Five Steps to Improved Customer Engagement Through Email

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

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

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

Minimizing the Impact of 'Unintended Consequences'

At the BAI Retail Delivery Conference in Boston in November of 2009, the overriding theme from major bank leaders, industry pundits and vendor partners to the financial services industry was the risk of 'unintended consequences' as a result of the yet to be implemented Reg E. There was the belief that, while the government was trying to protect people from excessive fees from overdrafts, there would be many consumers who would be negatively impacted as debit card transactions or ATM withdrawals were rejected. Based on a recent straw poll of many of the bankers I work with across the country, some of the same people the regulation was intended to 'protect' have been negatively impacted the most.

It has been almost 9 months since the implementation of Reg E, and the government has again created legislation that will have unintended consequences for a majority of bank customers. The still debated, but most likely to be implemented, Durbin Amendment to the Dodd-Frank banking bill will significantly lower the interchange income that banks can earn from debit transactions. In fact, many believe the impact could cause a reduction of 60-80% or more to this important non-interest income source.

Banks can't absorb this massive of a reduction in revenue without passing the costs on to the consumer in some form. On January 20 in an interview with the Los Angeles Times, Wells Fargo's Chairman, John Stumpf stated that new fees will need to replace those that are being eliminated. "We've begun to implement some changes," Stumpf said, apparently referring to a $5 monthly checking fee, imposed last July on new customers. "And there are more to come."


On the following day, Richard Davis from U.S. Bancorp echoed the sentiments of Wells Fargo, stating that they will soon will eliminate free checking and debit card rewards without strings attached, like minimum balances. At the same time, Chase and Bank of America are testing fees including a monthly fee for having a debit card, increased monthly checking fees and the elimination of rewards programs and free ATM usage.
So, how can bank marketers soften the impact of these fee adjustments and position new checking options in a more positive light?

• Know Your Customers: Take time to evaluate your customer database and understand which accounts are profitable to your bank and which are under water. But don't stop there. You also need to understand the customer's entire relationship to evaluate the potential impact of your repricing decisions.
• Look Out for Your Customers: Instead of converting a whole class of customers to a new pricing structure, you should determine which customers are no longer in the best account type based on balances, activity, relationship, etc. Over the past ten years, almost every customer was encouraged to open a Free Checking. Many of these customers will hold balances or conduct business in a manner that could retain their free status. For those who don't, provide clear guidance as to how they could retain a free or low cost alternative. Put yourself in the shoes of the customer and consult them as to the best way to bank with your institution.
• Communicate With Your Customer: In the past, most checking pricing changes were communicated using a statement insert. Since most banks will be implementing significant changes to their checking product portfolio, it is better to leverage the segmentation and targeting potential of more direct media such as direct mail, email and phone calls. These channels provide the opportunity to build custom messages for customers to guide them to the best product in your new continuum. In addition, leverage as many channels as possible to reinforce the best strategy for the customer going forward.
• Reward Your Customer: In almost every instance, there is the ability to structure your communication in a way that can reward positive customer behavior. While you may be eliminating the waiver of foreign ATM fees, can you reward the use of your ATMs? While you may be increasing the balances required to maintain minimal fees, can you reward the customer for selecting electronic statements? Finally, while you may be either charging for your rewards program going forward or eliminating the program for some categories of accounts, can you use points as a currency if the customer moves to a different category of account?

When I worked with a bank in Canada, we partnered with the bank to communicate significant checking account pricing changes on two different occasions. Each restructuring impacted the majority of the customer base. In both instances, we positioned the changes as a way to move many of the checking relationships into a better account for the customer and the bank. With clear and repeated communications, we not only increased balances by more than 10% overall, but retained more than 90% of the customers and minimized the number of customer service calls that needed to be handled.

How are you planning to communicate your changes to customers? Will there be unintended consequences from your communication? I'd love to hear from you.

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