State of Bank & Credit Union Marketing In 2012
The number one challenge facing financial marketers in the next 12-18 months?
Inadequate budgets.
According to The Financial Brand’s 2012 Bank & Credit Union Marketing Survey, bank and credit union executives say their organization’s lack of marketing investment is what holds them back, this despite the fact that nearly half saw their budgets increase in 2012. They also feel that their I.T. systems are limiting, that it’s difficult to get employee support for marketing initiatives, and (of course) there’s always a boatload of compliance headaches.
If financial marketers seem cranky, maybe they have good reason to be. The turbulence of 2011 strained both banks and credit unions alike, and it doesn’t look like 2012 is shaping up to be much easier. Indeed, marketing executives at banks and credit unions have their work cut out for them this year. They say their number one priority is to increase their financial institution’s lending portfolio. How? By cross-selling mortgages, auto loans and credit cards to existing customers. But the lending market — everything about the entire economy — isn’t cooperating. There aren’t many consumers brave enough to apply for credit in this rotten economy, and only a handful meet lenders’ new, stricter requirements.
The 2012 Bank & Credit Union Marketing Survey also revealed that financial marketers plan to emphasize their e-strategies more in 2012, with a specific focus on social media, PFM and online advertising. Meanwhile, the more traditional aspects of bank marketing — TV/radio spots, physical branches and even print ads — continue to hold steady ground.
You can review the full results of The Financial Brand’s study in detail below. There is also a companion piece to this article,“What’s The Single Biggest Financial Marketing Issue In 2012?“ highlighting answers to the survey’s only open-ended question.
Special thanks go out to all those who participated in the survey. These folks appreciate the value of collective insight — that you can learn a lot by contributing a little. The Financial Brand also extends a big thank you Jim Marous, Senior Marketing Director with Harland Clarke and publisher of Bank Marketing Strategy, for his logistical and marketing support that contributed so much to the success of this survey. You can read Jim’s take on the survey here at his blog. Thanks go out to the good people at ACTON Marketing as well, who helped recruit survey participants.
Breakdown of Participants
The survey was completed by 228 total participants, including 84 banks, 30 community banks and 104 credit unions. 82% of respondents worked in a marketing capacity. Financial institutions in all asset classes were well-represented — 15 responses came from those with over $100 billion in assets, while 57 responses came from those with less than $100 million in assets.
Biggest Marketing Challenges in 2012
What do financial marketers feel is holding them back? Topping the list in 2012, half blame insufficient budgets and manpower. It is perhaps a bit ironic that financial marketers feel they are (#1) inadequately funded and understaffed considering that they struggle with measuring and proving the impact of their efforts (#2 on the list).
Many of the challenges facing financial marketing executives involve other departments, particularly I.T., sales/operations and HR. In order for bank and credit union marketers to succeed, they need forge closer ties with these departments in 2012 and beyond. An isolated marketing department can only achieve so much.
It is simply stunning that only 9% of financial marketers see consumers’ lack of trust in the banking industry as a significant marketing challenge in 2012. (Try telling that to BofA.)
Reality Check: For consumers, their economic meltdown is far from over and banks are still to blame.
Changes to Marketing Budget in 2012
When asked how their financial institution’s marketing budget will change in 2012, 45% said it would increase, 12% anticipated a decrease, while 39% said it would stay about the same. The Financial Brand has frequently noted that marketing budgets at banks and credit unions should equate to approximately 0.1% of assets — a $1 billion financial institution should have a marketing budget around $1 million.
Top 3 Marketing Priorities
For this question, respondents were asked to rank their top three marketing priorities over the next 12-24 months. The data in the table signifies the number of respondents who ranked that priority either a #1, #2 or #3 on their list. The majority of financial institutions see cross-selling and loan growth as critical to their success in 2012.
| #1 | #2 | #3 | Total | |
|---|---|---|---|---|
| #1 Cross-sell, deepen relationships | 48 | 64 | 37 | 149 |
| #2 Loan growth | 63 | 39 | 22 | 124 |
| #3 Customer/member acquisition | 21 | 27 | 33 | 81 |
| #4 Building/strengthening the brand | 30 | 21 | 27 | 78 |
| #5 Building brand/product awareness | 22 | 25 | 26 | 73 |
| #6 Attracting a younger audience | 13 | 11 | 30 | 54 |
| #7 Deposit/checking growth | 13 | 19 | 11 | 43 |
| #8 Offering profitable products/services | 9 | 10 | 14 | 33 |
| #9 Expanding/growing new markets | 10 | 7 | 13 | 30 |
| #10 Customer/member retention | 3 | 7 | 18 | 28 |
If banks and credit unions want to deepen relationships, you’d think they see value in retaining those relationship, but they paradoxically put “customer/member retention” at the bottom of their priorities.
Reality Check: It may be easier to sell to an existing customer than to find a new one, but you can’t cross-sell customers/members (#1 in the list) that you don’t retain (#10).
Most Important Products & Services
In the survey, this question presented respondents with a randomized list of financial products and services, asking them to check those that their bank/credit union will concentrate on promoting most heavily in the next 12-24 months. Not surprisingly, lending products such as home loans, auto loans and credit cards top the list.
| # of Respondents | |
|---|---|
| #1 Mortgage loans | 137 |
| #2 Auto loans | 119 |
| #3 Free checking | 113 |
| #4 Credit cards | 105 |
| #5 Online banking/bill pay | 105 |
| #6 Small business banking | 94 |
| #7 Mortgage refinancing | 93 |
| #8 Small business lending | 87 |
| #9 Auto refinancing | 84 |
| #10 Home equity lines | 82 |
| #11 Home equity loans | 69 |
| #12 Checking (fee-based) | 59 |
| #13 Youth/kids accounts | 51 |
| #14 Retirement products | 41 |
| #15 Savings accounts | 38 |
| #16 CDs | 26 |
Most Important Marketing Channels
Despite many predictions declaring that traditional media is dead, roughly half of all bank and credit union marketers assert that print, TV, radio and outdoor advertising will have about the same importance in 2012 as it did last year. However, financial marketers also say that online advertising, social media and PFM tools will be growing in importance over the next 12 months. This data suggests that future of bank and credit union marketing will shift to the internet, but old habits die hard. It’s also worth noting the increase in significance of data-driven initiatives such as onboarding, database/matrix marketing, CRM systems and direct mail.
| More Important | Less Important | About The Same | Not Sure | |
|---|---|---|---|---|
| Print advertising | 12% | 38% | 49% | 1% |
| TV/Radio advertising | 28% | 23% | 44% | 5% |
| Outdoor/billboards | 20% | 24% | 50% | 6% |
| Online advertising | 74% | 3% | 20% | 3% |
| Social media | 69% | 5% | 18% | 8% |
| Incentives/giveaways | 23% | 17% | 53% | 7% |
| Onboarding program | 51% | 4% | 34% | 11% |
| Guerilla/word-of-mouth | 44% | 5% | 39% | 12% |
| Direct mail | 31% | 21% | 46% | 2% |
| Database/matrix marketing | 48% | 5% | 32% | 15% |
| CRM system | 39% | 5% | 33% | 23% |
| PFM tools | 41% | 5% | 36% | 18% |
| Sales collateral/brochures | 14% | 19% | 65% | 2% |
| In-branch video merchandising | 27% | 10% | 49% | 14% |
Utilization of Marketing Vendors & Suppliers
Roughly two-thirds of banks and credit unions utilize the services of an outside ad agency or design firm. A similar number turn to web developers for their online needs, while nearly 3-in-4 use a production company for their TV and radio spots. Only about a quarter of financial institutions utilize a third-party vendor to help them in areas like public relations, social media and financial education.
Primary Tools Used to Measure Branding and Marketing
Anyone who works in management — especially those in marketing — knows how hard it can be to correlate advertising and branding with results. When you look at the tools financial marketers are using in 2012 to assess and measure the success of their efforts, you see the usual suspects, mostly metrics that gauge the overall health and performance of a financial institution. But what’s startling is the number of bank and credit union marketers that don’t look at these things. Nearly a third (28%) don’t view marketing activities through the lens of customer acquisition. One in three don’t incorporate customer feedback. Three in five don’t factor attrition/churn rates.
Changes in Size of Branch Network
Pundits have been predicting the demise of branches since the mid 90s, but (for now) banks and credit unions seem reluctant to accept this. Rather than close branches, 42% say they are planning to open more locations in 2012, while nearly half say the size of their branch network will not shrink and at least stay the same. Only 6% of financial institutions say they intend to close any branches in 2012.
Utilization of Online Marketing Tools
When The Financial Brand conducted a similar study back in 2010, only 69% of banks and credit unions said they utilized email, but that number increased 10% in 2012. Similarly, 68% say they now pay for online banner ads vs. only 54% who said they did so in 2010 — an increase of 14 percentage points. Those pursuing an SEO strategy grew by 13 percentage points. But it was ads in eStatements that saw the most growth, moving from 44% in 2010 to 63% in 2012 (up 19 points). Fewer financial institutions say they are using microsites in 2012 (52% vs. 38%), signalling a significant slowdown in this once-popular internet marketing approach.
| 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% |
Utilization of Social Media Tools
Two in five financial institutions either have a blog today or plan to soon. Three in four use Facebook, making it the dominant social channel for banks and credit unions. Just about half are using the other three major social platforms: Twitter (54%), YouTube (49%) and Linkedn (48%).
In an August 2010 study, only 46% of financial institutions were using Facebook. 35% were using Twitter, and 25% were using YouTube. In both the 2010 and 2012 surveys, the same number of banks and credit unions said they had a blog (18%). Financial institutions utilizing an online discussion forum dropped by a quarter, down to 6%.
| Use | Don’t Use |
No, But Plan To |
Not Sure |
|
|---|---|---|---|---|
| Blog | 18% | 57% | 20% | 5% |
| 54% | 34% | 10% | 2% | |
| 72% | 17% | 10% | 1% | |
| YouTube | 49% | 32% | 17% | 2% |
| 48% | 36% | 13% | 3% | |
| Discussion forum | 6% | 76% | 10% | 8% |
| Foursquare | 14% | 69% | 9% | 8% |
| Google+ | 11% | 59% | 20% | 9% |
Staff Time Spent on Social Media
When asked how many staff hours are applied to social media every week, a staggering 40% of banks and credit unions say only 1-5 hours. And financial institutions wonder why they don’t get more out of it? There is practically nothing in marketing worth doing that only takes 1-5 hours per week — and that’s especially true with social media. You’re going to get out of it what you put into it. Little investment = little/no return.
When Was the Last Major Website Redesign?
The Financial Brand looks at hundreds upon hundreds of bank and credit union websites. Based on what we see, it’s hard to believe that nearly one in three financial institutions have undertaken a major redesign in the last year, or that two-thirds of banking websites have been refreshed within the last 2-3 years. There are still many websites in the financial industry that look dated (e.g., more than five years old).
Do You Have Formal Brand Guidelines?
When asked if their financial institution currently has a formal, written set of brand guidelines, 53% said yes, although it’s likely that many of these respondents have only a set of graphic design standards rather than a broader brand manual applicable to all employees. One in five financial institutions don’t have brand guidelines of any kind, but an equal number intend to.
All content © 2013 by The Financial Brand and may not be reproduced by any means without permission.
Fantastic study, Jeffry. Enjoyed the “utilization of marketing vendors and suppliers” and “primary tools used to measure branding and marketing” slides the best. All very telling and useful data.
Well done!
@JimMarous This is a very good article. I believe one of the biggest challenges banks have is customer perception that it doesn’t cost any money to run a bank. To the contrary it costs a lot of money to provide the services banks provide and customers love. I believe the top priority should be to build customer trust and to create awareness among the population that banks are a critical part of our lives and they provide a great service by protecting our money and making it available 24×7. With all the regulatory changes, Banks have to find a way to make up the revenue they were use to for so long. Banks will have to start charging for each service they provide and customers are not going to be happy. Therefore marketing efforts should be focused on the value of our bank and credit union.
The other challenge as stated in the article is that most of the major banks are working on 20+ year technology that requires millions of dollars for the smallest change. This wastes stockholder dollars. Investments need to be made in more modern – core banking platforms that will create a more agile, flexible environment.
Regards,
Shirley
@Shirley – The problems stemming from core systems is a huge issue. I can’t count the number of times I’ve proposed solutions to banks and credit unions only to be told, “Nope, our system can’t handle that.” No one likes system conversions, but with the pace of change in the industry today, financial institutions almost need a full conversion every 4-5 years.
Offering profitable products checks in way down at #8 on the priorities list. That might make a few Presidents and CEOs cringe!
Great study. Thanks for sharing.
@Steve – Similarly, when asked to rank their biggest challenges in 2012, financial marketers put “inferior product/fees” at the bottom of their list, with only 8% citing it as a concern. Ask consumers that same question, and I’d bet nearly 70% would say inferior products/fees were a major issue.
Primary Tools Used to Measure Branding and Marketing … no mention of ROI? Seems to me that if you want marketing credibility in the boardroom, one needs to report returns like a CFO.
It appears an area many credit unions have an issue is proving ROI. I have yet to find a Credit Union that is able to track campaigns from start to finish without some sort of assumptions or requiring an employee to enter something. Has anyone come across a way around this?
@Tony – In all fairness, the question in the survey was about what tracking tools financial marketers used, not how they presented the data they collected to internal stakeholders. Among the top answers for measuring the effectiveness of marketing efforts, banks and credit unions cited customer/member growth and loan/deposit growth. Both these could easily be considered the “R” in “ROI.” But to your point, most marketers don’t speak the language of CFOs nor present the data they track in the context of ROI.
Please stop telling marketing folks that it is recommended to spend 0.1% of assets on marketing regardless of asset size.
Reality Check: As an example, average ROA of banks in MA in 2011 was as follows:
0.11 for banks less than 100 mill
0.39 for banks 100-500 mill
0.61 for banks 500 mill to 1 bill
0.77 for banks over 1 bill
Clearly disporportionate returns require different marketing budget standards. Clearly, banks less than 500 mill in assets cannot affod, nor do they spend, 0.1% on marketing.
Regards,
A community bank CFO who is not seeing any concrete marketing ROI results
What do you think the marketing investment should be for a financial institution with less than $500 million in assets like yours Victoria?
Obviously, there is going to be a wide range of variance in budgets for smaller institutions, with factors like geographic market, target audience, growth goals, profitability and (to your point) size all playing a role.
As passionately as you may believe a marketing budget of 0.1% is irrational for some financial institutions, there are some who spend way more than that.
The 0.1% is just a ballpark figure. Financial marketers should feel comfortable using this as a number they can tweak up or down according to their institution’s unique goals and situation.
@Editor
Thank you for responding. I do agree with you that a number of factors are at play when determining what the marketing budget should look like. In my opinion, everyone can do something with a lot, the skill is to accomplish a lot with less. Case in point is word of mouth marketing and initiatives that require relatively little financial resources but successfully engage current and potential customers.
As to your example of institutions that spend more… Please do not lump credit unions with banks. We actually pay taxes. Also, it used to be that $500 per one million of assets (0.05%)was the rule of tumb for marketing expenditure and that was at a time when ROA of 1% was the norm. With decreasing margins and ROAs, I don’t see the case for increasing the number.
Ultimately, as a CFO I want to see measureable results. If strong, supportable ROI is present, then I can see a case for increased expenditure.
Thank you.
I meant to say the same thing about credit unions: You’re right, they tend to direct some of the surpluses generated by their tax exemptions towards marketing.
In all fairness, however, there are a number of banks investing 0.1% into marketing, including BofA.