In the rapidly evolving business landscape, the role of the chief marketing officer has been facing an alarming decline across various industries, with Fortune 500 CMOs averaging a mere 4.3 years of tenure. Despite the pivotal importance of marketing in building brand awareness, attracting new customers, and driving revenue growth, many organizations, including those within the banking sector, have been sidelining or even eliminating the CMO position from their executive leadership teams.
This concerning trend of minimizing the CMO role appears to be counterproductive and potentially harmful to long-term growth prospects. Extensive research conducted among Fortune 500 decision-makers and marketing leaders has revealed a striking correlation:
Companies that integrate marketing as a core component of their growth strategy are significantly more likely to outperform their peers.
Specifically, organizations that prioritize branding and advertising as one of their top two growth strategies are twice as likely to achieve substantial revenue growth of 5% or more compared to those that don’t (67% vs. 33%). This pattern holds true across both consumer-facing (B2C) and business-to-business (B2B) companies, underscoring the universal importance of effective marketing across diverse industries.
In the highly competitive and often commoditized banking sector, the consequences of deprioritizing marketing and the CMO role could be particularly detrimental. By sidelining the CMO and minimizing the role of marketing, banks risk falling behind competitors who recognize the long-term value of building a distinctive brand and fostering enduring customer relationships. Drawing insights from Rivel’s interviews with 267,000 consumers in the U.S., the following three imperatives underscore the imperative for banks to strategically and financially support marketing efforts as a driver of sustainable growth.
1. Drive a Recognizable Brand
A powerful distinctive brand is one of the few things a bank can wholly own and manage—it’s a true opportunity to let the marketplace know what the bank stands for and, more importantly, how the bank can improve their financial standing.
Rivel’s research from Q1 2024 reveals that the average bank faces intense competition and a significant challenge in building brand recognition. Among consumers, the average bank’s Brand Awareness measure stands at a mere 33%, while its “Would Consider Banking With” score is only a low 6%.
It’s important to remember that brand differs by location and consumer base. Among institutions with at least 10 branches, the competition is particularly fierce to break through. This crowded landscape makes it increasingly difficult for banks to differentiate themselves and stand out from a plethora of national, regional, community banks, and credit unions vying for customers’ attention.
- Throughout Colorado, there are 17 institutions above the local brand awareness norm
- In Cook County, home of Chicago, there are 18 banks and credit unions known to consumers above the local brand awareness norm of 32%
- In the Greater Houston area, there are an amazing 21 institutions above the local average
Public perception of banks remains a significant challenge. Nationwide, less than 60% of consumers believe local banks offer trustworthiness, advanced technology, and exceptional customer service. To effectively compete, institutions must understand how non-customers view them and align their marketing strategies accordingly. By bridging the gap between public perception and desired brand image, banks can develop targeted campaigns that resonate with their target audience.
Important to Keep in Mind:
How a bank ultimately markets itself defines the brand, its attractiveness and ability to draw in new business.
Banks that fail to invest in building and maintaining a distinctive brand identity risk being overlooked by potential customers, or lumped in with competitors, who may gravitate toward more recognizable and well-marketed alternatives that have successfully captured mindshare and loyalty.
2. Be Distinctive
According to Forrester’s CMO outlook for 2024, “There is a pressing need for profitable growth amid a backdrop of an even more divisive, mobilized, and activist consumer base, causing values-based marketing to go on hiatus. This means that CMOs will favor practical marketing practices in 2024 over purpose-led marketing campaigns, starting with their own customers.”
The scattershot method of marketing and customer service has not been successful for a long time. It’s especially important to align the bank’s benefits and messaging to those who are most likely to switch their primary bank.
Based on Rivel’s most recent insights, millennials — with 36% vulnerability — are the target for switching. Because of that, this group’s particular needs are paramount for both retention and acquisition. Namely, 51% of them use their mobile app more than 10 times per month, 26% are seeking a new savings account this year and 84% are saying it’s very important for their bank to offer good value for fees. Simply reminding current customers of the bank’s services is something that is commonly pushed aside for the focus on growth, a mistake in this market.
In today’s digital age, CMOs must also prioritize omnichannel marketing strategies, ensuring a consistent and seamless customer experience across various touchpoints, including online banking, mobile apps and physical branches. Millennials now prefer social media advertising (49%), internet/web advertising (44%), and word-of-mouth referrals by a trusted friend or family member (41%). By delivering a cohesive and engaging experience, banks can enhance customer satisfaction and reduce the likelihood of customers switching to competitors.
Dig deeper:
- ITMs Are Not Part of Your Multichannel Strategy. They Are Your Multichannel Strategy.
- How 3 Bank Marketers Push – and Win — for Their Budgets Amid Cost Cutting
- Can Softer Skills Stem the Tide of Silent Attrition?
3. Reinvent Marketing as an ROI Tool
Several factors contribute to the marginalization of marketing. One key issue is the perception that marketing is a cost center, responsible for flashy campaigns with little measurable impact on the bottom line. This perspective often stems from a lack of understanding of marketing’s evolving role, which extends far beyond traditional advertising. Today, effective marketing encompasses customer experience, data analytics, and brand storytelling, all of which play a crucial role in driving revenue and growth—something a CMO needs to guide, nurture, and take ownership of.
The banking industry’s investment in brand and marketing efforts directly correlates with deposit growth and overall performance. Based on an analysis by Capital Performance Group, U.S. banks in 2023, with assets between $2 billion and $10 billion, spent an average of 0.07% of their total assets on marketing, accounting for 2.80% of their non-interest revenue. Notably, marketing spends grew by 4.84% between 2022 and 2023 within this group that reported spend, indicating that banks are recognizing the need to increase their investment in this area.
This increased spending has paid dividends to a certain extent with banks in the group experiencing a median non-brokered deposit growth of 1.98% and loan growth of 8.88%. However, overall median revenue growth was only positive for those banks under $2 billion in assets or over $50 billion. Retaining and acquiring new customers is the focus of every institution, but the business models of large institutions and fintechs give them advantages in their marketing dollar stretching further.
The Case for Consistent Branding
The banking industry stands at a crossroads, facing immense competition from neobanks, decoupling of accounts from traditional institutions and rapidly shifting consumer preferences. In this landscape, the strategic role of the Chief Marketing Officer and the importance of effective marketing initiatives cannot be understated. Banks that fail to recognize this reality risk falling behind their more forward-thinking counterparts, who understand the power of strategic marketing in driving growth, cultivating brand loyalty and forging enduring customer relationships.
Ultimately, the banks that will emerge triumphant are those that embrace marketing as a critical investment, rather than a mere cost center. By allocating appropriate resources to build distinctive brand identities, deliver seamless omnichannel experiences, and leverage data-driven insights to anticipate and meet evolving consumer needs, these institutions will not only attract new customers but also foster deep, lasting bonds with their existing clientele. The CMO should be well-equipped to be both the driver and implementer of these ambitious goals for any bank.
This year, the Financial Brand and Rivel have partnered to provide banking professionals with exclusive primary research and analysis on U.S. banking consumers monthly. For more information on Rivel Banking Research’s benchmarking, market opportunity highlights, and on-hand brand perception insights for your institution, contact: Corey Wrinn, Managing Director, Rivel Banking Research at [email protected]