaders over the past several years.
• While only about half the participating banks routinely collect email addresses, more than two thirds collect mobile phone numbers. This is most likely a result of IT challenges in setting up capture methods for email vs. another phone number box. The current level of email address pollination within the databases for the banks in attendance was still less than 30% on average.
• Only a very small handful of banks in attendance ask a new customer what their preferred channel of communication is. This is both a potential missed sales channel opportunity and a customer experience shortfall.
• Almost half of those at our session have used web video as a communications tool, about the same number are using Facebook, while less than 25% have used Twitter or YouTube.

An overarching takeaway was that, while most of the banks in attendance are doing dual channel marketing, few are integrating multiple channels for improved marketing effectiveness. With budgets either staying the same or being reduced in 2011, it will be more important than ever to optimize marketing channel investments through the testing of new media and even social channels. At the same time, banks will need to focus on the basics (such as the capture of email addresses and determining customer's commnication channel preferences) while setting the foundation for improved measurement of channel effectiveness.

Thanks to all of the banks that attended our session yesterday and especially to Matt and Tal for their exceptional insights that they shared with in the workshop.

Ten Bank Marketer Resolutions for 2011

It is the dawning of a new year in banking with many of the same challenges that we saw in 2010. Our industry continues to be viewed in a less than positive light from both the consumer and small business marketplace. 

The need for new customer growth and share of wallet expansion underpins the need for new sources of non-interest fee income at a time when regulations are dramatically reducing many traditional sources of revenue. In addition, the expansion of transaction and communication channels are changing the ways we interact with customers. 

These challenges are combined with an historically low interest rate environment and a credit environment where there is a massive amount of money to lend at a time when borrowing is more difficult and less desirable for many.

According to a national survey, the majority of personal resolutions in 2011 will revolve around saving money, losing weight, changing a bad habit and being closer to loved ones. Achieving any of these goals will take commitment, focus and changes in behavior. The same can be said for the resolutions I have developed from traveling the country over the past few months and being involved in a number of banks' annual planning efforts.

Here are areas where bank marketers believe they should focus in 2011:

1. Replace Lost Fee Income
Nothing has impacted banking over the past 12-18 months or will impact banking in 2011 more than the loss of fee income caused by the combination of the Card Act, Reg. E, and the upcoming changes from the Durbin Amendment. Almost all other resolutions for the upcoming year are built to address this need. The role of bank marketers in achieving fee income replacement goals will include checking product restructuring and new fee-based product development, increasing card transactions, improving customer engagement and better resource allocation for results.

2. Improve the Customer Experience
Another overarching resolution similar to the personal resolution of being closer to loved ones, bank marketers need to view all of their initiatives using the lens of understanding customer's needs, looking out for customers and rewarding their relationship. In an environment of heightened scrutiny of how we are treating customers, it will be more important than ever to market to consumers and small businesses on a more personalized basis from the day they open their first account and to build a reward structure that reinforces our commitment to relationship retention and growth.

3. Focus on Incremental New Customer Growth
A new balance between quantity and quality of new accounts needs to be struck. With the elimination of Free Checking occurring at most banks I visit, new acquisition models need to be developed that take into account the new checking account continuum. Instead of generating as many accounts as possible, banks will be focusing on the potential value of relationships including the likelihood of engagement and retention. A premium will be paid for those households that will immediately contribute to the bottom line.

4. Gather Email Addresses
When presenting at the BAI Retail Delivery Conference this Fall, it amazed me that there were more banks that collected cell phone numbers than collected email addresses at the new account desk. I suppose this phenomenon may be caused by the combination of more households using a cell phone as opposed to a land line for home communication and the relative ease of having a bank's IT team build another phone field into the new account process as opposed to an email field. But with other communication channel cost increasing and the improved results achieved when email is combined with more traditional channels, the importance of collecting (and using) email addresses has never been more important. Some banks are even considering stand alone marketing initiatives to address this need in 2011.

5. Reduce Customer Attrition
At a time when the cost of acquiring a new customer exceeds $200 and the annual income potential from a new relationship is at least as high, banks can ill afford to accept first year attrition rates of 30-40%. Multichannel onboarding programs that encourage alternative channel use, enhanced services (such as online bill pay, automatic savings, privacy products, etc.) and increased transactions need to be leveraged to stop the massive outflow of accounts that occur early in the customer's lifecycle. Improved tracking of relationship diminishment and win-back programs will also be used to achieve this resolution.

6. Expand Share of Wallet Through Lifestage Marketing
To compensate for the increased difficulty of generating high value relationships, there needs to be a much greater focus on organic growth, including behavior based cross-selling and lifestage marketing. While the movement from product centricity to being customer-centric has been discussed for decades, the removal of product silos is no longer an option for those banks who are seeking optimal resource allocation. More banks than ever are investing in improved models and strategies for relationship growth which will improve both engagement levels and retention in the long term. New service introductions such as privacy protection and enhanced personal financial management (PFM) tools will further allow for relationship deepening in 2011.

7. Don't Confuse Channel Economy with Channel Efficiency
No communication channel is 'free'. While email may seem like a far less costly channel to use for reaching customers, the lack of clear targeting and message development may prove costly as customers opt-out of future communications or simply ignore email messages. In my experience within the banking industry, email has not proven to be as good of a replacement for channels like direct mail as it has been a good supplement for improved results. In 2011, banks will develop much better processes for measuring the incremental impact of alternative channel communication and will continue to expand communication channels to include mobile, ATMs, social media, etc.

8. Leverage Social Media Personally and Professionally
Social media channels definitely can be beneficial or a distraction. Not many of us have time for reading about someone else's dinner plans or personal political opinions on Twitter, yet Twitter can be a great source of timely financial industry or marketing insight and competitive research delivered in a very compact format to the desktop for consumption at a time and place desired. Banks have also realized that social channels need to be used differently in financial services than with retail or other industry verticals. As opposed to trying to find 'friends' of our brands, social media has been used most effectively for customer service (Twitter) and for the promotion of broad based public relations initiatives (Chase's very popular Community Giving Campaign). The coming year will be a year of expanded testing of these new channels for the banking industry. Unlike the past, however, investment in these channels will need to generate a tangible ROI.

9. Deliver On The Mobile Banking Promise
The opportunity to be a 'first mover' in the mobile banking marketplace is quickly closing as more and more financial organizations are introducing products that work on multiple platforms. Bank of America has found that their market leading mobile banking customer base has significantly less attrition than a customer without a mobile banking application. USAA has continued to push the envelope on ways to use the mobile phone for financial convenience including remote deposit capture, receiving auto insurance quotes, requesting proof of insurance cards, etc. While building a concrete business case for mobile banking may be challenging, the marketplace will eventually demand this channel for P2P payments, geolocational applications and even low cost banking alternatives. Next year will also see the first wave of iPad and Android tablet applications that go beyond minor adjustments to current phone applications and leverage the enhanced capabilities of the popular tablet hardware.

10. Reconfigure The Branch Bank Model
The most challenging resolution for 2011 may be the testing and development of new branch banking models in light of the shift in channel use by the consumer. As branches are increasingly used primarily for account openings and small business servicing, the physical and operational configuration of branch networks will need to be evaluated. But what will be the best model for the future? While Citibank introduced a refined branch model late last year similar to an Apple Store, Huntington Bank went in an opposite direction by expanding their branch network and increasing hours and days of operation. With such a significant investment in real estate and human resources to support branch operations, each bank will be testing a variety of options in the next few years with multiple configurations most likely winning based on specific market dynamics.
I am sure there are several more important resolutions that can be added to my list, but there are already more than many of us can handle. This will definitely challenge the ability to focus and to achieve meaningful results especially in an environment of continuous change. Similar to personal resolutions, however, we all need to start as soon as possible and focus our attention on those resolutions that have the greatest impact and opportunity for success.

Let me hear where you will be focusing your efforts in 2011.

New Email Marketing Study Highlights Missed Opportunities for Bankers

As social media channels continue to proliferate and traditional communication channels become more expensive, bankers struggle with how to maximize the effectiveness of the email channel within their marketing mix according to a just released study from SubcriberMail, a Harland Clarke company. The study entitled, Email Marketing Within Financial Services Institutions, surveyed 71 banks and 191 credit unions, finding that email marketing among these organizations to be strong and growing.

But, while many organizations are leveraging email to inform and communicate news and product information (50% for both banks and credit unions) and even cross-sell existing customers (56% of credit unions/42% of banks), a far lower percentage of credit unions and banks use email as part of a multi-channel onboarding and/or activation process (26% and 27% respectively) or use email for delivery of an electronic receipt.

This is a missed opportunity since studies show that new account holders are very open to all channels of communication early in their relationship and that as many as 75% of customers open and read transactional emails. In addition, in working with financial organizations across the country in the development and implementation of onboarding programs, early customer engagement, cross-selling and retention are all positively impacted by adding email marketing to the communications mix.

At some organizations such as Chase, email welcoming messages many times arrive at the customer's home before the customer returns from opening a new account. This communication is used to thank the customer for opening their account, encourage usage of engagement services (online banking, debit cards, direct deposit) and describe future communication the customer will receive from the bank.

So why the hesitation in using email as a communications tool? According to the survey, while the fear of phishing or fraud was a significant concern, the primary controllable challenges to successful email marketing included the effective collection of email addresses in the first place in addition to subscriber churn (or addresses going bad). Roughly 40% of banks and credit unions found both of these issues to be an impediment to success.

To address these concerns, the SubscriberMail study suggested a holistic, company-wide approach to collecting and confirming customer's email addresses at every touch point. This would include collection and verification at the branch level, call center, and even as part of direct mail efforts and at the ATM. The key is to establish the collection and maintenance of an email address database as an overarching corporate initiative that will result in both lower communication costs as well as improved marketing effectiveness.

Unfortunately, senior management support of such an initiative was far from a reality according to the survey, with less than 30% of the bank respondents stating that senior management was supportive of email marketing strategies. With a subscriber email address valuation estimated to be an average of $118 according to a recent DMA Email Experience Council calculator, marketers need to continue to seek managerial support for their email collection initiatives.

Another challenge to keeping a subscriber database up-to-date comes from the customer's perspective, since allowing email communication is directly correlated to the relevancy and value derived from the emails a customer receives. As with traditional direct mail, relevancy depends on effective segmentation of the email database and timely communication of opportunities, events and offers. Again, both banks and credit unions were found to fall short in their efforts to segment customers, with far fewer than 50% segmenting their email database in any manner. Interestingly, only half of the responders had email initiatives planned in the next six months, indicating a less than robust email strategy and the potential for the customer to undervalue email communication from their financial institution.

Overall, the SubscriberMail survey results illustrated a tremendous amount of untapped potential with the email channel and the need for the same type of discipline with email marketing as with other direct channels. With increased focus on the collection and cleansing of email database files, improved segmentation and more consistent use of this communication tool, return on marketing investment can be improved at a time when bank marketing budgets are being reduced.

I am interested in your results and use of email within your bank.

If you are interested in this free survey, simply follow this link to the download.

Checking Changes Make Onboarding and Cross-Selling More Important

Over the past several weeks, many of the larger banks across the country have announced significant changes to their checking account continuum, including elimination of traditional Free Checking, discontinuation of rewards programs, ceasing reimbursement of foreign ATM fees, as well as potential fees and transaction limits on debit cards.

While each of these strategies are intended to reduce costs or generate revenue in response to Reg E and the Durbin Amendment, these changes could also present a challenge to banks as they seek to increase engagement and gain share of wallet. This is because debit card use and rewards program enrollment were two of the more important account engagement criteria and basis for a broader relationship growth.

According to an economic analysis on the effects of the Durbin interchange amendment presented to the Federal Reserve Board on February 22, between $33.4-$38.6 billion of debit card interchange will be lost during the first two years the new rules are in effect. This reduces the revenue on a personal checking account by $56-$64 and by $79-$92 on a small business checking account according to the study. These impacts make it more important than ever to optimize onboarding and cross-sell efforts for retail and small business customers thereby reducing costly attrition, improving engagement and providing a stronger foundation for ongoing relationship expansion.

Here are several of the steps financial institutions should consider as they begin to implement changes to their deposit accounts and debit products.

• Double Down on Onboarding Initiatives: While most banks currently have an onboarding process for new retail customers, many have yet to build an onboarding process for small businesses. In addition, many programs only reach out to the customer once or twice and don't leverage a robust mix of communication channels. The impact of recent legislation makes the opportunity cost of attrition more expensive than ever. Banks need to increase the number of 'touches' a customer receives by email, phone and direct mail with the message centered on maximizing the benefits of using the account the customer just opened. When the account becomes active, then begin to expand the relationship.
• Don't Walk Away From Debit: While the economics of the debit card have definitely changed, the use of this payment vehicle remains better than many of the alternatives and provides the consumer with constant brand reinforcement each time they open their wallet. David Stewart from McKinsey & Company wrote in a recent BAI Banking Strategies article entitled, "Keeping Debit in Focus Post-Durbin" that debit cards remain an important component of the anchor DDA. As a result, getting new customers to activate and use their debit card as part of the onboarding process should continue to be a primary objective.
• Expand The Definition of Engagement: In the past, most banks focused on debit card utilization, enrollment in online banking (with bill pay) and the sign up for direct deposit in their onboarding messaging. While you don't want to cover too much in the onboarding communication, there are some households you may want to encourage to apply for a credit card and/or activate an autosave transfer as part of welcome process.
• Encourage Channel Migration: Another way to stem attrition, potentially reduce cost and build share of wallet is to increase alternative payments channel use. As part of the onboarding process, some of my clients are building messages around the use of mobile banking early in the relationship lifecycle. This makes sense based on recent trend research done by Javelin Strategy and the potential for offline customer mobile adoption found in research done by Fiserv. While there may only be minimal channel shift from a payments perspective initially, there could be significant savings if call center inquiries are reduced.
• Focus on Share of Wallet Early: While I totally agree with Ron Shevlin in his Marketing Tea Party blogs (Honeymooning and Why Engagement Matters) that a new customer must be courted and engaged before they can be cross-sold, customers define the pace of this trust building as opposed to the bank. This level of engagement/trust is usually found by looking at transaction volumes and whether engagement services are active. Once actively engaged, the customer should be offered additional services that may improve their overall banking experience. This is where product propensity models and behavioral segmentation can be effective.
• Leverage the New Account Desk: Many of my clients have found that the new account desk can  be an effective cross-selling environment for the customer, especially if credit services such as credit cards, personal or small business lines of credit and even equity credit are pre-approved at the point of sale. The point of sale is also the best place to discuss the correct account to open in the first place and the benefits of engagement services and rewards alternatives.

The effective communication of your checking account changes to existing customers has been discussed in my recent blog (Minimizing the Impact of 'Unintended Consequences'). It is just as important to communicate well with new customers at the new account desk in the days, weeks and months immediately following the new account opening. Without an aggressive communication process, leveraging multiple channels and customized to the customer's stage in the engagement process, the investment in acquiring the customer will be lost or the value of the relationship will not be optimized.

How are you going to ramp up your new customer communications to maximize your marketing ROI? Are you considering new ways of onboarding your customer in the first 30, 60 or 90 days? Have you found a way to leverage any social media in your onboarding process? I would love to hear your ideas.

A Little Note From BankSimple

After hearing about the vision of BankSimple several months ago, I decided to see if the development of another new online bank would be different. To begin with, I accepted their invite to be part of their beta test once the bank officially launched some time in 2011. Yes, I accepted an opportunity to be on a waiting list to potentially open an account.

As a lifelong bank marketer, I also followed the story of the bank's founders and the development BankSimple (The Buck Stops Here). I was intrigued by the fact that BankSimple would not really be a bank at all, but instead, simply provide a better front-end experience with a myriad of banks being used behind the scenes to generate the highest returns (and lowest costs) for their customers.

According to their web site, the bank was going to require only a single account and one card, use simple language, treat customers as people and not account numbers, eliminate surprising fees and provide a heightened level of customer service. They would provide online, ATM and mobile access to their accounts and would provide financial tools to help a customer manage their money. Sounded good . . . but not much different than almost any bank promise.

Today, however, BankSimple set themselves apart from any of my current or previous banks.

They sent me a personalized, seemingly non-promotional email from a Customer Relations Representative named Rachel acknowledging my request for an invitation to try their bank and asking for my 'story'. Rachel asked for my "loves, hates, quibbles, desires, hopes and dreams" regarding my financial life. Her email used a Helvetica type and had no fancy creative elements included (just like an email from a co-worker or friend).

Doesn't sound like an email that was developed by a committee that then went through a bank's compliance and legal departments after several levels of management approval, does it? Rachel then went on to say that the bank was committed to building the best service a bank can offer and wanted to know "what's up?" (when was the last time your bank asked 'what's up'?). The email was so personal (it was titled 'A little note from BankSimple' and allowed me to respond directly to Rachel@banksimple.com) it begged for a response as to what I would love to see from my bank.

For those who are cynical by nature and don't believe there is a real Rachel, she was just hired ONE WEEK AGO by the bank as one of BankSimple's first Customer Service Representatives with an accompanying press release.

I responded to Rachel with some of my visions of a perfect bank. I also tweeted about the email from Rachel since the experience is so unusual for a bank. I don't know if the dialogue will continue via email, but I was again surprised when I got a response to my tweet about my email (in 10 minutes at 9PM et) from RACHEL!

Interestingly, even if I don't get an email response, the bank (and Rachel) have already surpassed my expectations, and there will be part of me that will feel like my response might have had an impact on the bank's development. Not a bad way to build an affinity and loyalty before the bank has even opens it's virtual doors. And when it comes to word of mouth marketing, I think they did pretty well in my case.

Finally, if you wonder if there is a demand for another online or bricks and mortar bank, simply watch the very robust discussion on Twitter around BankSimple and the desire for a traditional bank alternative. Up to now, this new financial entity has done a lot of things right. It remains to be seen if they can perform to this level once they start to handle money in addition to PR.

What is your bank doing to build trust, dialogue and word of mouth? Does your team have a Rachel?

An Open Letter to BankSimple

On January 18, you impressed me when Rachel Giuliani from BankSimple wrote an email to me unexpectedly asking me for my "loves, hates, quibbles, hopes and dreams" regarding my financial life. Her email seemed surprisingly personal coming from a bank I had signed up to be part of a beta test several months earlier. In her letter, she piqued my interest when she told me she represented a 'new' bank that was committed to building the best possible customer service without surprises.

Her timing was great since I had been a bit upset with my current bank. Not only had my bank changed their fee structure without a clear notification, but they seemed to be looking for new ways to generate fees for actions I had become accustomed to not paying for. Sure, I could avoid the fees as I had in the past by maintaining a steady balance in my account, but even that had been raised to a level that really didn't correspond to the value I felt I was receiving from the bank.

You made it so easy for me to respond to Rachel's email since she even provided her email address (rachel@banksimple.com). And, as opposed to feeling like my response would end up in some black hole of customer service or would be responded to by a person not even named Rachel, it was easy to see that my new pen pal had been hired just a week earlier as the first of two customer service representatives to provide 'brilliant customer service'.

I was definitely impressed that almost immediately after a wrote my email to Rachel late at night, she responded within 10 minutes! I was falling in love with your bank even though it hadn't opened yet. I was so impressed that I immediately tweeted about my experience, spoke about my dialogue with Rachel at conferences, and posted a blog entry about my new friend from your bank on this site (A Little Note From Bank Simple, January 18, 2011). That blog post generated by far more traffic than any post I have done before or after. Talk about word of mouth marketing (WOMM)!

As with any new relationship, there were some of my friends (Ron Shevlin) who were naysayers. They said it I was getting my hopes up that the communication between Rachel and I would continue. They said that the proof of a good relationship is in the long term communication and caring, and not just a single series of emails. They said I was getting my hopes up that I had found a new bank and that I might be setting myself up for being disappointed.

I am starting to believe they were right. Not only has Rachel seemed to move on to other friends as your team has grown, but the promises of a great, new banking experience that she spoke of remain just a promise. Maybe my optimistic personality got the best of me again. Sure, your leader Josh Reich tells me about the fact that you have received a lot of new funding and that you have found new corporate partners in Visa, some banks and even TXVia. You even got my hopes up when you hired Alex Payne from Twitter. but it has been 6 months since Rachel last wrote and the only time I hear about BankSimple now is through traditional press releases and trade publication interviews.

Much like in the movie Jerry Maguire, where Renee Zellweger says that Tom Cruise 'had her at hello', you really had me at 'simple'. But now, there are other banks that are starting to look a lot like how you once looked. You have competition in existing banks like Ally, and ING where there are no fees, easy access and even interest on my accounts. You also have a new competitor coming down the road that is compared to you every time they talk to industry insiders. Brett King's MoveNBank seems to be looking for friends also, allowing me to be part of their beta group in 2012. There are some of my friends like Jim Bruene from NetBanker who wonder if MoveNBank may even 'outsimplify BankSimple.

So when is Rachel, Josh, Alex and the rest of your team going to let me see more than promises? I know you have moved to a new headquarters, but to say I am ready is an understatement. Since January, my old bank (yes, I switched once already) has raised fees and cut back the value they provide again, with many of the other large banks following suit thanks to Durbin and other pressures.

If you are not quite ready to let me kick the tires or take your bank for a ride around the block, the least you could do is have Rachel write me again and assume me that our potential relationship is still alive. Otherwise, I will consider the great communication 6 months ago a nice experience, but also another lesson that all banks are alike when it comes to customer service and promises. They love to tease you, but when it comes to delivering on a promise, they fall short.

Please write.

If not you, maybe some of my blog followers can either assure me that I should remain patient or that I should move on.

Marketers Not Aligned With Consumer Marketing Channel Preferences

Technology is rapidly changing the way consumers interact. We wake up each day to a barrage of messages coming from both traditional and new media. We check our Facebook posts and text messages at the same time we watch television, read the newspaper, listen to the radio or conduct work online. 

Marketers have long recognized the shifts in media consumption that are redefining how customers absorb information and offers. However, recent studies indicate that marketers may not be in total alignment with consumers as to how the new media is consumed and their degree of reliance on various media for making buying decisions.

A new research study by Acxiom entitled, Tug of Love: The Changing Relationship Between Consumers and Brands found that more than four in five people (82%) believed they were in control of the relationship between themselves and their brands (with 'control' being defined as receiving the information they desire, when and through the media they want). This was more than 50% higher than marketers thought, indicating that 'push' broadcast marketing is quickly being replaced with 'pull' marketing where the individual is in charge of message consumption.


Interestingly, the perception of having the ability to filter messages that were either inappropriate or not of personal interest increased with age, possibly due to less messages being sent using electronic channels and due to improved targeting available for older households. Older households also benefit from having longer relationships with their brands, resulting in less bombardment of messages occurring.

Despite feeling in control, however, one in four households still say they receive 'inappropriate' marketing communications, while marketers feel they do a better job of targeting. Even with this ability to screen messages, only 27% of consumers believed their brands understood them or communicated with them appropriately. The good news is that some of the best numbers were recorded for financial services communications, even though less than half believed they were understood and communicated with well.

One of the most surprising findings in this study and in a recently published study from the European Journal of Marketing entitled, Comparing Perceptions of Marketing Communications Channels (Vol. 45, No. 1/2, 2011, pp 6-43), was that although email is well established and widely used by marketers, the traditional channels of television, radio, newspapers and to a significantly greater degree, direct mail retain historically favored attributes of trust and reliability. Conversely, some of the newer media such as SMS and mobile received much lower rankings than marketers believed they would, making these channels less powerful or accepted by consumers of any age category. In fact, direct mail was reported by both customer and prospect groups in both studies as being in the top two marketing channels preferred next to email.

In the Acxiom study, 71% of current customers cited direct mail as an appropriate way of reaching them, with 57% of prospects preferring direct mail. These acceptance ratings were far above what marketers thought who were asked the same question. Only 35% of marketers thought prospects would welcome direct mail. They were much closer with customer perception, noting that they believed 75% would be positive about direct mail. Email acceptance was 77% for customers and only 52% for prospects, still significantly higher than other newer media. In fact, only 12% of consumers felt mobile advertising was appropriate, with the figure for SMS being only 9%. As could be surmised, marketers believed the acceptance rate on these media options would be much higher. Despite the industry focus on and massive growth of interactions through social media, only 4% of consumers wanted to be reached using these channels.

Customer Acceptance of Alternative Marketing Channels (Acxiom, 2011)

Prospect Acceptance of Alternative Marketing Channels (Acxiom, 2011)

The European Journal of Marketing study dug deeper into the perceived attributes of the different media channels as determined by both the sender and recipient. As could be expected, channels that were considered annoying or irritating included SMS, phone, door-to-door and email. Consumers found direct mail to have the qualities of being informative, reliable and trustworthy, while they found most mass marketing to be informative and enjoyable.

Perceptual Mapping of Marketing Channel Attributes - Recipient (European Journal of Marketing, 2011)

'Senders' as defined by the study had a pretty close correlation with recipients regarding most marketing channels except they viewed email in a significantly more favorable light than consumers. Part of this bias may be caused by the lack of measurement between the stages of clicks and consumption of the email opened. The chart below illustrates the perception of the senders of marketing messages on the same dimensions as the above graph.

Perceptual Mapping of Marketing Channel Attributes - Sender (European Journal of Marketing, 2011)

Regression analysis found, not surprisingly, that a marketing offer is more likely to be successful if the recipient regards the information as important. In addition, higher involvement with the product or service is also more likely to result in greater engagement. Finally, it was found that receivers are more likely to be persuaded by the marketing offer in a particular channel if they find communications in that channel to be enjoyable and entertaining, and if the channel that has a reputation for reliable information. Again, this illustrates why some traditional channels such as direct mail and, to a lesser degree, email continue to perform well.

While the Acxiom study was conducted in Europe and the European Journal of Marketing Study was conducted in Australia may impact the specific numbers, but most likely dramatically change the trends found. Both of these studies and a recent white paper published by The Winterberry Group entitled, The Multichannel Revolution: New Media, New Approaches, New Opportunities also emphasized that no single channel strategy will be enough in today's multichannel world. Instead, marketers need to develop a long‐term, audience‐driven multichannel strategy, gaining insight into customer attributes, demand drivers and response cues that are the key to optimal budget allocation.


Finding that right balance of media (and having the courage to respond quickly to its changing dynamics) will
prove essential to growth in tomorrow’s competitive marketplace.

I would like to hear from you. How is your bank's media mix changing as you plan for 2012 to reflect changing media consumption patterns, shrinking budgets and greater emphasis on ROI?

Direct Mail Still Has Impact in Digital World

As more and more marketing dollars are funneled into digital and social media, and as postal rates continue to climb, direct mail marketing has been getting less and less attention. While there is definitely a case to be made for building a multichannel communication plan integrating a number of different channels to reach customers, recent research indicates that direct mail should still be part of the mix.

A study entitled, Using Neuroscience to Understand the Role of Direct Mail conducted by the research company Millward Brown found that direct mail actually leaves a deeper impression on the human brain than its digital counterpart. The research project used functional Magnetic Resonance Imagery (fMRI) brain scans to show that our brains process paper-based and digital marketing differently and that direct mail actually created a greater emotional impression than digital communications.

During the study, participants were given marketing messages on a screen and printed on a card with brain scans done to assess how the processing of messages was impacted by the medium of communication. It was determined that tangible communication (direct mail) left a deeper 'footprint' on the brain even when the physicality of the channel (sensory impact of touch) was discounted.

• Material shown on cards generated more activity within the area of the brain associated with the integration of visual and spatial information (the left and right parietal)
• This suggests that physical material is more 'real' to the brain. It has meaning and a place and is better connected to memory because it engages with spatial memory networks.

The study also found that direct mail involved more emotional processing which is important from a memory and brand association perspective.

• More processing is taking place in the right retrosplenial cortex when physical material is presented. This is involved in the processing of emotionally powerful stimuli and memory, which would suggest that the physical presentation may be generating more emotionally vivid memories
• Physical activity generates increased activity in the cerebellum, which is associated with spatial and emotional processing (as well as motor activity) and is likely to be further evidence of enhanced emotional processing.

Finally, the study found that physical materials produced more brain responses connected with internal feelings, suggesting greater 'internalization' of the ads. According to Graham Page, Executive Vice President of Consumer Neuroscience at Millward Brown, the results suggest, "The brain is more emotionally engaged and is potentially reflecting more on a response" when viewing direct mail. "Due to the fact that the brain recognizes mail as real, memories of that piece are being created. Our brains seek to understand the thing that we hold in our hands more so than a transient image on a screen." said Page.

Even understanding some of the neuro benefits of direct mail, digital communications have distinct advantages over paper such as interactivity and the ability to integrate audio and video. In addition, with continuously improving targeting tools, digital communications can more effectively target audiences based on interests, behaviors, past transactions and other characteristics that direct mail can't match.

Bottom line, this study and other studies covered in one of my previous blog posts (Marketers Not Aligned with Consumer Marketing Channel Preferences) indicates the importance of integrating multiple channels to communicate your marketing message to people who will process and react to different channels differently. More importantly, while response rates to a credit card, new customer acquisition or cross-sell campaign may seem low, direct mail can still have a positive impact on the brain from a brand perspective . . . even to those who did not respond to the direct offer. According to Graham Page, "each point of contact with the consumer gives marketers another opportunity to communicate broader brand messages."

As marketers, we need to realize the advantages and impact of different channels and realize that each channel needs to both compliment and supplement the the other channels and the campaign as a whole. We also need to consider more tactile and emotional elements of direct mail to increase the impact of the printed piece. For instance:

• Consider heavier stock, textured finishes and unique shapes and die-cuts that may increase the tangibility of the direct mail piece
• Try to build on the emotional power of direct mail with more emotional messaging
• Don't forget to build a brand message as part of your direct mail package since even those not responding will be left with an impression
• Remailing has an advantage of reinforcing the brand communication in a way that digital communication can not

Finally, we need to be careful about making assumptions as to which channel(s) may have the greatest impact on different demographic groups. For instance, while our gut may tell us that the tech-savvy millennials may only respond to social media and digital communication, studies have shown that direct mail is still important in making a purchasing decision.

The 2010 Consumer Channel Preference Study from Epsilon found that for certain categories including financial services, the preference among millennials and even Gen X participants for receiving marketing communication from offline sources such as direct mail and newspapers was 2-3 times greater than for digital communication and social media. Likewise, a 2009 survey from ExactTarget found that 75 percent of the people 25-34 had made a purchase resulting from direct mail. The rationale for these results was due to the ability to cut through the clutter and due to the way the media was consumed (at a pace and time that was convenient to the reader).

In fact, 53% of all respondents to the Epsilon study said they paid closer attention to information they received by postal mail than through email. The research also found that there was an overall strengthening in attitudes toward postal mail between 2008 and 2010 mainly due to the convenience factor (the mail can be read when and where they want and can be saved and passed on).

On additional telling finding from the study is that respondents believed they were getting significantly less mail than in the past and that they were able to spend more time with the mail received. The implication for marketers is that there may be an opportunity to get the attention and more dedicated readership using direct mail since mail volumes are lower. The opportunity may be even greater given the overload of email marketing received by many prime consumers.

So, as you make budgetary decision for 2012, how will you allocate your media funds? What channels will get less and what channels will get more funding. More importantly, how will you measure the impact of the integrated marketing programs you will be implementing?

I would love to hear about the shifts you may be considering.

As Channel Proliferation Increases, Consumers Still Prefer and Trust Direct Mail for Financial Services Communication

According to a just released consumer channel preference study from marketing services firm Epsilon entitled, The Formula for Success: Preference and Trust, 36% of consumers prefer to receive financial services communication through the mail (compared to only 8% preferring email), while 50% state that they pay more attention to direct mail than email. Interestingly, U.S. consumers actually receive an emotional boost from receiving mail, with 60% agreeing that they "enjoy checking the mailbox."

The 2011 study is the latest in a series of studies conducted by Epsilon around communication channel preferences. In the latest study, it was found that the preference for direct mail extended to the 18-34 year old demographic, highlighting the risk in making assumptions around age and channel preferences. Part of this preference bias compared to email and other channels could be caused by the level of trust associated with the channels reviewed, since 26% of U.S. consumers found direct mail to be more trustworthy than email. The least trustworthy channel continued to be social media, with the channel only being viewed as trustworthy by 6% of consumers. Consumers also found direct mail to be more 'private' than email or online channels (important for 37% of consumers).

"Consumers use and trust certain communication channels more than others," states Warren Story, VP of product marketing at ICOM. "This means that marketers need to understand which channels resonate most at various stages of the consumer purchase cycle and incorporate a cross-channel strategy that leverages data and technology to communicate on a 1:1 basis." Story also suggests starting with direct mail and layering other channels into the marketing mix for message reinforcement.

Not only do consumers seem to prefer direct mail communication, but there seems to be an increasing frustration with the amount of email received and the level of satisfaction received from receiving emails. The study showed that 75% of U.S. consumers get a lot more emails that are not opened, with 65% saying they get too many emails overall. Conversely, 43% of consumers surveyed still enjoy receiving emails from brands on new products, indicating that targeting and messaging of communication is needed to capture attention.

For financial services communication, consumers also overwhelmingly preferred personally addressed mail as opposed to 'dear occupant' mail that doesn't have the emotional pull of a personally addressed communication. (This should be tested on an ROI basis however, since I have found that the financial benefits of less personalized direct mail can work in some instances).

Even with the strength of direct mail indicated in this study, financial marketers should not exclusively use direct mail or remove email from their marketing mix. In fact, the Epsilon study showed a greatly increasing use of Facebook and mobile phones as communication channels, while showing that the most trusted channels were newspapers, company websites and television. The study also showed that there were many perceived benefits to both direct mail and email as shown below from people who preferred direct mail to email and visa versa..

In this time of communication message overload, financial marketers need to balance the use of multiple channels based on consumer preference, financial considerations, objective of the marketing program, and the results of multichannel effectiveness measurement initiatives. Bankers also need to continue efforts to improve the targeting of messages through all channels from both a financial and customer satisfaction perspective. 

And while social media did not perform well from the perspective of trust, social channels provide several benefits that should be leveraged in a multichannel communication program due to economic considerations and the expanded use and reach of social media. Mobile channel communication should also be tested as we enter the new year and are building our marketing plans.

Of greatest importance is the development and use of advanced metrics that can assist you and your team in measuring the effectiveness of channels and channel mix. As opposed to measuring only single channels independently, advanced analytics are now available that can provide a view into the consumer's media consumption patterns and the impact of different channels.

As we enter 2012, the importance of an effective and efficient marketing communications mix is important. Budgets should be shifting to digital and social channels to build a reservoir of learnings that can be leveraged in the future, but it appears that the projected demise of traditional channels such as direct mail has been overstated. 

How will your team be shifting marketing channel dollars in the new year? How will you be measuring the impact of your efforts?

I would love your comments.