7 Big Mistakes In Financial Marketing
It may be easier and more fun to launch new initiatives, but going back to critically assess and adjust existing programs can be more rewarding, cost effective and ultimately more profitable than rolling out new ones.
By Kevin Tynan
"You can’t make the same mistake twice. The second time you make it, it’s no longer a mistake. It’s a choice."
Marketers are often quick to celebrate their successes — e.g., growth in new customers, or web traffic. But there’s a lot that could be gained by studying and sharing their failures as well.
Think about it. Thomas Edison tried 10,000 times before creating the light bulb. James Dyson made countless discoveries during his 5,100 attempts to perfect a bagless vacuum cleaner. 12 publishers rejected J.K. Rowling’s book about a boy wizard before a small London house picked up Harry Potter and the Philosopher’s Stone.
Every disappointment, mistake and failure brings with it rich opportunities to learn and grow. As businessman and philanthropist Bill Gates says, "Its fine to celebrate success, but it’s more important to heed the lessons of failure."
With that in mind, here are seven of the most common mistakes bank and credit union marketing executives like to overlook. Many of these mistakes won’t surface unless you dig deep into the metrics, but they do take a toll. Each mistake cuts into the overall performance of the organization, which — over the long haul and aggregated together — can be significant.
1. Poor job cross-selling
More than a third of all products, on the average, are purchased from banks that are not the customer’s primary institution. 49% of bank customers say they have never received a courtesy call from their bank to see how they are doing. Winning new relationships provides a lifetime of opportunity to sell people more banking products, but financial institutions are failing to build effective cross-marketing programs that tap into the potential.
2. Lousy customer service
The primary driver of low satisfaction scores within retail banking is a lack of successful resolution to problems. A Gallup survey on retail banking shows that, on average, 15% of customers have experienced a problem with their bank in the past six months but only 24% are extremely satisfied with the problem resolution they received, while 27% are not at all satisfied. 42% of respondents to another survey said repeating their problem to multiple reps was the most frustrating aspect of dealing with customer service departments.
3. Overestimating your customer experience
The banking industry is in denial. According to a study from IBM, 65% of retail banking executives think their organization delivers excellent customer experience. Only 35% of their customers agreed. Financial services executives often see themselves in a more rosy light than consumers. But this type of self-delusion doesn’t help anyone, particularly those in marketing. It’s hard to market a financial institution that won’t admit to its own warts.
4. Customer churn
Customer churn is hurting your bottomline profits. Annual acquisition rates for retail banking providers average around 13.5%, but customer loss is 12.5%. That’s net growth of only 1%. If you get a better handle on why customers leave and implement a program to retain them, reducing churn by just 5% could increase your profits by as much as 80%.
5. Messy, complex marketing messages
A research study published by Harvard Business Review applies to websites, digital channels, and brochures: keep things simple. The authors found that the best tool for measuring communication effectiveness is the "decision simplicity index." This gauge measures how easy it is for consumers to gather and understand information, and ultimately make a purchase. The easier a brand makes the purchase-decision journey, the higher its decision-simplicity score. Brands scoring in the top quarter in simplicity were 86% more likely than those in the bottom quarter to be purchased by consumers.
6. No real digital marketing strategy
Some banks seem to adopt a helter-skelter strategy when it comes to digital marketing. Because it’s relatively easy to buy pay-per-click, search engine and display advertising, marketers frequently by-pass the critical step of analyzing the market and preparing an implementation plan. In many cases, they simply don’t even bother defining objectives. Many financial marketers fail to create product landing pages, monitor phone calls, test copy lines or set up systems that allow them to learn from the results. Poor planning and poor execution will lead to poor performance in digital channels.
7. Ignoring the brand
Financial institutions will invest in new technologies. They will pour their energy into compliance. They will train staff on policies, processes and procedures. And marketers will advertise rates, products and the latest mobile offerings. But what often gets lost along the way is the brand. What does the organization stand for? How are those messages being expressed? Financial marketers need to constantly remind themselves, "What should we be doing today to build our brand for tomorrow?" Don’t let short-term sales goals dominate your strategy and derail your long-term branding efforts.
