In this Q&A interview Dave Braun, President of New Control Direct & Digital and bank marketing expert, talks about the evolution of data-driven marketing and how financial institutions can achieve success even in tough economic times.
What are the most significant changes in financial services marketing over the past 10 years?
Dave Braun: So much has changed in the past decade, but I think two key developments have had the greatest impact on financial services marketing.
First, the introduction of a greater number of communication channels makes today’s marketing environment vastly different. Not too long ago, financial service marketers had a few very effective tools available to them: in-branch communications and direct mail with telemarketing occasionally thrown into the mix. Now we have online search, online display, email, landing pages, microsites, websites, social and mobile — and those are just the most commonly used channels.
Second, we’ve seen a fairly dramatic shift in the focus of financial institutions from pure acquisition marketing to a much greater emphasis on existing customers. This is a direct result of a marketplace that’s become saturated with financial products and services. And as the costs to acquire new customers continue to rise, marketers are realizing the value of cultivating and extending their current customer relationships.
These key changes have led to an increasingly more complex and competitive landscape, which has empowered agencies like ours to evolve with the marketplace. We now have a much broader skillset, with expertise across all direct response channels. We’ve also enhanced and refined our strategic marketing consulting practice to meet the changing demands of our clients. Our own evolution is what continues to enable New Control to help our clients drive down the costs of acquiring new customers and cost-effectively increase the value of existing customer relationships.
Financial services marketers have been grappling with declining response rates for several years. What can they do about it?
DB: We’re relentlessly focused on delivering measurably better results for our clients, so this is an area I could talk about for hours, but I won’t do that to you or your readers. The bottom line — no matter how complex the marketplace becomes — is that it all comes back to the fundamentals of direct marketing. One thing that hasn’t changed over the last 10 years, 20 years or even 40 years is how to drive response. Regardless of your channel, the key to success is message clarity, specifically when it comes to being clear about why and how to respond.
It may seem simple, but very few marketers and agencies have the organizational discipline or culture to maintain a focus on message clarity like New Control does. We believe those who stay true to this principle are going to have more success. And we believe it’s the number one reason we’ve been so successful over the last 16 years. Every communication we develop demonstrates our unwavering commitment to message clarity. And our clients’ results are proof of just how powerful it can be.
With steep declines in direct mail volumes, what do you believe the future holds for direct mail?
DB: The evolution of the marketplace we talked about earlier has had a clear impact on direct mail response rates and, in turn, overall direct mail volume.
As an agency, we’ve gone from a 100% focus on direct mail just 10 years ago to it now accounting for slightly less than 50% of our revenue. I do see direct mail volume continuing to decline but at a much slower pace than we’ve seen in the recent past. Where it levels off — 40%, 35%, 30% of the total marketing mix — nobody knows.
But direct mail is absolutely not on its way to extinction. It’s always going to be an incredibly important component in the media plans of financial services marketers. And that’s because it continues to deliver some of the most cost-effective, best-performing accounts. And at end of the day, it’s one of the most intrusive channels. You still have to take the mail out of your mailbox and decide if you’re going to read it or throw it away. As a result, people who receive direct mail, take time to read it and respond, are extremely involved in their decision to take your product or service.
So I think direct mail still has a long and prolific future.
The past several years have been particularly difficult for financial institutions. What are some of the biggest marketing challenges they face today?
DB: Well, that would be quite a long and diverse list, but I can talk a little about the things that seem to be on most of my clients’ minds.
I think navigating the industry changes we’ve already discussed presents significant challenges. With a more saturated and competitive marketplace, product positioning and differentiation have never been more important. You simply can’t go to market with a generic credit card, checking account or rewards program any more.
Also, we’ve all been dealing with a tough economy for several years now, making increased financial discipline imperative for our clients. As a result, they demand even more accountability from every dollar they spend on their marketing. That’s a demand we welcome because everything we do can be measured at a very finite level to ensure our clients see the best possible ROI. In fact, one of our mantras is, “if it’s not measurable, it’s not meaningful.”
Another key challenge is simply taking advantage of the opportunities presented by all the marketing channels available. Because of the siloed nature of many financial institutions, different teams or departments are often responsible for each channel. So how do they integrate all these channels into a cohesive campaign? This is where New Control’s channel agnostic approach becomes a benefit to our clients. We can work across the enterprise and help bring those groups together to foster seamless channel integration.
Whatever challenges our clients face, having the right marketing partner makes all the difference. One of the things that sets us apart from our competitors is our strategic consulting practice. Many of our strategists have held senior marketing positions on the client side. So we’ve confronted the same challenges our clients bring to us. Marrying that expertise with top-level agency talent has been a winning combination for us and our clients.
Everyone’s excited about new media these days, but what is the ideal marketing channel mix for financial services providers?
DB: This is a question I get often. Unfortunately there simply isn’t a one-size-fits-all approach.
In my experience, the appropriate channel mix is unique for every client, product and industry. But through our years of experience and previous in-market testing, we can certainly get our clients a very effective mix right out of the gate. Then through disciplined test design and ongoing analysis of results, we can continue to refine and determine the optimal mix for each campaign.
Some of our more sophisticated clients are using attribution modeling as a tool to understand the ROI associated with each customer touch point. And we believe that will become more and more common for all of our clients.
But keep in mind, you’ll never land on a media mix that will work for every campaign in every industry. It will change as your portfolio changes, as new communication channels become available and as new technologies to target those channels are introduced. It’s a very dynamic marketplace and this is something marketers will need to constantly optimize if they want to be successful.
How does New Control’s experience outside the financial industry benefit bank marketers?
DB: Of course, our heritage is in financial services marketing — which we believe to be the most competitive, data driven, mature and sophisticated direct response environment. And while we continue to work with top financial services brands, we’ve also had great success in industries like insurance, clubs and services, pharmaceuticals, technology, deregulated energy and more.
There’s a definite advantage to having diversity in your client base. We’re able to get different perspectives on solving similar marketing challenges. And other industries have been more progressive in their adoption and use of social, mobile and other emerging media channels. That’s helped us increase our capabilities and provided learnings we can use to benefit our financial services clients.
It also helps keep our staff energized and open to constant learning. Which I think is a big part of why New Control has one of the lowest turnover rates in the industry — it was less than 5% last year. And that has a direct benefit for our clients. It means they can rely on consistent resources who know their business intimately, so the learning curve remains low to non-existent when they kick off new projects with us.