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.

Online and Social Media Emphasis Grows

As the focus on marketing spend is magnified and marketers are asked to do more with less, marketers are continuing to increase their online and social marketing strategies, according to the CMO Council's 2010 State of Marketing report.

The global affinity network, which surveyed 600 of its members from across the world and representing most industry verticals, found that 46% of its members ranked investing in digital demand generation and online relationship building as a top initiative for 2010. The survey also found that 62% will be crunching customer data to improve segmentation and targeting. Most of the respondents plan on doing much of the heavy lifting internally or by specialized outsourced providers.


The survey also saw a significant uptick around online channel integration and multi-channel offerings that deliver the brand promise consistently across online, mobile, in store, and traditional channels.

The challenge for bankers and non-bankers alike will be to find the skill sets to successfully implement these strategies. With only 6% of those surveyed rating their online marketing performance 'excellent' and the majority trying to grow their capabilities, finding people with a successful track record is difficult.

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.

Optimism and Better Results Reported in Recent DMA Quarterly Business Review

In the most recent DMA/Winterberry Group Quarterly Business Review (QBR) for the first quarter of 2010, the Direct Marketing Association in conjunction with The Winterberry Group found that both direct and digital marketers have seen improved performance in terms of revenue, marketing expenditures and profitability compared to the previous quarter and the same quarter last year. Moreover, both marketers and service providers have optimism that this growth will continue, albeit at a slow pace.


Even though the plurality of 301 marketers surveyed said their spending remained the same during the period, nearly half expected spending to increase in the second quarter. The primary reason for this increased activity was cited as improved analytics and enhanced processes. In addition, there was a significant increase in revenues generated through direct channels due to slow improvements in response rates suggesting some easing of the recessionary pressures over the past year.

According to marketers, nearly all direct/digital marketing channels (with the exception of catalogs) had increased spending during the quarter. As has been the case in previous quarters, the most significant growth has been seen in email, social, search, online and mobile.channels. Interestingly, teleservices saw an increased investment after several quarters of decreases. Finally, the report found that the balance between budget allocated to acquisition and customer retention remained relatively constant at 59.5%/40.5%.

From this quarterly study, it is clear to see that online/offline integration will continue to be a marketing priority leveraging the technology available to drive better results across multiple channels and multiple touches. Reduced budgets and staffing is also making the importance of robust reporting and a strong ROI a centerpiece of most direct/digital programs.

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?

Zions Bank Integrated Strategy Yields Results

I recently spent a couple days at a Marketing Summit with the Zions Bank direct marketing team and their interactive agency Richter7 in Salt Lake City and it was exciting to see the great results of their integrated marketing communications programs.

Not only have they lowered an already industry low attrition rate with their multi-touch onboarding program that uses direct mail, email and phone contacts of customers over the first 90 days of the relationship, but they have also seen a strong increase in account engagement, cross-sales and balance enhancement. Even using very conservative estimates, the ROI of the program far exceeds 400%, with enhancements still being introduced to improve these results.


In addition to a best-in-class onboarding process, they also have seen seen great results from their recently introduced multi-touch customer cross-sell program that scores every household to determine the best product to offer each quarter. This systematic communication based on product propensity and a next most likely product score has enabled the bank to be both efficient and effective in their sales efforts, replacing a multitude of programs that used to be run on an ad hoc basis over the course of a year. Like the onboarding program, the great results for the cross-sell program can be attributed to both excellent targeting and leveraging multiple channels as opposed just one communication medium.

Beyond these foundational programs, the Zions team continues to test new ideas that banks several times larger are not doing. In addition to being close to introducing a new customer acquisition program that leverages multiple channels, traffic generation and the power of their sales force, they are more focused than many in the industry on the power of social media, online and mobile banking (just introduced) and continuously improving metrics. They are even building the infrastructure to expand some of these initiatives to their affiliate network. As a lead player on the Zions team, Matt Wilcox mentioned during the meeting, "I want Zions Bancorporation to be a recognized marketing leader in the financial services industry and to do things that others just imagine".

I want to thank the teams from Zions and Richter7 as well as the people from our team that continue to amaze me by what can be accomplished with senior level approval and with an attitude of partnership and a forward focus. It is always an energizing summit to attend and the results definitely illustrate the value of these planning meetings.

Matt Wilcox has also agree to join me at BAI Retail Delivery 2010 in Las Vegas where on Monday, October 18 we will partner on a half day workshop entitled, Improving Acquisition, Onboarding and Cross-Sell Effectiveness with Multi-Channel Communication . During this session, we will discuss ways to leverage multiple channels in the implementation of successful, integrated marketing communications programs.

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.

Reaching the ATM Customer With Intelligent Personalization

About a month ago, I visited my neighborhood branch office on a Saturday to open a few new accounts and was surprised to see the vast difference in customer traffic outside the branch compared to inside the office. More specifically, it was clear that the traffic outside the office was almost entirely for the ATM, since during my 30 minute visit only 3 people were served through the drive-up window while no less than 25 customers used the ATM. The manager even mentioned that she had offered the drive-up lane to the long line of ATM users, only to be told that, "we only need to make a withdrawal" (I guess many people don't remember the purpose of withdrawal slips).

While I realize the primary advantage of using an ATM is speed and convenience, are bank marketers missing an opportunity to expand communication through this channel? Having a captive audience, if only for a couple minutes, provides the opportunity to both target communications as well as collect insight.

According to a white paper entitled, "The Use of ATM Screens to Augment Marketing Initiatives" presented by sponsored by Elan Financial Services, 40 percent of the adult population use ATMs 10 or more times in a month. For many cardholders, like myself, the ATM is the most frequent touchpoint connecting a customer and his/her bank. Based on the white paper, the opportunities for communication exist during 'waiting periods' when the transaction is being processed. Specifically, these opportunities include:

• On the welcome screen when the transaction choice is being made
• On the wait screen when the consumer is provided the opportunity to make additional choices
• On the thank you screen when the card and receipt are being dispensed

The opportunity for enhanced communication was also very well presented in a webinar on November 18th entitled, "How the Self-Service Channel Will Evolve in the Next Five Years", presented by Phoenix Interactive Design, Inc. and Larry McClanahan from Fifth Third Bank in conjunction with ATM Marketplace. During this presentation, it was illustrated how ATM messaging can now be personalized leveraging the bank's MCIF system enhanced by device awareness, geolocational determination and even expanding to two way communication with the objective being to enhance the customer experience, improve sales results and increase loyalty.

In my travels, it is clear many banks are testing the expanded software and hardware capabilities of the ATM channel enabling marketing and product owners to deliver highly targeted and visually appealing static or video communications to customers based on their demographics, current relationship (or lack thereof), other marketing messaging being delivered through other channels, geographic location, time of day and type of device being used (full function ATM, cash dispenser, in branch kiosk, etc.). Instead of printing ridiculously long sales messages on ATM receipts or using a 'one size fits all' approach to communication, banks can leverage the screen and alternative channels to personalize messages.

For instance, on my return from the BAI Retail Delivery Conference in Las Vegas this year, I used a Wells Fargo ATM for a withdrawal and was asked if I would be interested in a consolidation loan from the bank. Instead of a long sales message that would slow down the transaction or a printed message on the receipt that would be thrown out, they provided the option of email delivery of the offer as shown below.

I am assuming this ATM strategy was in a test mode at the time since I didn't have the student loan referenced on the ATM. In addition, the email follow-up (shown below), which I expected to receive almost instantaneously, didn't arrive to my inbox for two weeks, which indicated the possibility that the follow-up process was still manual at the time.

In any event, this type of integration of channels and messages is an enhanced sales process compared to long, less targeted screen messages or receipt communication. In fact, there is no reason why the ATM can't be integrated with other customer communication that can extend into the branch based on the time of day and location of ATM, or to a mobile phone or even an iPad. Much like Wells Fargo has offered to have ATM receipts delivered to a mobile device or email, mobile devices also provide the ability for immediate locational offer delivery (possibly including tickets to an event, merchant funded offer or mobile banking funding option), while the iPad provides expanded communication real estate and functionality not available at an ATM or even through a personal computer.

With more and more banking being transacted out of the branch and the expanded capabilities offered by both hardware and software firms supporting the ATM delivery system, time will tell which banks will make the most of this opportunity to communicate to a relatively captive, active and mobile audience in a way that resonates and generates results. Keys to success will be some of the same communication and marketing rules from other channels (audience, channel, timing, offer) combined with the ability to better measure results by channel, location and timing.

What is your bank doing to enhance the revenue generating and service aspects of your ATM network? I would love to hear from you.

7 Common Sense Ways to Increase Bank Cross-Selling

SELLING STRATEGIES

Every financial institution needs to generate a steady stream of new customers, yet one of the easiest and most steady sources of new businesses and related revenue is to reach out to current customers for additional business.

With the cost of acquiring new retail, small business or commercial customers being five to ten times the cost of retaining an existing one, and with the average spend of a repeat customer being 50- 100 percent more than a new one, bank marketers need to remember that the most efficient investment of marketing funds is to market to customers that already bank with you.

Here are 7 relatively easy techniques to do just that:

1. Start With the Lowest Hanging Fruit: The easiest sales that can be made to current customers are engagement services that help a customer use an account they already own. These 'sticky services' include a debit card, online banking, direct deposit, bill pay, automatic savings transfer, personal line of credit and security solutions such as privacy protection. These services help to ensure the customer will use the products they own more frequently, will significantly improve retention and will help to improve the overall customer experience.
   
   
2. Stay Connected: About a year ago I was talking to a friend who said, "I was very impressed with how much love my bank gave me when I opened some new accounts, but amazed that I never really heard from them again except to tell me about new fees". While some banks have very successful onboarding programs to help stay connected with new customers, a surprising number of banks still rely on the customer to onboard themselves. And unless the customer expands their relationship, their bank may never include them in a model-driven cross-sell program.
   
   
3. Continually Evaluate Upsell Opportunities: Rather than using product-driven programs that are done seasonally, consider funding more customer-focused programs that evaluate each customer's propensity to open one or more of the products and services you offer. With some of my clients, we evaluate each customer's transactional, product ownership and even behavioral characteristics to determine what would be the most likely next purchase and whether the propensity to purchase is high enough to make an offer. In some of most successful programs, this evaluation of opportunities is done monthly, with smaller mailing universes, but much higher response rates.
   
   
   
   
4. Empower Your Customer Contact Teams: For most customer facing employees of your bank, their primary responsibility revolves around efficient processing of transactions and/or customer service. To leverage the thousands of customer engagements these employees have each year, you need to provide easy ways for them to extend their conversations to include relationship expansion opportunities. Many banks provide prompts on their employee's computer screen around recent sales communications received by the customer, most likely products that may interest the customer and even special offers that can be made as part of their transaction or service conversation. The best programs don't stop there, but include tools for the customer to take advantage of the offer. This may be an immediately generated custom printed sales document, a follow-up email or sales call or a referral form.
   
   
5. Ask for Referrals: One of the easiest ways to generate new business and increase loyalty of current retail or business customers is to ask (and possibly incent) for referrals. If a customer is happy with the way they are treated at your organization, they usually want others to know. This is especially true with satisfied small businesses, private banking customers and with retail customers that are part of a bank-at-work program. And it doesn't hurt if you provide an incentive to your current customer. At a time when new customer acquisition offers often exceed $100 and when the overall cost of acquisition is more than $250, offering a 'bounty' of $50 would be less expensive and would most likely generate a more loyal customer.
   
   
6. Leverage All Channels: Never assume that customers understand all that your organization offers or absorb communication the same through all channels. Remind your customers continuously that you know who they are, understand their needs, are looking out for them and that you are willing to reward them for their loyalty. And use as many direct channels as possible to reach out to your current customer base, including direct mail, email, statement inserts, banner ads on your website, ATM messaging, outbound calling efforts, etc.
   
   
7. Measure and Reward What You Want Done: By providing ongoing measurement of the cross-selling objectives you want to achieve and paying for this achievement of these objectives, you have a much better chance of reaching your goals. This continuous reinforcement of your cross-sell mission allows your team to be focused on what's important. You can also turbocharge your results by communicating how you are assisting in their efforts. Provide Opportunity Reports of the customers where they may have the greatest opportunity for success. As part of these reports, it is also helpful to provide background as to why the customer is being selected for a specific offer.

Finally, remember that current customers like to be rewarded for their loyalty. One of the best ways to do this is to remember to include an offer with any cross-sell or upsell message. Without an offer, you may be perceived as simply 'pushing product' without leveraging the relationship value already in place. A strong offer will not only generate a better response to your communication, but also remind the customer of the value of doing business with your organization.

I would love to know other ways you are improving cross-sales within your bank, credit union or investment firm. I know I have missed some great ideas and I would love to hear from you.

Seven Steps to Reduce Offline and Online Bank Product Purchase Abandonment

According to Forrester Research, the number of consumers using the Web to research, buy and manage their financial products has grown steadily. In 2009, 63% of US online adults who researched a financial product did so online, with the number increasing over the past two years. Virtually all products were researched, from mortgages and student loans to savings and checking accounts. Interestingly, more than a third who researched products did so exclusively online.

The Web provides inherent advantages when researching and applying, including the convenience of being able to research whenever the user wants, the ease of comparing providers, and in some cases the ability to open the product or service in real time. While the use of the Web is correlated to age categories (with Gen Y using the Internet more frequently), all age groups are increasing their use of online and mobile channels to evaluate options before purchasing financial services.

Online purchase of financial services varies significantly by product type, with complexity and locational considerations driving the sales process. For instance, while almost half of online adults applied for a credit card online, a far lower percentage purchased a checking account online since convenience is a primary consideration, making the ability to walk into a branch to open an account more feasible.

Building awareness and even consideration online, however, does not guarantee the prospect will apply for or open their relationship online. According to a recent Forrester Research study entitled, Injecting Next-Generation Thinking Into Your Financial Services Acquisition Website, almost 40% of online households who researched a financial product online used another channel to complete the sale. This cross-channel selling behavior provides both opportunities and challenges for banks.


Source: Forrester Research 2011

In the example above, a customer may gain awareness through mass media or even direct or online channels, only to further research the service online, over the phone or in person, with the actual purchase of the product or service culminating either online or in a branch office. Each of these steps in the buying process (or sales funnel) can lead to abandonment of the process by the prospect due to complexity, competitive considerations, other prospect priorities or poor sales inquiry follow-up at the bank.

While research indicates that the success rate of moving a prospect from the awareness to consideration to purchase stage varies significantly depending on the product, the research channel, and the ultimate sales channel, the opportunity diminishment can be 80% or higher. In fact, with lending products where there are numerous steps between the awareness stage and loan closing, close rates can be as low as 10% of the shopping universe.

This sales inefficiency provides many opportunities for banks at a time when the cost of new customer acquisition has never been higher and the competition for customer share of wallet is extreme. Some of the ways to improve conversion of awareness to sales include:

• Provide online information from alternative perspectives: Some people will shop for a specific product (credit card), while others research to solve a specific problem (debt consolidation), while still others may inquire from a lifestage perspective (student). A bank website and search engine strategies need to be built with this interplay in mind, providing alternative paths to reach the best solution.
• Leverage dynamic and customized content: Whether the Web, the phone channel or in the branch system, dynamic and customized content needs to be developed to assist in moving a prospect from the awareness to the purchase stage. Understanding segments, purchase intent and competitive position in the marketplace can greatly improve results both online and offline.
• Capture prospect insight from all channels: Surprisingly, some of the newest channels (online) have the best refinement of insight capture through digital tracking and jump page data collection. Alternatively, far fewer banks capture insight from prospects who indicate potential purchase intent by phone, in the branch or through direct mail. Without a formal method of capturing information on how to follow-up on inquiries, we greatly reduce the potential for sales success.
• Develop a multichannel follow-up strategy: In the same way that prospects leverage many channels in their consideration process, it is important to follow-up on all leads using multiple channels. Dependent on the level of insight capture done when the prospect initially inquired about your product or service, quick and consistent follow-up on leads using all channels possible will improve chances for success.
• Monitor the sales funnel: As important as a strong follow-up strategy, the monitoring of each prospect in the sales funnel is needed to better understand the paths prospects take to purchase different products and the success of your follow-up efforts in generating a strong close ratio. Similar to online navigational pattern monitoring, internal monitoring of prospects allows for the development of a sales waterfall that can assist in the identification of service and communication gaps that depress sales results.
• Develop metrics for improved results: Focusing only on the beginning and end of the sales funnel oversimplifies the opportunity cost of lost sales. By better monitoring each stage of the sales process from awareness to consideration to final sale allows for the potential improvement of ROI. For many banks, an improvement of 5-10% in the consideration stage and similar improvement in the closing stage of the process can improve results by more than 100%.
• Online and offline retargeting can provide big returns: Sending an email, making a call or delivering a piece of direct mail to a person who has abandoned a shopping cart has been found to be the most efficient online strategy for all categories of online merchants. While banks don't have online shopping carts per se, they do have abandoned purchase processes for a number of reasons. Retargeting allows you to show your ads to visitors that left your website (or other channel) as they surf elsewhere on the web. These potential customers can get highly targeted ads that are designated to entice them to return to your website and convert their visit into a completed action. Many studies have found that the open rate on these emails exceeds 50%, while the conversion rate can exceed 20%.

In a content-driven world, with the number of messages consumers receive on a daily basis continuing to increase, making follow-up communication personalized and pertainent is extremely important. Therefore, any form of sales communication (even if the prospect indicated interest) needs to respect the prospect's time and privacy.

In addition, the timing of the communication should reflect the channel that the prospect used to shop for a service. In the first 24 hours following an online abandonment, 54 percent of returning customers who make a purchase will do so within the first few hours according to research from the remarketing firm SeeWhy. In other words, more than half of customers will abandon the cart for good if not remarketed within 24 hours of the abandonment. Alternatively, if a prospect is shopping for rates or asking questions about a checking account fee schedule via phone, a person should reconnect within 24-48 hours to answer any follow-up questions.

How many channels can a prospect use to investigate one of your services? Do you capture insight from the shopper and follow-up in a timely manner to determine if any other questions can be answered? Do you measure the effectiveness of these efforts and maintain a waterfall illustrating where improvements can be made? Do you know the cost of lost potential sales if effective management of the sales funnel does not occur?

I am interested to know how your bank manages this process. I also discussed the various views of a sales funnel in a world where prospects enter from various channels late last year on this blog.

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?

Banking Industry Leaders Discuss Findings of Intuit Financial Management Survey

In conjunction with the release of Intuit Financial Services' 4th Annual Financial Management Survey, Banking.com hosted a Twitter Town Hall yesterday, bringing together financial industry leaders to discuss loyalty and channel migration as well as some of the challenges and opportunities facing the banking industry. The following is a recap of the very robust one hour dialogue. (the complete transcript can be found using #IFSsurvey on Twitter)

The Town Hall discussion began around the issue of customer loyalty and the finding that many consumers thought their financial provider was not 'in touch' with their needs. Given the events of the past week, where many large banks reversed decisions around the implementation of fees due to highly vocal negative sentiment amplified by social media and credit union trade group support, most participants believed that banks are not leveraging current insight and technology to make better decisions and provide value added service. 

Tobin Lee (@Tobin_Lee), Intuit Financial Services spokesperson stated, "It is time for a banker mindset shift; cultivating deeper relationships, more meaningful engagement and stronger advocacy for growth". Campbell Edlund from EMI (@EMI_mktg4sales) added, "These findings provide a very strong argument for a communications plan around the customer lifecycle". 

The already robust dialogue really took off as the discussion moved to the acceptance and utilization of banking channels (especially mobile and tablet banking). Bradley Leimer (@leimer) from Mechanics Bank in the San Francisco Bay area believed mobile strategy will be the key to future engagement due to the portability and 'always on' nature of the device. He also believed that the correlation between mobile banking and smartphone use (41% of respondents owned a smartphone) could indicate a lower engagement with financial technology in general for non-smartphone users.

Edlund added that while there is currently a higher penetration of smartphones than tablets, tablets can not be ignored by banks since Oracle found that tablet ownership is expected to increase significantly in the next year. She also warned that we need to be cautious not to get ahead of the acceptance curve. . . "we always underestimate inertia". Brett King (@brettking), author of Bank 2.0 and founder of Movenbank went a step further stating that within 3 years all bank websites will need to be built for tablets first. He also believed that branches will continue to diminish in presence and utility (according to the study, 27% of respondents still visit their branch once a month in addition to ATM visits).

Mark Zmarzly (@BankMarketing) did not believe bricks and mortar would completely go away, but definitely felt the relevance of branches will change. "It's easy to say branches will go away, but is that realistic? They have to evolve, but customers will never let them become 100% irrelevant." King responded that with the drop in branch transactions, the economics of the branch are not working. I (@jimmarous) illustrated the model of Boeing Employees Credit Union in Seattle, where only 2 of the 40 branch network have tellers, while the installation of multiple ATMs at offices and around the city have an average of 10,000+ transactions each. 94% of the transactions at BECU are done electronically, according to Howie Wu (@howie_wu) from the credit union.

"Relevance is the key to banking for tomorrow," stated King. "By 2015, mobile will be the #1 day-to-day channel, OLB #2 with the branch network being #5. The challenge for mobile and online will be developing great customer journeys". King doesn't believe these journeys exist today and believes the goal should be to have banking so pervasive that it is not tied to a branch, device or website, but is everywhere customers are.

Edlund pointed to the retail industry as a forerunner for what we will see in financial services. "Social and tablets will change the landscape in banking as they have in retailing", Edlund stated. (During the Twitter Town Hall, there was even a discussion of the integration of TV as a channel for banking). Representatives from EMI in Boston (EMI_mktg4banks) emphasized that we will continue to see a blurring of all channels with social media providing some of the glue for enhanced communication. Gamification and location-based rewards were also seen as a key elements of engagement by Leimer and Edlund.

A conundrum was discussed with regard to the needs of small businesses where checks still prevail and the need for branches. King believed that we will see significant attention paid to mobile payments for businesses in the next couple years, while I added that tablet apps for business are also being developed to respond to the needs of the business community. NFC was also seen as a game changer with regard to the need for branches for small businesses. Bob Williams (bob_williams) from Harland Clarke believed that, while check usage is definitely dropping, there are much greater efficiencies today than in the past with RDC and other electronic tools.

It was clear from the Intuit research that was just released, the Bank 2020 research released in April, and the discussion during the Twitter Town Hall today that there is significant disruption in the banking industry with regards to channel support and device utilization. The consumer movement to new banking channels is mirroring the movement to more sophisticated devices such as smartphones and tablets. Many consumers are NOT choosing one device or channel over another, but are using multiple devices depending on their personal needs.

Consumer desire for an integrated banking experience without friction will need to be supported by banking organizations in the future. Distribution networks (whether tangible or intangible) will need to support an expanding array of capabilities that may include integration within retail or social sites as opposed to standing alone.

As I stated to the participants of the Twitter Town Hall at the end of today's discussion, "If banks are not prepared for the channel migration that is already underway, they may experience the impact of 'Bank Transfer Decade'".

Note: A summary of the findings of Intuit Financial Services' 4th Annual Financial Management Survey and recently released related research is available in my previous Bank Marketing Strategy blog post.

If you weren't able to join us, what are your thoughts around the impact of channel shift away from the branches and towards other media? Will we see the elimination of branches completely? Will another device or technology unseat smartphones and tablets?

I would love to hear from you.

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.

State of Bank and Credit Union Marketing 2012

Today's bank and credit union marketers are facing a period of big data, increasing devices and more communication channels than ever before. In addition, consumers are challenging the pricing and service levels they receive from their financial institution, and are willing to speak their mind using lightning fast social media channels.


To better understand what bank and credit union marketers are thinking and doing during this period of unprecedented change and opportunity, I partnered with Jeffry Pilcher from The Financial Brand to develop the 2012 Bank and Credit Union Financial Marketing Survey. More than 300 bankers responded from banks and credit unions of all sizes thanks in no small measure to our many friends on Twitter who helped distribute the links to the survey and to ACTON Marketing, who recruited many of their clients and friends.


The results of the survey underscore the primary challenges facing financial institution marketers today:

• The need for better measurement of marketing results during a time of constrained budgets and limited human resources.
• The importance of expanding share of wallet through cross-selling, especially with credit products
• Changing the media mix used for integrated customer communication - with a greater emphasis on less familiar online and social media channels

    View Entire Survey Results   


Participants

Over 300 financial organizations participated in The 2012 Bank and Credit Union Financial Marketing Survey, including 101 banks (33%), 143 credit unions (47%), 33 community banks (11%) and 26 other types of financial organizations (9%). All asset sizes were well represented.

SURVEY HIGHLIGHTS

Majority of Challenges For Marketers Are Internal

With all of the external challenges facing financial organizations over the past several years, ranging from new regulations that impact fee revenues to the continued distrust of the financial services industry in general, it is interesting that marketers viewed the majority of their challenges in 2012 as being internal in nature. Even though 84% of respondents mentioned that their budgets would either increase (45%) or remain the same (39%), 46% of marketers believed the primary challenge would be insufficient budget or manpower. As could be expected, this challenge was less prevalent at the largest banks.  

As has been noted in various studies and covered in a recent Bank Marketing Strategy post, difficulty in measuring results was also a significant challenge, but this was inversely correlated to the size of organization, with more than 40% of banks under $1 billion noting measurement as a challenge and less than 25% of organizations over 10 billion noting this as a challenge (my travels indicate that measurement is better at the larger banks, but by no means considered adequate). Conversely, the challenge of 'silos', I.T. inflexibility and  regulatory issues were much more challenging at the larger organizations than is noted by the consolidated results.

Many of the internal challenges shown above could be reduced if marketing departments could better align with other C level players within their organization. By providing better analysis of results from an ROI perspective and through better marketing planning, marketing would be invited more often to the strategic planning table, allowing them access to the players who could partner for improved departmental integration.

Customer Acquisition and Organic Growth are Job #1

When asked about the top priorities over the next 12-24 months, there was significant consistency between large and small institutions, with the majority of respondents agreeing that there is a need to acquire and cross-sell additional products and services. This makes sense due to the focus on fees and revenues in 2012 and beyond (and with the public highly sensitized to any fee changes). Bottom line, the only way to improve margins will be to make every relationship count and to improve on acquisition program effectiveness.

There was consistency as well around the fact that loan products (especially mortgages) would be of primary importance in 2012 from both large and small organizations. As can be expected, there was a disparity in the responses around the importance of free checking, with the smaller community banks and credit unions placing more emphasis on these products than the larger organizations. The desire for auto loans and the refinancing of autos was also the domain of smaller financial organizations. Interestingly, there was also a reverse correlation between the desire to promote online banking/bill pay and the size of the financial institution. This may be the result of larger banks believing that these are services sold at the new accounts desk and don't require additional promotion.

Communication Channel Shift Impacting Marketing Emphasis

The 2012 Bank and Credit Union Financial Marketing Study shows that financial organizations of all sizes are responding to the public's use of digital and social media in their shifting of dollars away from traditional channels such as print, radio and TV. What is interesting is that the shift is occurring much more dramatically in larger organizations than in smaller firms. In addition, while direct mail use is either staying the same or increasing at small and mid-sized firms, the largest organizations are definitely reducing their use of this channel. 

Finally, if the survey results are any indication, onboarding at banks of all sizes will become mainstream in 2012, with more than 50% of banks in all asset ranges placing a greater emphasis on new customer welcome programs this coming year.

In 2010, The Financial Brand conducted an online marketing survey to measure the use of digital and online channels. In that study, only 69% of banks and credit unions said they utilized email. In this year's study, that number increased by 10%. Similarly, 68% now indicate that they pay for online banner ads compared to only 54% in the 2010 study. Those pursuing an SEO strategy also grew by 13 percentage points since 2010. It is anticipated that these shifts will continue as more people consume information electronically.

	Yes	No	No, But Plan To	Not Sure
Email marketing	79%	9%	12%	-
Banner ads (paid)	68%	24%	7%	1%
Social media	68%	21%	11%	-
eStatement ads	63%	28%	8%	1%
SEO	57%	27%	13%	3%
Search engine ads	53%	31%	15%	1%
Smart phone app	42%	30%	27%	1%
Microsites	38%	50%	10%	2%
Full online account opening	37%	40%	23%	-
Online switch kit	28%	54%	17%	1%
Live online chat	22%	59%	18%	1%
iPad/tablet app	19%	48%	31%	2%
Online PR/media center	17%	70%	7%	6%

Finally, almost three-quarters of the banks responding indicated they used Facebook for marketing, a dramatic increase from the 2010 study when only 46% used the most popular social channel. The change in use of Twitter increased by 19% since 2010, while the use of YouTube increased by 24%. In both the 2010 and 2012 surveys, virtually the same number of banks and credit unions said they had a blog (18%), while several of the other channels were just coming into existence in 2010.

	Use	Don’t Use	No, But Plan To	Not Sure
Blog	18%	57%	20%	5%
Twitter	54%	34%	10%	2%
Facebook	72%	17%	10%	1%
YouTube	49%	32%	17%	2%
LinkedIn	48%	36%	13%	3%
Discussion forum	6%	76%	10%	8%
Foursquare	14%	69%	9%	8%
Google+	11%	59%	20%	9%

More to Come

In the next several weeks, more insight from the 2012 Bank and Credit Union Financial Marketing Survey will be analyzed and shared, highlighting more variations found between types of organizations, sizes of firms, etc. In addition, we hope to use the findings from this survey to provide strategic recommendations around where banks and credit unions could best allocate time and resources for the greatest impact.

In the meantime, if you have any thoughts on the survey, please share them with us in the comment section below. In addition, if there is a section of the research that you would like us to dig into quickly, let us know.

    View Entire Survey Results