It’s Time to Push the ‘Reset’ Button on Bank Marketing

If you view marketing as an expense rather than an investment or if your business lines view marketing as a partner in growth, it’s time to transform your marketing function into a true revenue producing unit before your competitor does.

Marketing as a discipline has totally reinvented itself over the past several years, from primarily a communications function to one that creates both value and revenue. Unfortunately, most bank and credit union marketing departments have not kept up with the same pace of change that we’ve seen in other industries, costing their institutions hundreds of thousands or millions of dollars in hard costs and lost revenue opportunity.

The transformation of marketing has resulted from a confluence of three factors: consumer behavior, technology, and data analytics:

  • The Consumer. Consumers have changed the way they learn about and buy financial products. Increasingly, they distrust advertising and prioritize web content and customer reviews they perceive as being more objective.
  • Technology. Digital advertising allows sales tracking and the calculation of marketing ROI. Marketing automation allows more varied and rapidly deployed campaigns, enabling testing, learning, and optimization of spend. Both have conspired to transform marketing from an “expense” to be minimized to an investment which needs to be optimized. There is a reason GEICO spends much more in advertising than many of its competitors. (Warren Buffett, whose Berkshire Hathaway owns GEICO, is not known for wasting money.)
  • Data Analytics. Analytics has transformed marketing from an art to a science. Data streams are now available that can identify prospects who are ready to buy whatever product you’re trying to sell, and digital media can deliver targeted content to those prospects. Similarly, propensity and behavioral data on your existing clients allow marketers to serve up qualified sales opportunities to the front line.

While there are standouts in the banking industry who have transformed their marketing functions and capitalized on these three powerful trends, the vast majority of banks and credit unions have not. The implications of this are likely to be that an institution is spending too much on marketing activities with sub-optimal (or no) return, and spending too little (or nothing) on marketing activities with a high ROI.

A Call to Action

There are four actions that executive management can take to immediately increase the return on investment of their institution’s marketing efforts:

1. Organization and Leadership. Performance-based marketing requires leadership and resources that understand running a business, and are aligned around revenue generation. If your marketing team talks in terms of “clicks” and “likes” instead of household growth, balance growth, and ROI, you need to restructure your marketing function.

2. Alignment with Sales. Historically, marketing raised awareness and managed local community events, while the sales force signed up new customers and grew those relationships. That is not a winning approach today. Marketing dollars are too valuable to be spent on activities and programs that are not leveraged by the sales force. Marketing in most industries is expected not simply to generate brand awareness, but to actually generate, manage and deliver qualified sales leads to the sales force.
Technology exists today that allows marketing to attract, nurture and deliver qualified sales leads for the front line to actively work and turn into customers. A seamless collaboration between marketing and sales organizations is required to achieve optimal marketing ROI today. One plus one can equal TEN if this process is managed effectively.

3. Analytics and Insight. While campaign creative is still important to cut through the advertising clutter, what really drives results today is data analytics, which requires an entirely different skill set within your marketing department. Banks have not historically used data and insight to effectively analyze brand positioning, customer segment performance, or crafting of differentiated value propositions to win in the marketplace. Effective marketing functions do all of these things, and add tremendous value in the process.

Additionally, for new household acquisition, analytics can inform which prospects are likely to be attracted to your institution’s value proposition, and which are likely to be the most profitable. Meaningful gains in market share can not only be achieved – they can be engineered and planned. For existing clients, appending third party data and tracking trigger events can help your marketing and sales organizations prioritize which clients are likely to have loan, deposit or investment needs that are going unfulfilled. Utilizing these tools can simultaneously reduce marketing waste and dramatically improve effectiveness and ROI.

4. Focus. Marketing functions are notorious for reactively responding to executive and line of business requests rather than providing proactive leadership on how to optimally grow clients, products and revenue. Associated with your leadership decision is clarifying marketing’s focus, and aligning it with the goals of the organization. The typical marketing function focuses on too many priorities and as a result, allocates far fewer dollars to high priority initiatives than is warranted. An effective marketing leader embraces corporate priorities, makes tough allocation decisions, and generates 200 – 500% of the marketing ROI of a typical marketing department.

Mark Gibson is senior consultant at Capital Performance Group, a strategic consulting firm that provides advisory, planning, analytic, and project management services to the financial services industry.

This article was originally published on February 21, 2018. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.

Comments

  1. Right on Mark! Marketing and Sales is a Partnership in the best CUs and Banks. And your assertion that 1+1=10 is realistic. We have proven that having shared performance goals and measurements that are achievable and based on fact can drive growth “through the roof” as one client put it last year.

    Interested in more? Contact us at http://www.flowtrackeranalytics.com

  2. What if you have no real value proposition, lack luster service, locations with limited access, and operational hours pretty much 9-5.

    For every 2,000 people that we attract to the credit union we get around 10 membership applications, of those 20% are denied due to credit, etc. 30% are unable to be properly processed by staff, so we get 5 as members and of those 5 we are able to loan to about 40%, so 2 with loans.

    Think of this and this is based off of general response rates for the industry, I could be off, but this is an example. Let’s say a particular campaign has a 1.5% response rate, so for us 100,000 people (impressions or whatever you want to call it) at a 1.5% response rate = 1,500 people who responded; out of those we get 8 who actually apply, out of that 4 we are able to complete everything and then 2 loans. (as an organization we don’t catch many fish)

    To have a positive ROI I have to be able to get 100,000 impressions for under $200.

    Because of branch locations, etc. we get on average 0.85 new members per branch per business day and we lose on average 0.84 members per branch per business day. Yes, that is less than 1 new member per branch per day – keep in mind that 40% of these have horrible credit, 20% mediocre credit, and 40% good credit.

    Hope for a merger?

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