Making Offers On PFM Platforms

Congrats to @pglyman and @kplynch for their quotes in an American Banker ($) article on customized Web ads. According to Lynch and his eCommerce manager, Steve Kruskamp, the PFM platform:

[W]ould let First Mariner pitch products only to people that might be receptive…the bank might use Geezeo’s software to note customers’ auto insurance payments, even those made to a rival insurance provider charged to another bank’s credit card. The software could then present an ad for First Mariner’s own insurance — and possibly persuade a sticker-shocked motorist to dump his or her current insurance provider.”

That certainly is the promise of PFM. But there are a couple of things that I believe that banks and credit unions will need to do to really capitalize on this promise. The best way to think about these “things” is to put them into two perspectives:

1. The FI perspective. Before pitching an offer for some other bank/credit union (CU) product — especially an insurance product — the FI needs to know: Is this customer a good prospect for this product for us? In other words, seeing that someone pays a car insurance bill is nice, but that’s no big deal — you’d be making a good bet if you bet that 90% of your customers paid car insurance.  The more important questions to address are “does this customer meet our underwriting criteria?” and “would we make this customer a pre-approved offer?

FIs also need to know whether or not they’ve made an offer for that product to that customer recently (or ever). Good marketers establish rules for how many times an offer will be presented to a prospect/customer, and the frequency with which those offers are made.

PFM presents a scenario to blow this out of the water. See a payment, make an offer. Disregard past (or current) marketing activity.

One of the biggest problems I foresee for FIs’ PFM implementations is the desire on the part of the online channel group to prove the “ROI” of PFM by making offers willy-nilly, then beating their chests heralding the “incremental” sales generated.  The potential for an even more disjointed marketing effort than what exists today is looming large.

2. The customer perspective. Kevin (or Steve, I forget who said it) said that the bank would make offers to people “that might be receptive.” That’s definitely the right perspective. But easier said than done, I fear. How do you know when someone is receptive? Simply because they just paid for a product or service? That could be too late, no? If the car insurance payment that the PFM platform captures is that customer’s first payment, then you’ve pretty much missed the boat on this customer, no?

Let me oversimplify things here: There are providers I do business with today. And providers who I might do business with in the future. For a change in providers to occur, there has to be an impetus for change.

If you’re under the delusion that simply putting an ad under someone’s nose is sufficient impetus for change, please stop reading this, and go back to Ad Age, or some other advertising blog.

A bank or CU using PFM as a platform to make offers must provide some impetus for the customer to make a change. Conceivably, it could be as simple as “We could save you 15% on that insurance payment.” Or — and I like this one even better — “Our other PFM users’ car insurance payments are, on average, 15% less than yours. Click here for more info.”

In other words, the bank or CU should use PFM to help make a customer become receptive. And if it’s going to promise a savings, it better damn well better be able to deliver on that promise — or the credibility of the PFM platform will be tarnished.

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I’m very bullish about the potential for PFM in strengthening the relationship between banks and their customers, and between credit unions and their members. I see PFM as a platform for engagement.  And properly utilizing the data that PFM promises to provide should help improve FI’s marketing effectiveness and efficiency.

But here’s the lesson: Data is like a bullet. Bullets can be very powerful, and having more bullets is certainly better than having less. But used improperly, bullets can be dangerous and harmful. And having more bullets doesn’t mean that you have to shoot more often.

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