Q&A: Youth Marketing for Financial Institutions

The Financial Brand sat down with James Flores, head honcho of Subcat Marketing. Subcat specializes in helping financial marketers reach “sub-categories” such as kids, teens, young adult and family markets. The agency develops fully-custom youth marketing and education programs for financial institutions across the country, and also offers a turnkey program for teens called The Elements of MoneyTM, a kids club called, M3 Money ClubTM, and a financial newsletter for Gen X parents called, Family Money.

What’s the business case or ROI for a youth marketing program?

It’s really a matter of long-term survival for many financial institutions, particularly credit unions, where the average age of members sits somewhere around 47 years old.

Although youth marketing ROI must be seen through a long-term lens, there are cases where financial institutions have seen an immediate return on their efforts. This usually happens when targeting the older end of the spectrum — the 18 to 25 market.

It’s unrealistic to think you’re going to recoup marketing and education expenses for a kids or teen club within the first year. This is a slow process that must be nurtured over time. But if a company is serious about building long-term growth, this shouldn’t be an issue.

What are some vital financial lessons that kids aren’t learning these days?

I don’t see anyone helping kids and teens deal with financial peer pressure. I think this should be a standard part of any financial literacy outreach program. We’re actually developing an educational module right now to address the issue.

There was a fantastic documentary on HBO a few months ago called Kids + Money that illustrates the role money plays in the lives of young people. After I viewed it, all I could think about was the immense pressure kids and teens have to spend money on clothes and the next “cool thing.” In many instances, a teen will spend hundreds of dollars needlessly on things like purses and shoes, just so they won’t be ostracized at their school. In my opinion, a class war has overtaken the race war in many youth cliques. It doesn’t matter what ethnicity you are, but it does matter how you spend your money. I wrote about this in my blog at subcatmarketing.com.

What are the biggest mistakes financial marketers make when targeting young people?

The biggest mistake we see over and over again is talking down to younger members. Sometimes you don’t even need to say a word to talk down to them. For example, if you offer a youth section on your website, don’t lump the kids club with the teen club. Teens don’t want to be associated with kids and will be turned off by this. Instead, make sure your kids club and teen club are separate.

Another mistake we see is developing programs that are too young for their intended audience. The youth market is age aspirational, and even though they may be 14 years old, they’re already thinking about what life will be like when they’re 16. And remember, the media that these teens consume is dominated by people in their 20s. If anything, err on the side of older representation.

Another mistake we see is companies trying too hard to be cool and cutting edge. We get quite a few requests to develop Gen Y programs that are edgy and extreme. This approach was probably more relevant when Gen X were teenagers back in the 90s. Contrary to popular belief, Gen Y is not an “extreme” generation.

When should a financial institution market to parents vs. directly to kids?

Parents are extremely influential in regards to marketing financial products to young consumers. Ask anyone under 25 why they opened an account in a particular financial institution and they typically cite their parents. I constantly hear things like, “my mom opened my account,” or “my dad had an account at the bank, so I opened an account there.” Targeting parents must be at the forefront of any youth marketing initiative. A few credit card companies are savvy to this, with teen cards marketed to parents such as the Visa Buxx program and Discover’s Current card. Bank of America also does great work with reaching out to parents of college students.

As a matter of principle, we never market financial products to kids under 13 years old. For kids under 13, it should be about education. Instead, the marketing efforts should be directed toward the parents and/or grandparents. This shouldn’t pose any problems for financial institutions since it’s highly unlikely that an eight-year old is going to stop by their branch and request their own ATM card. Once the individual turns 13, however, I believe it’s appropriate to market directly to them. The parent will still be the gatekeeper, so efforts should shift to co-marketing — targeting both the tween and parent simultaneously with two separate message platforms.

How important is it to make financial services fun and engaging for kids?

Two things are necessary when dealing with the youth market: fun and humor. Although kids and teens love money, learning about financial concepts can be a bit dry. Anything you can do to engage kids is critical. This isn’t an easy task, but definitely possible. An understanding of child development really comes in handy when creating a strategy for engagement.

For instance, kids retain more information when it’s delivered through storytelling. Something we’ve done with the M3 Money Club is create a story arc with characters and exciting adventures. We weave the education and storytelling throughout the main program components: the comic strip, podcast and blog. Kids can then follow their favorite characters as they learn about money. When they read about a concept, they can then play a game that reinforces that topic.

How does the current economic meltdown affect youth programs?

As most marketing professionals know, marketing budgets are typically the first to get cut. Programs that don’t immediately contribute to the bottom line are even closer to the axe.

Financial institutions must recognize that this economic crisis has brought the topic of money front and center. Whether kids are hearing stories at school about a friend’s father who lost his job or teens are watching news reporters predict total economic collapse, exposure to the world of finance and the economy among youth is at an all time high. The current situation creates what some may call a “teachable moment.”

What’s the difference between a turn-key youth marketing program and a custom one?

I recommend a client utilize a custom program for one of two reasons: (1) they create local/regional competitive differentiation, or (2) they offer something a turnkey program doesn’t. A custom, proprietary program will cost more to develop, and many financial institutions can’t handle that, in which case the only option may be to go with a turnkey program.

My issue with the turnkey programs is that there are some out there that could actually generate more harm than good. In most cases, it’s a matter of wrong messaging or an outdated look, which will torpedo any youth marketing effort. When it comes to this audience, it has to be authentic and credible.

The youth market is a moving target. Unfortunately, most turnkey programs aren’t equipped to evolve that quickly. A few programs still use the same photos as they did five years ago. That’s a horrible strategy.

In what ways can financial institutions help moms and dads?

There is a huge opportunity in this arena. Our research has shown that parents by and large want their kids to practice better financial skills. Parents just don’t know how to do it. Financial institutions must provide parents with the tools needed to instill positive money skills in the home. They need to show parents that they’re on the same team and they both want the same thing-money-smart kids. Providing financial education is a point of differentiation between traditional financial providers (banks and credit unions) and alternative financial providers (payday lenders and check cashers).

We publish a cooperative quarterly newsletter that is targeted toward parents called Family Money. The goal of the publication is to help media-savvy parents — specifically Gen X moms — by providing relevant financial advice. It helps them raise money-smart kids and manage their household finances.

Rapid-fire, free-association questions.

Facebook? Never the same since mom and dad became your friend. Maybe Bebo instead?

SecondLife? The jury is still out, but teachers and parents are leery about this one. This gives me reason to pause.

Branches in schools? Takes a lot of work, but worth it. Just make sure it’s about education (i.e. teach to the standards) and not just marketing. Treat teachers with respect. They have a lot to do and don’t have the time you think they do to deliver your financial education. Be nice to the custodial staff. You will need them when you lock your keys in the branch office.

Podcasts? Another way to deliver financial education. Some people like them, others are ambivalent. Put it out there and let your members decide.

YouTube? Video is the future, but the future is also about content. Just don’t know if YouTube is the final content frontier.

Twitter? We just asked 10 teens if they knew what Twitter was. They didn’t know what we were talking about.

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