Datamyx | Guide to Responsive Marketing

Six Bad Direct Marketing Habits Banks Need to Break

By Jim Marous, SVP/Corporate Development at New Control

I’ve been involved in financial services direct marketing for the better part of two decades, and while there have been a number of advances in the way banks communicate to their customers, there are still a number of bad habits that haven’t been broken, as well as some new habits that just don’t make sense.

Why is collecting valuable customer data so difficult?

If my dry cleaner, grocer, department store and virtually every retailer online can ask for email addresses and cell phone numbers, why can’t banks? This problem is similar to one that banks faced two decades when new account personnel were reluctant to collect birth dates because the question made them uncomfortable. Eventually birth dates became a non-issue when the government required financial institutions to gather this information. So why is it so difficult to collect email addresses and cell phone numbers that makes communication easier? This basic insight collection should be required from our staff and should be used for marketing based on the customer’s communication channel preferences.

Key Point: If Old Navy and Apple can get every customer to give up their email address, so can your staff.

Why don’t we ask our customers for their preferred communication channel?

In addition to asking for the customer’s email address and mobile phone number, why is it so hard to also ask what channel the customer wants to be communicated with? In my household, I will look at almost all email but not very much direct mail. My wife is the opposite. Seeing that my wife makes virtually all of the decisions regarding banking relationships, wouldn’t knowing her preferred channel be helpful for a financial marketer to know? Wouldn’t this be helpful for a bank trying to optimize their marketing communication? For a bank trying to cut costs and reduce waste? All we need to do is to position this issue as a benefit to customers: “So that we may keep you informed of account changes and special offers, how would you prefer we communicate with you?”

Key Point: If you let customers choose what channels you use for communications, they’ll be more receptive to the messages you send.

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Why do bank marketers still fear email?

Many banks are very tentative about using email as a communications tool. When asked for a reason, some say they’ve promised customers that they’ll never send any emails ever, so that way customers can easily spot scams — anything purporting to be from the bank would a phishing attempt. Others say their list of email addresses are probably outdated and would likely trigger a significant number of returned emails. While this, by itself, should not prohibit the bank from communicating using this channel, these are usually the same institutions that avoid doing a proactive clean up of their email database. In other words, the challenge will only get bigger in the future. Banks need to build an ongoing process for updating email lists.

Key Point: Email marketing works.

Why limit the number of touches?

A number of banks I have worked with put a subjective limit on the number of times a customer can be communicated with, either in a specific channel or overall. The number normally is not based on any quantitative research, but usually based on what feels right. Who determines this limit? Why would there be a limit if the bank’s research shows the customer has been responsive or that there is a need? (note: In some cases, the limit on communication is more stringent for higher value customers even though these are the same customers who are most likely to respond) We need to stop putting communication limits on any channel, but rather use advanced analytics to determine when communication should occur and through which channel.

Key Point: If a communications strategy works, it works… whether that strategy involves four touches or forty.

Why are we moving all communication to digital channels?

Are digital channels less expensive than more traditional channels such as direct mail, email and mass media? Yes. Are digital channels more effective than traditional and mass media channels?At times. Is the integration of multiple channels more effective than using solely digital channels? Almost always. The key is to use behavioral and response data to determine the best mix of channels that should be used for each individual customer at different stages of the buying process. While many consumers use digital channels as part of their shopping process, research shows that direct mail and email can lift results/ROI when used in tandem with digital channels. In fact, recent research also shows that even direct mail influences Gen-Y’s financial decisions.

Key Point: Multichannel marketing is more effective than one channel or another. You need to measure attribution of each channel, and test the sequence, cadence and mix of channels to generate optimum results.

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Why is result measurement so slow (or non-existent)?

In an age of massive data, technology and knowledge, most banks don’t have immediate access to program results and the tools to apply these results to future initiatives. Amazing… In many cases, the analysis of programs lags program completion by weeks or months, eliminating the potential for insight to be applied quickly for subsequent programs. While the challenge is usually blamed on the lack of human resources, there is still the ability to do tracking studies that can provide 80% of the insights needed to make informed decisions quickly. While cross-tabbed evaluation of data may not be available as quickly as you’d like, major trends can be determined using tracking data that can assist with  program planning — immediately, and down the road.

Key Point: Effective direct marketers use data to sharpen all the arrows in their sling.

What’s bugging you about direct marketing in banking?

I know I haven’t touched on all of the bad direct marketing habits we have as financial marketers, but these are some of my favorites. I would love to hear some of the rants other financial marketers may have.


Jim MarousJim Marous is a recognized financial industry strategist and publisher of Retail Banking Strategies for The Financial Brand. Marous publishes the Digital Banking Report and is a consistently highly rated speaker worldwide, presenting on global trends, distribution strategies, customer experience, digital banking, advanced marketing and marketplace disruption. You can follow Jim on Twitter and LinkedIn.

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Comments

  1. Having spent the past few days listening to sessions at the ABA Marketing Conference, I would completely agree with Jim’s assessment.

  2. Jim – all great points and can only hope more and more marketers will sit down and digest this information. One of my pain points is the lack of Test vs Control groups. And the other bad habit I see is direct marketers who only want to test a campaign one time to determine a go or no-go strategy. I guess these points all roll up to your points about tracking data and understanding multichannel marketing.

    Lee

  3. Jim, I agree with this: business marketers/companies should ask customers for their communication channel. This would work better with everyone.

  4. Todd Nelson says:

    I worked for several years in marketing and communications roles with Internet-based companies before moving into the credit union world in 2005. Talk about a leap backward! Still today, inertia grips so many people in the banking industry; the most common reply received from staff when I bring up email, mobile and data mining is ‘members will be offended.’ It’s high time to challenge the sloth in our myopic industry and give members a reason to actually ‘like’ us.

  5. Janet Bussch says:

    I think one of the underlying issues is that banks have been run by lenders who have moved up the ladder. They cannot connect with the idea of spending dollars on marketing that tells them little about their bank – they are used to reading loan data, deposit data and very little is identified by customer, just numbers.

    When I served as marketing director to 26 banks, I had to rewrite the marketing plan in terms of each community bank in order for the bank president/branch manager to understand the focus of marketing efforts in their particular market and in terms of the overall bank plan.

    I do think that philosophy is changing, as more and more CEO’s bring general business experience with them into their positions.

  6. Jim,

    Every year my college calls to “verify my contact information”. Yes I know you’re surprised I went to college. They gave me a degree to get rid of me.

    But they call every year for money. I know this. There is no pretense. But, I’ll tell you what, they have my correct contact information.

    I remember I made a large electronics purchase with my debit card. My bank called to make sure it was me because it was outside of my normal use of the card. I greatly appreciated the follow up call. Instead of the call from a centralized call center, why couldn’t they push that out to the branch, to build rapport between me and branch staff?

    Anyway, I always enjoy your insights.

    ~ Jeff

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