Is Your Bank’s Marketing Department Structured for the Last Century?

CMOs should have a seat at the senior management table, but to get there, they must prove their worth and reimagine marketing's role.

Marketing has always been an afterthought in banking. For many years, marketing wasn’t even necessary. Bank regulators quelled competition by controlling everything — entrants, operations, expansion, products and even rate. Accounting, mortgage and retail executives were the kingpins who ran the show.

In the 1970s, institutions started creating more senior-level marketing positions, but often in name only. Community relations managers were given new titles like “Marketing Director,” but their role — placing ads, administering donations and managing premiums — didn’t really change.

Those days are gone. Competition is fierce. With virtual banks and digital disruptors threatening established players, the marketplace is white hot. Now’s the time for marketers to come out from the shadows and take a more prominent leadership role.

This is the Golden Age of bank marketing. Exciting challenges and new opportunities abound. No longer are we simply telling consumers what products we have available; consumers are telling us what they expect — speed, convenience, and all of it for free. If we don’t provide the right products, at the right time and price, they’ll go elsewhere. Listening and responding is the essence of marketing. And no one in the organization is better suited to this role than marketing execs. In an environment where consumers are king and competition is intense, marketing should be providing the data and the strategy to guide corporate decision-making.

Retail marketing departments outside of banking bear little resemblance to those of earlier eras. Content officers, digital analysts, social media engineers and engagement officers are among the trendy new titles that give testament to the importance of digital marketing, but they also connote the expanded functions of today’s bank marketing department. A Chief Marketing Officer should be the bank’s primary customer advocate, a champion for change and a guide to help achieve greater profitability. Meaningful insight into the market and the consumer buying path is a critical role for today’s CMO. Similarly, digital analysts should be doing more than just tracking email open rates; they should be providing critical customer behavioral data that value throughout the bank, and it’s the CMO’s job to make sure this is happening.

If your marketing department has a digital specialist for placing ads and blog posts, that’s not enough. You’ve simply added a digital operative to a traditional department. You are failing to recognize that digital is more than media — it’s a service delivery system that crosses all channels, strengthening relationships and improving satisfaction. Marketing departments must be restructured to reflect the role digital plays in every aspect of banking.

A McKinsey 2013 DataMatics survey underscores the role of contemporary marketing in corporate profitability. Companies that use customer analytics extensively are more than twice as likely to generate above-average profits as those that don’t. They also outperform their peers across the entire customer lifecycle, are 9x more likely to enjoy superior customer loyalty, and a remarkable 23x more likely to outperform less analytical peers on new-customer acquisition.

CMOs should be measuring channel efficiency, product profitability and customer lifetime potential. They should have the customer base segmented into socioeconomic groups, a strategy for acquiring the more profitable ones and a product wish list to fulfill their needs. Bottom line is, today’s CMOs should have the ROI on every dollar spent and every customer acquired.

Where Marketing was once a distinct, siloed group, now it must be integrated with departments throughout the bank. Every customer interaction has a marketing component. From acquisition to onboarding, product delivery to issue resolution, marketing plays a role. Not just data analysis, either. At each customer touch point, we should be asking if the messaging is consistent. Does our electronic banking technology and service personnel fulfill the mission and the promise we make – implicitly or explicitly — to customers? What information can we give the frontline retail team or loan officers to help them do their job better?

With expanded responsibilities comes increased accountability. No longer is it acceptable to admit that half of all advertising expenditures are wasted and we just don’t know which half. Digitized media and consumer transactions give a full picture of efficiency and profitability. When data isn’t available, research can fill the gap.

CMOs should offer insights into customer behavior, identify market trends and recommend changes. Perhaps, more importantly, the CMO then needs to motivate and help drive the required changes through the organization.

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This article was originally published on April 23, 2015. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.

Comments

  1. Curt Louckes says:

    Exactly right on, Kevin.

    The question is, can and will more CMO’s–especially community bank CMO’s–“come out from the shadows” and find ways to re-focus their limited time and resources on becoming strategic contributors, rather than implementers of someone else’s ideas?

    I regularly see budget pressure, lack of staff, the “crisis of the moment” and not knowing which potential strategic data/analytic tech and marketing partners to evaluate and trust as huge obstacles to the average marketing officer. And, as you’ve mentioned in this and other articles, the strong pressure not to miss the digital boat–even if there is no real plan to measure success–keeps the focus on short-term tactical solutions.

    A handful of our best clients are CMO’s who do exactly what you counsel but, as you know, they are rare. Most of our clients are retail leaders, who are eager for ways to know if their investments are truly economically impactful.

  2. I saw this headline and knew right away that I would agree with the premise. In fact, I wrote two pieces recently expanding on the need for bank marketers to modernize their thinking.

    The first one references a TFB article about the need for bank marketing to evolve. At present, “typical FI marketing departments spend seven times more on donations and sponsorships than they do on marketing in digital channels.” Oy! http://bit.ly/1DHzvjl

    This one offers eleven ways to shift marketing budget from old-style marketing to measurable, value-added activities for customers.
    http://bit.ly/1DHySpQ

  3. Great article Kevin – I just tweeted this – I think your comment that “consumers are king and competition is intense” is spot on and can be applied to all of the financial industry, not just banks. What Curt said about budget pressure and lack of staff is a far reaching issue with no easy solution. I think if CMO’s can see – and convince others to see – the benefits of marketing over the long term rather than just the short term, that’s when we’ll start to see some results.

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