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.

Ten Steps to Onboarding Success

Later today, I am presenting at the Oregon Bankers Association 105th Anniversary Convention at Sunriver Resort on the topic, Stemming Attrition and Building Relationships Through Effective Onboarding.

In addition to sharing recent statistics from J.D. Power and Associates around the positive impact of increased attention early in a new relationship and the positive impact of using multiple communication channels from case studies across the banking industry, I will be sharing the ten key steps to onboarding success that I have seen over the past five years.


These ten steps are:

1. Acquire the right customers: The most important component of a successful onboarding program is to acquire customers that have a greater liklihood of future value based on modeling and geographic targeting.
2. Communicate early and often: The sooner you can build dialogue with the customer and the more often you can connect in the first 90 days, the more successful you will be in retaining and building relationships.
3. Integrate across multiple channels: Reaching out to the new customer using phone, direct mail, email and personal 1:1 communication will greatly improve the success of an onboarding program. We have seen lifts of 25-50% when multiple channels are used.
4. Build in learning from day one: An onboarding program should not run on auto pilot. The competitive environment, customer behaviors and transaction trends change all the time. Your onboarding program also needs to adjust on a dynamic basis.
5. Engagement is key: Cross-selling the new customer should not begin until after you encourage engagement with the new account. This can include direct deposit, online banking and bill payment, autosave, credit utilization, debit/credit card utilization, etc.
6. Build a cadence of communication: A successful onboarding program uses a sequence of communication to improve the customer experience by helping the customer understand their new account, get to know the bank brand and eventually build trust and a stronger relationship.
7. Develop personalized offers: Once the customer has demonstrated a satisfactory level of engagement with their new account, offers targeted to the specific needs of the customer should be communicated.
8. Use a test and learn mentality: Testing should always be done with an onboarding program to determine the right offers, timing, channels and cadence for each customer segment.
9. Measure results: Results should be measured consistently against a control group. Common metrics include changes in attrition, engagement, cross-selling, balances and satisfaction on both a customer and household basis.
10. Provide a single point of responsibility: Since most banks do not have Directors of Cross-Selling or VP of Retention, it is important to assign the onboarding process to a single person who will 'own' the development and impact of the onboarding process. This person will work with segments, product managers and marketing teams to ensure the success of your program.

There has never been a more important time to develop a successful onboarding program. With fee income being attacked by Reg E and net interest margins at historical low levels, it is imperative that financial organizations attract and keep customers with the highest potential lifetime value.

Bank Marketers Should Focus on Metrics That Matter

Early in my career, heading a bank marketing department, I remember the frustration of my department being viewed as a cost center as opposed to a revenue contributor. Part of the problem was that it was easy to see the marketing spend each month as part of the bank's expense reports. I also didn't have the measurement tools at my disposal to provide analysis in many cases.

Jump forward two decades and the tools for marketing measurement are plentiful, but the challenges for measurement have also increased exponentially. In many cases, however, it is not so much the ability to measure as it is that most bankers are not speaking the same language that the CEO and CFO want to hear.

At a time when legislation has dramatically impacted the bottom lines of most banks, CEOs and CFOs are interested in metrics that frame marketing investment and results in terms like revenue, profitability and growth. And more often than not, they want results in terms of incremental improvement over business as usual.

Unfortunately, even when hard numbers are provided (which isn't often enough), the perception of the credibility of the numbers still biases the go/no go decisioning for further investment in marketing initiatives.

This view of success is very well described by Pat LaPointe in his Marketing Measurement Today blog, where he illustrates the relationship between values created against resources consumed, where insights are transformed into action and where the perception of measurement quality (many times viewed as the 'so what's') provides the motivation for future action. Pat used the following equation to illustrate his point.



Instead of going through all of the measurements that should be done, what are some of the ways current metrics should be adjusted in order to become more relevant in today's banking environment and to be of higher value to the CEO, CFO and organization as a whole?

• Measure Marketing Impact Against Corporate Goals: Instead of looking at metrics like awareness, response rates, share of wallet or even sales, change the context of the results delivered to include revenues, lifetime value and net present value. These monetary measurements are much more in alignment with the numbers provided on quarterly and annual reports and can be used to generate a Return on Marketing Investment (ROMI).
• Focus on Sales Effectiveness: In a more complex sales cycle associated with an internal sales force (mortgage lending, small business, commercial, corporate, trust, investment services, etc.), marketing needs to stay engaged beyond simply the lead generation phase. In consumer and retail banking, marketing must focus on the engagement of the newly acquired customer as well as the retention of that household. Instead of just measuring leads generated or sales converted, forecast metrics should be used that provide a look into the future value of the relationship based on the customer's level of engagement and loyalty.
• Communication Touchpoint Attribution: According to Forrester Research, with so many marketing channels currently being used, last-touch methods of allocating results to channels are outdated and could lead to a suboptimal marketing mix. In my travels, channel attribution is the holy grail of marketing measurement, where results are either not tracked or results are tracked and allocated to every communication channel. Bank marketers need better tracking methods that look at the customer decision process while serving multiple channel owners who will debate over response ownership. Otherwise, management will get an incomplete (or inaccurate) view of marketing and channel effectiveness.
• Fight the Tough Battles: Be willing to fight the tough battles that come with siloed organizations. Even when money has been budgeted to support a product or service area, the results of marketing initiatives may indicate the need for discontinuation or reduction in future investment. Another battle may loom with your database or analysis team as you attempt to get timely reporting.

With every dollar spent by a bank being highly scrutinized, it is imperative that bank marketers take a leadership role as a strategic advisor to drive revenue growth and cost reduction. By doing so, marketing budgets will be less at risk and marketing departments can be viewed as a source of future revenues as opposed to being a cost center.

How are you measuring results of your programs using metrics that matter to your CEO and CFO?

Collecting Behavioral Insights Increases Value of Relationship

Over the past 30 years, the new account opening process hasn't changed very much. Sure, there is a far greater use of technology at the new account desk and there is the opportunity to open accounts online, but the overriding objective for most banks is still operational efficiency as opposed to building the foundation for a lasting relationship.

This is why new customer onboarding has become so important to the banking industry. Without a rapid deployment of communication around the best way to use the product(s) opened and encouragement to expand the functionality of the product by taking advantage of engagement services such as online banking, direct deposit, bill-pay, mobile banking, etc., the customer experience will be lessened and the potential for attrition increases.

In fact, first year attrition continues to be a strategic challenge at most banks, with defection rates of 20%, 30% or even 40% not being uncommon. For those organizations with a multi-touch, multichannel onboarding program, however, the rate of attrition drops significantly. Unfortunately, even for those banks that have an onboarding program in place, the program may not be optimized due to a reliance on transactional and demographic insights as opposed to psychographic and behavioral insights.

While demographic and early transactional data can provide directional guidance, a deeper knowledge of the customer's financial goals, channel preferences, product usage, preferred channels and reason for coming to your institution is needed to personalize the onboarding communication and move the customer from product engagement to relationship entrenchment. The importance of gathering this additional insight was highlighted in the Javelin Strategy research entitled, '2010 New Account Onboarding: Using a Systematic, Tactical Approach to Deepen Financial Customer Relationships'.

According to the research, communication channel preference, messaging, offer selection and even transaction channel choice can be impacted by behavioral characteristics such as why the consumer came to your bank in the first place, the lifestage of the customer and the financial services the customer has used in the past.Unfortunately, these types of questions are usually not pursued during the efficiency-driven new account opening process.

To fill in this knowledge gap, best-in-class financial organization supplement traditional new account opening with an onboarding process that includes a short survey of needs and behaviors of the new customer. While this survey can also measure customer satisfaction with the new account opening experience, most banks focus on gathering insights into the reason for opening the new account, communication channel preferred, the financial goals of the customer and what financial services the new  customer holds elsewhere. In addition, some banks ask questions to determine key life events that may be on the horizon and determine who in the household will be in charge of managing the new account.

According to Sherrie Riley, Vice President of Sales at Scantron, a leading provider of assessment and survey solutions, "New account surveying is another way that banks are reaching out to find out more about their customers. This first touch assessment fits within a series of strategic survey programs that help an organization measure, monitor and improve the customer experience". The new AllianceLink™ Financial surveys include the a New Account, Closed Account Survey, Teller Transaction Survey, and Product Survey. 



Source: AllianceLink Financial 

 Without new account surveying, banks are limited to just basic demographic and transactional data since the customer has no history with your bank. This limited insight relegates a bank to treating all new households the same or building segmentation on only limited information as to the household's growth potential. With the application of additional insight, we have found banks improve the overall value of relationships by 50%, 100% and even more than 150%, while reducing attrition and increasing both engagement and share of wallet. In fact, the question around services held at other organizations has had the ability to impact relationship cross-sell rates by 1.5 to 2 services on average during the first year of the relationship.

In the same way that using the opening balance in the account is a poor proxy for determining future value of a relationship, an incomplete picture of the customer's needs and behaviors can lead to sub-optimal communication treatments, offers and/or messaging. By using additional insights captured through new customer surveys, banks can improve their onboarding program by identifying those customers with the highest potential and can better serve customers with lower potential by providing services geared to their unique needs. This will reduce attrition and will increase the likelihood of share of wallet build.

Does your bank capture additional insights to enhance the new customer experience and increase the potential value of the relationship to your bank? I would love to know.