The theme at a recent financial institution marketing conference was “Connecting with Customers.” Financial marketers were encouraged to connect with their customers strategically, emotionally, personally and even “socially.” Curiously, none of the presentations mentioned email. But if you ask customers for their preferred method of contact, the majority will say email. Yep, good, old-fashioned, boring, one-to-one email — the channel many have declared “dead.”
One client found that nearly 8 out of 10 customers choose email as their preferred contact channel (and they are investing in it accordingly). A survey by Exact Target on channel preferences confirmed this finding, and emails rank as the contact channel consumers prefer most for marketing communications (77% for email vs. 5% for Twitter and 4% for Facebook).
Nevertheless, email remains under-utilized, under-budgeted, and under-appreciated at most financial institutions. Like Rodney Dangerfield, it seems email gets no respect, or at least not the respect it deserves.
It may surprise many marketers that it wasn’t so long ago (not more than a decade) that most financial institutions couldn’t even capture email addresses. Things have changed, and today banks and credit unions should be able to capture and harvest upwards of 70% or more of their customers’ email addresses.
Reliability = Strategic Value
While the past few years have seen an increase in email usage by financial institutions, the attention given is nothing compared to the seemingly insatiable appetite for shiny new things (e.g., social media strategies). Maybe it’s because many marketers commonly think of email as little more than a distribution method for newsletters and announcements.While newsletters are nice, they’re usually not a strategic priority for most banks and credit unions. If a newsletter doesn’t get opened, or an email address bounces, or the customer opts-out, no big deal — right? “Besides, what can be done about it anyway?’
Obtaining and maintaining ongoing email contact with your customers should be the most important marketing task on your list right now. Having a reliable email database allows you to connect directly with your customers when you need to, at a highly effective cost. This can include operational messages, marketing campaigns, educational content, feedback, and onboarding new customers, among other things. Without a reliable email database, all these are difficult to execute effectively.
There is a correlation between your email capture rate, email usage, and its strategic value. The higher you score on capture rate and usage, the higher the strategic value. It’s not mere coincidence that the more attuned you are to your email program, the more reliable (and strategic!) it will become.
Online System of Record
Recently, a senior credit union marketing executive casually dismissed nearly 60% of his email addresses (7,000 out of 12,000) as being “worthless.” So much for a strategic asset! That would never stand if it was a system-of-record physical address. Ironically, the executive was looking for meaningful feedback on his members’ online experience, where email is the system-of-record.
While web channels, applications and platforms continue to proliferate, email remains the “business class” method to connect with customers. In order to make email a strategic asset, it has to be treated accordingly. That means gaining senior management’s commitment — and IT’s buy-in — to implement email-friendly systems and processes.
Here’s a tangible example. In 2011, when Hurricane Irene roared through New England, many banks faced branch closings. Some financial institutions were able send email alerts to their customers within minutes of making their decisions to close. Despite all the communications challenges in a hurricane, the alerts were read by thousands of bank customers. The effective reach for two banks who used email to announce branch closings averaged over 22% of those customers for whom they had email addresses.
In contrast, a super-regional bank with more than 7 million customers boasted that it kept its customers updated using Twitter. A look at its Twitter page showed just over 3,800 “followers” — for an effective reach of 0.0005%. Ironically, it’s safe to assume that those Twittering customers are not the typical branch users that would likely be affected by any branch closings. Other banks took to posting Facebook alerts, reaching fewer than 2% of their customers. Is this what “staying connected” is supposed to be all about?
There Are Challenges…
Despite its clear advantages, email continues to be relegated to second-class status (or worse) at many financial organizations. Part of the problem includes stubborn biases and inaccurate assumptions within banking circles. It’s not uncommon to find bank and credit union executives who think email is not reliable, it’s dangerous, it’s difficult to manage, it’s not effective, and it’s all spam anyway. Many marketers mistakenly think older folks don’t (or won’t) use email because they’re stymied by technology, and young people don’t (or won’t) use email because social media will overtake email. And, of course, the latest popular myth: “Email is dead.” All of these issues are either flat out wrong, or can be addressed with a little strategic attention.
…And There Are Solutions
For an annual investment of less than $1 per customer, you can connect personally with most of your customers / members with multiple messages that are timely, targeted, relevant, informative and interactive. No wonder email continues to deliver the highest ROI of any channel. It’s important to note that that relevance is critical to email’s success, but is difficult to achieve without some level of integration into core systems and processes. This is why it’s important to make email a true strategic initiative across the enterprise, so that it’s a seamless, natural part of the customer contact strategy.
The conversation is much more complex, but the problem is that the conversation is not even taking place. But now is the time to use email to stay connected with customers a strategic goal. Here’s a checklist to get started:
- Develop an email content and contact strategy that is sustainable and delivers actual value to the customer.
- Restore customer trust in your emails. Use authentication techniques, keep front line in the loop on email campaigns, and educate recipients about safe email practices.
- Educate customers about the roles and value propositions of email (“what’s in it for me?”). Deliver that value with relevant, informational, respectful messages and special offers. That means integrating with your MCIF or integrating product usage in your email database.
- Put systems in place to measure ROI. Most MCIF systems have campaign tracking tools that should make this easy. If you don’t have an MCIF, use click-through reports to compare new accounts to campaign efforts. When calculating ROI, don’t forget to include the intrinsic value of brand impressions made with message views. Reaching customers via other channels costs money; assign the typical cost of an impression (50¢ to $1.50 per impression is not unreasonable).
- Capture and validate email addresses and preferences at all possible contact points. A great place to start is with a new account or new product welcome email sequence.
- Use a system that can differentiate and handle multiple levels of opt-outs, and retain email addresses for delivering operational messages.
- Ensure that email addresses are treated with the same importance as physical addresses, with respect to accuracy, accountability and system integration. (Some clients are implementing postal and phone follow-ups when emails bounce. It’s that important.)
- Get professional email support on the budget somewhere. It’s not a nice-to-have – it’s a must-have. Don’t be afraid to educate senior management on email’s value. There’s plenty of supporting material out there. If you want to make email strategic, use a provider that can meet your security, compliance and regulatory standards. We’ve seen a number of low-cost self-service providers get the boot when facing regulatory scrutiny.
- Review systems and processes to ensure that they are “email-friendly.”
A few years ago, many financial institutions made the regrettable decision to concede their email channel, telling customers they would “never contact them by email.” Capitulating email to spammers and phishers may have been the only option 5-10 years ago, but nowadays financial institutions must reclaim control of this most critical, strategic channel to stay connected with customers. If financial institutions want to stay connected with their growing online customer base, doesn’t it make sense to pay attention to email as the electronic system of record? Factor in the proven savings (and other benefits) over rising postal costs, and the strategic argument for email is compelling.