Don't Forget Small Businesses With Your Reg E Communication

While small businesses are not impacted directly by Regulation E, many of the banks at the Atlanta BAI Checking 2.0 Executive Forum where I spoke last week indicated that they will be reaching out to their small business customers to explain the law and the potential impact on their retail business.

Not only do many smaller businesses use consumer checking accounts for their small business transactions (with the potential for debit card rejected transactions), but with the potential for so many customers of small businesses having payments for goods and services rejected after the implementation of Reg E, banks are communicating details around this consumer legislation and options as to how to deal with transactions that are rejected.

BAI Checking 2.0 Executive Forum Recap

I just finished presenting at the second BAI Checking 2.0 Executive Forum in Chicago where close to 50 financial institutions learned about legislative changes, customer perceptions, new product development and marketing opportunities around the checking account. While only a month has passed since the first Checking 2.0 Executive Forum held in Atlanta, it is obvious that there are a number of changes occurring in the marketplace.

There was consensus among the participants that while consumer trust and confidence in banks has been negatively impacted by the events of the past two years, there may be some uptick in these measures over the next few months if financial results continue to improve and if banks continue to focus on the customer experience.


A significant change from the March event was that virtually all of the participating banks have developed an alternative version of 'Free Checking'. Checking account product innovation has added stipulations to some accounts, benefits for a fee on others and alternative reward structures on other checking programs. In fact, in a quick survey of the participating banks, it did not appear that any of the 'Free Checking' programs were similar.

When discussions moved to how banks are responding to Reg E, there were some organizations that were well on their way towards communicating with their customer base while other banks had not yet begun their information dissemination. Surprisingly, MB Financial out of Chicago shared that they had already achieved close to 85% opt-in from their customer base (and nearly 100% from new customers) by leveraging a combination of postcards, traditional direct mail, phone call follow-up and branch level involvement.

The success of some of the participating banks illustrated the importance of a multi-channel communication process with strong employee involvement and call center follow-up.

Seven Predictions for the Future of Banking

Today, Susan Wolfe, Vice President of Financial Services from Mintel Comperemedia, presented a webinar entitled, "Seven Predictions for the Future of Banking" where she explored trends in the industry based on the research and direct marketing examples from their custom consumer surveys and mail panel. Each of these trends correlate with what I have seen in the marketplace even though many trends have been impacted by the massive influence Reg E has had on the focus of many bank marketing departments over the past few months.

The predictions presented in the Webinar were:

1. More Aggressive Focus on 'Relationship Banking': Even though trust in banks has waned lately, banks are emphasizing the building of a stronger relationship through integrated accounts like Fifth Third's Relationship Savings Account and with rewards programs like PNC Bank's points.
2. Increased Promotion of Account Builder Programs: Responding to a much higher savings rate, especially by higher income segments, new products are being introduced such as SmartCents by Capital One and U.S, Bank's S.T.A.R.T. program.
3. More Debit Card Marketing: With the loss of overdraft fee income, banks will encourage debit card use for automatic bill payments and will begin to share interchange income with per use rewards programs and sweepstakes.
4. Continued Importance of Incentives: As mentioned my recent Blog, incentives for opening new checking accounts have increased and are becoming more widespread. BBVA Compass also offers incentives through an offline and online refer-a-friend program.
5. Mobile Banking is the 'New' Online Banking: While the adoption of mobile banking currently is inversely correlated to age, this trend could easily reverse as offline sign-up expands and promotion of text messaging and electronic alerts increases. Bank of America has around 3 million subscribers with the majority using an iPhone or iTouch. Online money management tools also continue to become more sophisticated such as those from Mint.
6. Proliferation of Financial Literacy Programs: Banks are focusing efforts on new programs to help customers better understand and manage their finances such as Chase's Blueprint and Bank of America's financial education website.
7. Expanded Testing and Use of Social Media: Financial services firms continue to test ways to leverage social media such as American Express's online booking app on Faceboook, Bank of America's help page on Twitter, Chase's Facebook charitable giving event and Stagecoach Island from Wells Fargo.

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.

Thinking Like Your Customer

Yesterday, I received a thought provoking Harvard Business Review blog from Scott Anthony, Managing Director of Innosight Ventures entitled, Think and Act Like Your Customers, where he discussed that many marketers surround themselves with what they produce as opposed to placing themselves in the position of a customer of their competition.

He pondered the fact that we may receive lots competitive intelligence from research decks and market studies, but we sometimes miss the simplest form of insight that can be derived by having our employees (or ourselves) use the products and services of the competition.


This got me thinking as to how often bank marketers actually open a new account at the competition as opposed to simply doing shopping studies with a third party research firm. How else can we really get a feel for the new account opening process, the insight collection and selling done on the front line, the subsequent onboarding communication process and the communication done later in the relationship?

As Scott Anthony pointed out, we should determine what the competition has that is better than our bank? How do they position or communicate their offerings that may be of interest to our customers? Most importantly, if you were not an employee of your bank, would the offering of the competitor encourage you to select the competition as being your bank of choice?

Sometimes, there is nothing better (or more frightening) than seeing the truth for yourself.

IAB Study Discusses Optimal Marketing Channel Allocation

Gone are the days of the Mad Men, when the marketing channels were limited and mass media was king. Today, there are more marketing channel options available and the attention of the consumer is more difficult than ever to capture.

As a result of this fragmented marketing mix, measuring the effectiveness of media spend and optimizing this spend is more complicated than ever. In fact, with the interactive channels (including social media) playing a vastly increasing role in establishing brand and product presence, and with tools like the DVR giving the consumer more control over their consumption patterns, the need to understand how to allocate budgets across marketing vehicles has never been more important.

Last week, the Interactive Advertising Bureau (IAB) released an excellent new study entitled, Interactive Advertising and the Optimal Marketing Mix where research by MarketShare Partners was presented that discusses opportunities for optimizing marketing spend in three different industry verticals - consumer packaged goods, financial services and automotive. In the study, there was a strong case made for a much better measurement of the impact of all marketing investments, both offline and online, as well as the use of incentives as part of the marketing mix. While the study makes a case that traditional advertising has somewhat diminishing returns, too much money spent on any channel was found to be suboptimal.

In addition, it was found that because of the reach and power of interactive advertising as well as the synergies with offline media, the optimal allocation of interactive media spend should be between 1.6x and 2.2x the percentage of the budget normally allocated to interactive. This increase in allocation made all channels more effective in the case studies presented. It was also found that there was a benefit to matching the media with their relative strengths - mass broadcast for brand building, print for information, radio for call to action, online for information, etc.

For the financial services case study, it was believed that the media mix selected needs to support the building of trust in the brand and that it was important that the consumer have some level of emotional connection with the specific brand they choose for certain products. Using the proprietary tool Compass from MarketShare Partners, it was found that the case study institution spent too much on mass media (TV and print) and not enough on online paid search and display. Interestingly, the statistical models employed recommended an increase in out of home marketing (billboards, bus stop ads, etc.) that support the local location. While in this case, the models indicated a need to slightly increase marketing spend for an increased marketing ROI, some of the cases presented actually recommended a decrease in spend for better results.

In most cases, the work of MarketShare Partners supports the importance of mass media to the marketing mix. Despite the growth of the internet and social media, TV is still effective. It is just that this investment in most cases is too high. It was also found that a relatively small reallocation of media spend can have a significant impact on marketers’ revenue. For example, one media optimization scenario examined in this study demonstrated a 6% increase in revenue - even after a 13% decrease in total marketing spend - when dollars were shifted to interactive.

The key takeaway from the research paper from the IAB and MarketShare Partners is that it is more important than ever to employ some type of science to your art of marketing to determine the optimal marketing medium mix. And while some generalities can be 'taken to the bank', the effective allocation of investment will vary from industry to industry, company to company and even program to program based on the objectives of your marketing plan. But with budgets limited, it is imperative that we begin to look at balancing resources to maximize the impact on revenue and profit.

Is your bank measuring the impact of different channels on your program's success? Are you confident in the measurements made around the impact of alternative media? How about the measurements around the impact of mass media? I would love to hear how your bank is allocating your marketing budget.

A special note: More than 15 years ago, I was teamed up with Wes Nichols when we both worked for Response Marketing Group out of Richmond, VA. that eventually was acquired by Brann Worldwide (now part of Euro RSCG). When we worked together, it was clear Wes was a visionary who wanted to test the limits of direct and interactive marketing that was then in its infancy. Through the years, he has led several different marketing organizations, moving more and more from the art of direct marketing to the science of media mix allocation and optimization. Currently, he is the co-founder and CEO of MarketShare Partners out of Los Angeles, a firm that leverages data and analytics to help Fortune 500 firms determine optimal channel spend as opposed to traditional survey based solutions.

Small Business Acquisition Strategy Should Correlate to Potential Value

According to Barlow Research, a small business customer ($100K to $10MM in sales) will bring about $5,173 in Net Potential Revenue to a bank each year. This revenue estimate is based the value of short-term and long-term loans, demand deposit accounts and other business banking products balances and fees paid by a small business in 2010. Based on these revenue estimates, a shift in one percent of primary bank market share can increase the Potential Customer Lifetime Value of your small business banking portfolio by approximately $577 million.

Even with this potential, most banks are viewed as underserving the small business market according to research from Barlow, Aite Group, JD Powers, Greenwich Associates and others. The perceived brand of large banks (assets of $50+ billion) became especially tarnished due to big banks' questionable financial stability, slower responsiveness to small business requests and perceived dwindling appreciation for the small business customer. As a result, more small businesses than ever state that they are willing to consider a change in financial institution partner.

The path to rebuilding trust with both current small business customers and prospects is by better understanding the needs of individual small businesses and getting in front of these business owners to present viable banking solutions. But, even though the average small business has tremendous value, just like the retail bank customer, not all small businesses should garner the same amount of marketing investment.

Instead of casting a wide net across all small businesses, your acquisition efforts should be tiered, leveraging product focused and proximity-based direct mail for the smallest businesses, multitouch solution-focused communications for mid-tier small businesses and investing in high-touch multichannel Demand Generation strategies for the highest value businesses where the engagement of a small business relationship manager is most important.

As a sales person for most of my life, I understand that there is no bigger risk to the success of a marketing program, and the credibility of those people who build the program, than the quality of leads I receive. Bottom line, sales people will not work leads with enthusiasm (or at all) if they do not believe the quality of the lead is reliable. This is the challenge most banks face with their small business marketing initiatives.

The best solution we have found to this challenge is to match the marketing communication strategy to the effort needed to close the sale. For that most coveted segment, where the business banking calling officer is required to optimize the value of the sale, we have successfully used a Demand Generation team, that leverages email, direct mail and a centralized outbound calling effort to improve the accuracy of the prospect database (notoriously bad to begin with), identify the appropriate decision maker, help identify a financial 'pain' that can be solved by the bank and score the lead. Only after the lead is thought to be 'ready to buy' is the prospect lead sent to the small business calling officer.

With an investment in an effective Demand Generation program, a bank can spend their time in front of prospects with a need instead of asking the calling officers to follow-up on leads of questionble value. In addition, unlike traditional direct marketing programs that drop and we hope they are followed up on, a Demand Generation process allows for continuous, and immediate, test and learn adjustments and changes in the determination of lead value.

Is small business acquisition and cross-sell part of your marketing plan? Do you tier your marketing investment to the potential value of the relationship and the effort required to close the sale? Are you leveraging multiple channels for your efforts? I would love to hear about your strategies. 

What's in Your Wallet?

In the past, bank marketers have relied on models based on demographic, geographic, psychographic and purchase variables to better understand their customers and prospects. Some financial institutions even use attitudinal, lifestyle or customer value segmentation to improve the targeting of their marketing communications.

As consumers are provided more and more options as to how to transact business and make payments, however, a better way to segment may be achieved by using advanced behavioral segmentation based on payment decisions. In other words, when consumers open their checkbook, reach for their wallet, turn on their computer, or use their phone, what payment option they choose may help bank marketers improve targeted engagement, channel and relationship expansion communication.

Payments behavioral segmentation may also be the best indicator of future financial services purchases since it can gauge changes in consumer purchasing, saving and investment patterns and enable Payments to effectively join Product, Pricing, Place and Promotion as the fifth P of marketing for bankers.

There are definitely challenges posed by payments behavioral analysis, however, since it introduces an element of time into the analysis that is different from other types of modeling. As opposed to using a single point in time like marketers can do for age, income, geography or even attitudes and lifetime value, behavioral segmentation requires analysis over a period of time with the length of time impacting the nature of the segmentation. Different conclusions can be made when looking and long vs. short-term trends. This is especially true during a time of significant economic change like we have today, where people's buying, saving, borrowing and payment behavior may be in transition.

Another challenge is presented by the number of channels and insight capture options available within the payments landscape, since consumers can pay using checks, debit, credit, ACH and even P2P or P2B using mobile devices in person, online or through the mail. As a result, it may be easier to capture ranges of transactions (high/medium/low) or develop a segment grids measuring ranges of transactions based on method and channel. As a starting point, marketers could potentially track tendencies using just one component of the payments continuum like measuring just point of sale transactions over time.

A final level of complexity is added when you consider whether how the consumer decides between funding today's purchases out of current income, wealth or borrowed funds. This adds the element of financial management into the picture.

Using all or singular components of payments data, bank marketers can build attitudinal segments that answer the questions "what payment instrument does a customer usually choose" and "why does a consumer choose a particular instrument (or channel)". While no easy task, it is one that can reap significant rewards. This is because the foundation of most financial management decisions revolve around the consumer's choice of payment method. Their attitude around safety and security, borrowing and saving, electronic or traditional all provide insights not available with traditional segmentation and open the window to the customer's potential level of engagement and potential value for your bank.

While certainly not a flawless segmentation process since the environment is constantly changing and is far from frictionless, payments behavioral segmentation could provide a level of insight not found in with other modeling processes and could assist in proactively addressing customer needs, improving customer lifetime value and enhancing the customer experience.

I would love to hear from banks that may be employing some form of payments behavioral modeling to drive marketing communications beyond the selling of payments products. Are other behaviorally modeling techniques working?

How Effective Is Your Bank's Social Media Strategy

Whether it is a company asking you to visit their Facebook page and 'Like' a product or brand or a peer wanting to keep in touch on LinkedIn, people are continually being driven to social networks according to Nielsen's latest report on social media. In this first report of its kind by Nielsen, it was found that social networks and blogs reach nearly 80 percent of active U.S. Internet users, and that social media accounts for 22.5 percent of the time Americans spend online. As expected, Facebook was by far the strongest social media brand.

In addition, it was found that nearly 40% of social media users access content from their mobile phone and that Internet users over age 55 are driving the growth of social networking through their mobile devices. As a result, "there is a need for companies to engage more strategically in the social space than they do currently," according to Radha Subramanyam, senior vice president for media and advertising insights and analytics at Nielsen.

Social Media Demographics, Nielsen Q3 2011 Report on Social Media

With networking continuing to increase, and the need to connect with customers and prospects in the most efficient and effective manner possible, more banks are using social media as part of their overall communications strategy. But, while interacting with customers through social channels can be effective, measuring the effectiveness of your marketing investment is no easy task. In fact, while many of the largest banks in the U.S. and overseas are leveraging many of the primary social networks, their strategies usually involve non-financial initiatives such as sweepstakes, charitable causes, etc. 

For instance, on August 16, Citibank used the front page of the Wall Street Journal to promote its Facebook page. On the Facebook site for Citibank US, visitors were prompted to hit 'Like' to learn how to get special access to Beyonce tickets. According to Jim Bruene from NetBanker there were 36,500 likes by midnight of that day for an increase of around 2,000 fans. Today, the page registers more than 125,000 likes (see below). But what is the return on investment for this strategy?

Citibank US Facebook Page, September 13, 2011

To show how fast what is considered a success in social media changes, we only need to look back to last March when Chase used their Chase Community Giving Facebook page to serve as the foundation for a voting process to allocate $5 million in charitable donations. At the time, this program was considered the industry standard with around 2 million 'likes'. Again, however, there was not a clear linkage between the buzz and revenues.

Chase Bank Community Giving Facebook Page

American Express, on the other hand has built very direct link between their Facebook page and credit card acquisition and engagement with their 'Link. Like. Love.' program. Unlike the Chase strategy described above, the American Express strategy is not limited duration and the program is all about their card product. With 'Link. Like. Love.', followers link their AmEx card using the Facebook platform to receive merchant-funded rewards. As rewards are communicated via Facebook (as opposed to on an online bank statement), the customer can link the offer to their card and are prompted to share the offer on Facebook with others in their network for a word of mouth marketing (WOMM) impact. As of today, AmEx has over 2 million fans with over 100,000 'likes' being generated each month based on a comparison to results on July 26.

American Express 'Link. Like. Love' Facebook Page - September 13, 2011

So how do you build a social media strategy that is effective from a financial perspective? How do you know how much to invest in a strategy and whether the strategy is successful from an ROI perspective? There is a great deal of debate today around 'attribution' and the real value of efforts that may not be directly tied to sales. And until we can do a better job of tying intangible benefits such as traffic, fans, mentions and views to some traditional metric, we should continue to be challenged by the finance departments of banks to provide more accurate measurements.

As shown in the infographic below developed recently by MDG Advertising, the vast majority of current measures used by CMOs are 'intangibles,' which by their very definition should prompt caution when using besides metrics like revenue, average order volume, reduced call volume or sales. And while 72% of CMOs cited that social media helped to close business, there was no direct connection between the investment and the return. 

Finally, even though the infographic indicates which social channels were thought to have the best ROI (Facebook), the majority of respondents didn't know what the return was on their investment or did not think there was an ROI. Obviously measurement and correlation needs to improve for social media to continue to grow as a viable financial institution marketing channel.

Infographic from MDG Advertising, September 2011

As with any marketing strategy, your social media strategy should begin with a clear establishment and understanding of your social media objectives. Look at how your competitors and those outside the industry are establishing goals and make sure that your measurement criteria is fully integrated with your current analytics system. Will your social efforts be to increase sales, improve customer service, generate customer engagement/loyalty, assist with product development or simply increase awareness of your brand? 

Once your objectives are delineated, you need to determine what percentage of your marketing budget should be allocated to your efforts. Be careful. Social media is not 'free'. Not only is there a cost for the internal team that manages the program, but there are usually external agency costs as well. In addition, since most banks don't have the luxury of simply implementing a social media strategy and getting immediate traction, most programs will need to integrate traditional media to promote social media efforts (advertising costs). Finally, there are creative, placement and tracking costs that also should be considered. 

The banking industry is known for moving en masse towards the next 'shiny object'. I would suggest viewing The Financial Brand's 'Reality Check 2.0: Myths and Facts' Webinar to understand some of the 'false reads' you could be getting from industry publications. While social media should definitely be part of every bank's strategy (customers expect a social presence), be cautious of building strategies that do not have a clear metric associated. Until key performance indicators (KPI) are established and agreed upon, bank marketers would be well advised to move conservatively and focus on integrating all communication channels.

Let me know: How are you leveraging social media at your bank? How are you measuring success? I am interesting in any success stories.

Banks Need to Make Love Not War

Over the last three days, leaders from the top banks across the country convened at the Barclays 2011 Global Financial Services Conference in New York to present investors with a review of results so far in 2011 and provide an outlook for 2012. Unlike the past two years, where this conference was dominated by bank presentations focused on TARP, credit risk, capital reserves and liquidity, this year's presentations highlighted the opportunity for organic growth and improving client's share of wallet.

For instance, Jim Rohr, Chairman and CEO of PNC Financial Services Group said that PNC will be focused on adding new customer relationships and cross-selling going forward. "If we cross-sell new clients, we'll see an almost $220 million increase," Rohr said during his presentation.

Similarly, Tim Sloan from Wells Fargo discussed significant opportunities that exist as a result of the integration of Wachovia. According to the presentation done by Sloan, there is a variance of an average of one product per household between legacy Wells Fargo (6.25) and the results from the Eastern footprint (5.29). He further illustrated that there is a variance of two products when legacy Wachovia is compared to the top Wells Fargo region (7.36).


When reviewing the presentations done by all of the top 20 banks, virtually every organization referenced their strong branch footprint and their focus on cross-selling and improving share of wallet going forward. Interestingly, only SunTrust referenced a focus on the retention of current customers (a drop of 8% in checking account closures between 6/30/11 and 6/30/10).

I am definitely a major proponent of cross-selling (see previous post: Seven Common Sense Ways to Increase Cross-Sales), but how do ALL of the leading banks think they are going to battle each other for a greater piece of the pie if the pie itself isn't getting any larger? Sure, it makes more sense to cross-sell existing customers as opposed to acquiring brand new ones, but isn't showing love and retaining current customers a viable path to growth as well?

Over the past year, I have visited most of the major banks in the country and still find that the first year new customer attrition ranges from roughly 25 percent to greater than 40 percent, usually based on the aggressiveness of a bank's acquisition efforts (the more aggressive banks usually have a higher level of attrition). Unfortunately, this is a number that most banks, as well as many marketing and product areas continue to ignore.

Before banks beat each other up trying to reach Wells Fargo's household cross-sell objective of 8 services, or move all of the budget that was spent in 2011 on acquisition into cross-sell initiatives, maybe more thought and money should be diverted to help make current customers feel better about their decision to open an account at your bank. Onboarding programs, customer satisfaction initiatives, customer engagement strategies, rewards programs and recapture triggers can all assist retention efforts.

At a time when most of the leading banks in the country are increasing fees and reducing some of the benefits that customers had come to expect and enjoy (rightly or wrongly), maybe we should focus more on sharing the love for their patronage as opposed to waging war on each other vying for a greater share of wallet.

Maybe next year's presentations at the Barclays Financial Services Conference will have more presentations around how many customers were saved in addition to how many were cross-sold.

I'd love to hear what you think.

Links to Barclays 2011 Global Financial Services Conference Investor Presentations:

Bank of America
BB&T
Capital One Bank
Chase
Huntington Bank
KeyBank
PNC
Regions Bank
Suntrust
TD Bank
U.S. Bank
Wells Fargo
Zions Bank

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.

Bank Marketers Face Challenging Times With Great Opportunity

After two years of responding to government intervention into the revenue structure of financial organizations, bank marketers are now faced with heightened levels of competition, a more demanding customer base, an unfavorable rate environment and, in many cases, a shrinking budget. But potentially most challenging to financial institution CMOs I meet in my travels is the ability to respond to the shift in the ways we interact with customers and prospects.

The flood of data, channels, devices and changing consumption patterns have marketing departments in financial organizations of all sizes trying to determine if they are prepared. They are reviewing the skills sets that will be required to take advantage of the opportunities these challenges present, and realizing that gearing up may require a heightened level of personal engagement from all members of their team.

These challenges are reinforced by a set of studies that I recently reviewed that surveyed marketers from all industries. IBM's 2011 Global Chief Marketing Officer Study entitled, From Stretched to Strengthened found that the majority of CMOs feel unprepared when it comes to the explosion of data available (71%), the impact of social media (68%) the growth of channels and devices (64.5%) and the movement from mass markets to micro markets (64.5%).

More importantly, several of the areas where CMOs stated they were least prepared were also those they believed would be the most important for their businesses. As shown below, each of the top four areas of preparedness gap are also in the quadrant where the impact on the marketing function was thought to be the highest.

Preparedness vs. Impact on Marketing Comparison - IBM CMO Study, 2011

But while there were many references to the growing analytical side of online measurement and monitoring in the IBM study, only 26% of CMOs surveyed track blogs, 42% track third-party reviews and 48% track consumer reviews. The need for a much better understanding of ROI was referred to many times in the study, going as far as saying that the CMO of today is in position similar to that of the CFOs 10 years ago.

Turning data into action was also the primary organizational issue in Unica's Annual Survey of Marketers, with the need to harness the power of the mobile device and to leverage the potential of truly integrated marketing also ranking high. As with the IBM study, the Unica research indicated that there is a significant gap between desire and achievement, with much more progress needed in the use of insight for better customer communication and measuring the impact of efforts across channels.

Three Most Important Issues for Marketers - 2011 Unica Survey of Marketers

What was interesting about the Unica study was that, while social media definitely registered as the champion of emerging channels in terms of use (53%), the enthusiasm for the channel was less than in recent years, possibly signaling the desire to see more tangible results from efforts. This also seems to be true in the bank marketing industry, where many are questioning the financial impact of investments made in social media and wanting to connect 'fans' and 'follows' into leads and sales.

Just like most other industries, bank marketers are being tested daily during a period of unparalleled change and will be required to respond to these new market realities:

• The consumer is definitely in control of the business relationship, with the ability to shop with a click and change bank partners without ever confronting us face-to-face.
• While margins are thin and the tolerance for fees is low, delivering customer value is the table stake in the game both from a perspective of products offered as well as access afforded.
• There is a greater need for seamless integration of marketing channels with an eye towards both effectiveness and efficiency.
• Accountability for marketing investments has never been more important at a time when bank revenues are at a premium, with new tools for measurement and skills for assessment being leveraged.
• Each of the above realities will require a more robust and continuous level of testing as tools, approaches and consumer attitudes continue to change.

Over the last few days at the National Center for Database Marketing Conference, where hundreds of practitioners met to discuss current trends and share success stories from a variety of industries, one thing was clear . . . there is no silver bullet. In fact, most marketers are working hard to hone their skill sets in a very fluid environment.

The good news is that there are amazing solutions being developed daily to help marketers do their jobs more effectively. The bad news is that the change is continuing at a more rapid pace every day. To be effective, bank marketers will need to have both great learning agility and adaptability to 'what's next'.

What do you see as the biggest challenge facing your marketing department in the coming year? Is your team prepared for the changes ahead? What are you doing to prepare for the new marketplace?

I would love to hear your comments below.

10 Resolutions Bank Marketers Can't Ignore in 2012

2011 was year that many bankers, and especially bank marketers would love to forget. Not only was focus diverted by the need to respond to new regulations for the second consecutive year (this time it was the Durbin Amendment), but the image of our entire industry was challenged as foreclosures and bank failures continued to be in the news. 

The biggest impact of all of this noise was that attention was diverted from what should have been accomplished in 2011. As I reviewed my post from last year, Ten Bank Marketer Resolutions for 2011, it is clear that most bank marketers lacked the time/focus to make much progress on any of last year's goals. 

So, in writing this year's Bank Marketer Resolution post, I could have simply posted the same resolutions from last year (similar to what I do with some of my personal resolutions). Instead, I reached out to bank industry leaders from across the globe for their ideas. There was surprising uniformity in their suggestions, and a sense of urgency around the need to achieve much more than last year.

So here are the resolutions bank marketers should not ignore in 2012 according to industry leaders:

1. Validate The Value of Marketing Through Measurement: As highlighted in my recent post 100 Years Later, Marketers Still Have Difficulty Measuring Up, there is still a tremendous gap between what bank marketers implement and what is measured. Not only are there almost 20% of marketers who don't find measurement of results imperative according to recent research by Ifbyphone, but less that 50% of any channel is measured. Dan Marks from First Tennessee says, "Bank marketers should resolve to measure and optimize true marketing ROI – having the courage to seek out the unproductive part of the marketing mix and replace it with other activities that generate real shareholder returns." Serge Milman, CEO of Optirate states, "In 2012, bank marketers should resolve to have a more diligent focus placed on business drivers that can help manage and grow the bank," while Bradley Leimer, vice president of online/mobile strategy at Mechanics Bank said that,  "The number one resolution for bank marketers in 2012 must be to 'put data first,' since the proof of any program resides in the measurement of results." 

Jeffry Pilcher from The Financial Brand added a common sense resolution that is not always followed . . . "stop doing things that don't work." It is clear that if only one resolution can be accomplished in 2012, the measurement of attribution and program results is the most important.

2. Don't Confuse Channel Economy with Channel Effectiveness: One of my resolutions from last year that needs reinforcement is that bank marketers should leverage the measurement mentioned above to ensure that the right channel (and mix of channels) are used for the right customers. While social and digital media seems less expensive, it doesn't work as well on its own as it does when mixed with traditional channels. In fact, recent research discussed on this blog has shown that for financial services, many of the traditional channels are more desired and effective than new media. In addition, many bank customers are not reached at all with phone, email or social media programs. As mentioned above, 2012 should be the year of improved measurement and improved attribution analysis, which will help to answer the questions around which channels should be used.

3. Be Customer-Centric: Ron Shevlin, senior analyst from Aite Group and author of the book and blog Snarketing 2.0 stated in a recent post, “banks need to be perceived as doing what’s right for their customers and not just their own bottom line.” One of the banks I work with stated it best when they said that customer centricity means:

• Know who the customer is and what they want
• Look out for the customer and help them make the right decisions
• Reward the customer for their patronage with tangible and intangible benefits

Saying you're customer-centric is not enough, though. "When claiming your bank is customer-centric, actions speak louder than words," warned Elizabeth Lumley, special projects editor at Finextra. This was especially evident in 2011, when many large banks made fee changes that created an uproar in social media, resulting in reversals of those decisions. To this new phenomenon, Chris Skinner, author of the Financial Services Club Blog suggested, "Bank marketers should resolve to make 2012 the year where good communication and real transparency ensures that we don't get screwed by social media campaigns."

4. Build a Social Media Strategy That Complements Your Overall Marketing Plan: Instead of engaging in social media because other industries are doing so, it is time to treat social media like other channels, with defined goals, strategies and expected ROI outcomes. "While simply having a Facebook page or Twitter account may have been sufficient in the past, customers are expected to utilize these channels to connect with their bank even more in 2012," says Karen Licker, financial consultant and social banker (independent) for J.D. Power and Associates. "Given the public nature of these contacts, bank marketers should have a resolution to be aware of these conversations and direct customer outreach, and be equipped to respond quickly to questions or issues raided via these channels." 

Nicole Sturgill, research director for delivery channels at TowerGroup, suggested that bank marketers should resolve to engaging the front line in social media since many don't realize they are being talked about. Alex Bray, managing consultant at IBM recommended, "Bank marketers should create a clear vision for social media based on a genuine customer value proposition while killing vanity projects that don't add value." Added John Owens "In 2012, bankers will need to understand the role and importance of social media to better serve clients and receive feedback."

5. Leverage Big Data for Better Conversations: There is a lot of discussion in the marketplace about the use of 'big data' to transform customer communication and the customer experience. There are very few places where more customer insight is available than in the financial services industry, where we not only have access to demographic and financial service ownership data, but also transactional insight that gives us a view into financial and purchase behaviors. But big data is nothing new, and should not be overwhelming in an environment where the ability to process data has also grown exponentially.

Unfortunately, as was found by Ron Shevlin from Aite Group earlier this year and in a soon to be published report, bank marketers are still not very comfortable with communicating online or through mobile channels using available insights. This may require new talents and new teams according to Brett King, founder of Movenbank, and author of the best-selling book and blog Bank 2.0. "In 2012, bank marketers should have a resolution to build a team that can create compelling customer journeys in real-time," states King. "Marketing is no longer about 'pushing' messages," continues King. Fred Hagerman, CMO of Firstmark Credit Union adds, "Bank marketers should have a resolution to combine web analytics and database knowledge to drive even more relevant communication."

6. Build Customer Value From Day 1: While there has been a great deal of discussion around the cost of a checking account since the December 9 American Banker article on the subject, there is no disputing the fact that fees alone can't make a relationship profitable. As a result, it is imperative that bank marketers look at customers as valuable assets to the bank that need to be nurtured and grown through increased engagement, relationship expansion and retention. As stated by Matthew Wilcox from Zions Bank, "2012 is a year when all bank marketers should resolve to have multichannel new customer onboarding programs as well as highly targeted relationship growth initiatives. To not have these programs in place would leave valuable money on the table and risk losing potentially valuable relationships."

7. Build Bank Value Daily: The past few years have been difficult for our industry, with the faith and confidence in many leading financial organizations being shaken. In 2012, consumers will look for solid value in products and services with every purchase and decision they make. Those organizations that don't reinforce the value they provide - every day - will be challenged. Dan Marks said that bank marketers should resolve to "refine, renew, and reinforce the bank's key brand distinction across the entire enterprise – everyone should know and exhibit how the bank uniquely serves customers’ needs." Steve Cocheo from the ABA Banking Journal suggested a rather straight forward resolution, "Bank marketers need to accentuate trust and value in the communications they develop and strategies they build." Bank consultant, Lori Philo-Cook seconded this resolution when she recommended, "Bank marketers should resolve to find new ways to communicate with customers in order to rebuild trust and strengthen relationships."

8. Innovate: Plain and simple, 2012 is a year where bank marketers should try new things and support innovation done in other areas of the bank. Bryan Clagett, CMO and investor at software services provider Geezeo put it best with his recommended resolution, "Bank marketers should not be afraid to experiment and think outside the box in 2012." For those organizations where budget, philosophy or other variables may make true innovation challenging, payments pro Scott Loftesness provides a suggestion, "Bank marketers should prepare to be a fast follower, especially in mobile for 2012, unless they have the budget to be an innovator."

9. Focus on Personal and Professional Development: While the skills needed to do effective bank marketing remain pretty much the same (targeting, messaging, measuring, etc.), the channels available have definitely increased. Therefore, bank marketers can no longer rest on their laurels and hope to succeed in the new marketing environment. More than ever, there needs to be a dedication to becoming familiar with the changes in the marketplace from a product and channel perspective. As stated by bank consultant Jeff Marsico, "The goal for bank marketers is to earn a place at their bank's strategic planning table and to be more than just an ad budget." Being aware of the changes in the marketplace can help earn this respect.

For me, I find that following industry leaders on Twitter and subscribing to industry blogs (like mine) are a great way to keep up to speed. Throughout this post, I have provided links to some of the industry pundits who share valuable insights and research on Twitter. Following them will go a long way towards keeping you in the loop. Watching who they follow will further expand your depth and breadth of knowledge. Bob Williams from Harland Clarke put it well in his suggested resolution, "Bank marketers should resolve to listen, discuss, think, read, and write. In short, they should be part of the conversation." Community banker David Gerbino provided a more basic, yet important resolution that, "Bank marketers need to resolve that they will understand finance, financial reports, and know how to calculate product profitability."

10. Don't Be Afraid to Break From The Herd: The banking industry is notorious for having a 'herd mentality', following each other's lead as opposed to thinking independently. In the past, the logic for doing this was usually based around risk aversion. Today, following other bank's can be both risky and can inhibit value creative. Look at the events around the raising of debit card fees by Bank of America, where many large banks followed the strategy of Bank of America only to have to follow the bank again as they rescinded the fee. The same can be said for the jumping into the social media waters without a defined strategy. While almost all banks are doing something in social media, very few can define the value it is bringing to their bank or what the ROI on this investment is.

2012 should be the year of breakout opportunity for those bank marketers who want to embrace the challenges associated with change. It is definitely not 'banking as usual', but is the environment where market leadership is gained and disruption creates new business models and customer segments.

I doubt if any bank marketer will succeed at all of the above resolutions. There may even be better resolutions than the industry experts provided above. If you have one that we missed, let me know. If you think some of the resolutions above are not valid, let me know as well.

I look forward to your comments and to a very exciting 2012.

100 Years Later, Marketers Still Have Difficulty Measuring Up

At the turn of the last century, store merchant John Wanamaker stated, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

Based on just released research from Ifbyphone, those may have been the 'good old days'. The report, 2011 State of Marketing Measurement Report found that, while 82% of CMOs expected every campaign to be measured (what's up with the other 18%), only 29% of the marketers believed they could effectively measure ROI of each channel.

Potentially more troubling was the finding that more than a quarter of marketing assistants did not find the measurement of results important. "It's concerning to hear that many marketers don't understand the importance of measuring the success of their campaigns," stated Irv Shapiro, CEO of Ifbyphone. "We need to determine the root cause of this sentiment, and whether it's a lack of education in best practices, or rather a gap in leadership and mentoring. Businesses can only get better at marketing if they are held accountable for improving upon what didn't work in the past."

From a channel perspective, marketers indicated they could only measure ROI on 47% of email programs and 41% of direct mail programs, with all other channels seeing significantly smaller percentages. This is despite having more tracking technology, greater human skill sets, and more attention to ROI and even though only 6% of marketers surveyed thought email was the most difficult to measure (only 5% found direct mail to be the most difficult to measure).

Part of the problem overall is the use of harder to measure channels such as social media and even traditional channels like television. And while the marketers surveyed believed they had many of the tools needed to measure results and build an ROI argument, the problem may be the challenge of attribution where an integrated multichannel strategy is implemented. The survey found that 71% of marketers believed they had the needed tools to measure the ROI of marketing campaigns.

The tools used to measure marketing campaigns included web analytics (48%), email marketing software analytics (47%), leads from contact forms (38%) and social media monitoring (30%).

In 2012, the key will be to take advantage of the vast amount of data at our fingertips and determine what we want to measure, how we will measure, and most importantly, what insights can be taken away that are actionable. Here are some recommendations that may assist in focusing efforts on seeing results of your programs.

• Develop and leverage a marketing measurement playbook that includes standardized measurement inputs and outputs you will use for your organization. Within this playbook, show how testing will be done and channel attributions will be measured.
• Set an appropriate budget and timeline for the implementation and delivery of analysis. Many of the banks I work with under fund the analysis portion of their programs and do not set specific time lines for the delivery of results.
• Set a standardized ROI formula that all impacted parties agree to. There has been a great deal of dialogue recently on how to establish social media ROI measures. Your team and management at your organization will need to agree to these measures.
• Build a reporting template that will be used for all of your marketing programs. This will help to standardize your reports and build credibility within the organization.
• Continue to look for new outside partners that can assist with your measurement efforts. New tools and processes are coming to market every day, with highly sophisticated process for measuring individual channels and multichannel attribution.
  

Channels will only increase in the future and the use of social media by your customers will have a greater impact on your results than ever before. So, how will your organization do a better job at measuring success (and failure) in 2012? What tools will you leverage and what standards will you set so that you don't embark on new programs without the benefit of analysis from prior programs?

I would love to hear your comments below.