New Email Marketing Study Highlights Missed Opportunities for Bankers

As social media channels continue to proliferate and traditional communication channels become more expensive, bankers struggle with how to maximize the effectiveness of the email channel within their marketing mix according to a just released study from SubcriberMail, a Harland Clarke company. The study entitled, Email Marketing Within Financial Services Institutions, surveyed 71 banks and 191 credit unions, finding that email marketing among these organizations to be strong and growing.

But, while many organizations are leveraging email to inform and communicate news and product information (50% for both banks and credit unions) and even cross-sell existing customers (56% of credit unions/42% of banks), a far lower percentage of credit unions and banks use email as part of a multi-channel onboarding and/or activation process (26% and 27% respectively) or use email for delivery of an electronic receipt.

This is a missed opportunity since studies show that new account holders are very open to all channels of communication early in their relationship and that as many as 75% of customers open and read transactional emails. In addition, in working with financial organizations across the country in the development and implementation of onboarding programs, early customer engagement, cross-selling and retention are all positively impacted by adding email marketing to the communications mix.

At some organizations such as Chase, email welcoming messages many times arrive at the customer's home before the customer returns from opening a new account. This communication is used to thank the customer for opening their account, encourage usage of engagement services (online banking, debit cards, direct deposit) and describe future communication the customer will receive from the bank.

So why the hesitation in using email as a communications tool? According to the survey, while the fear of phishing or fraud was a significant concern, the primary controllable challenges to successful email marketing included the effective collection of email addresses in the first place in addition to subscriber churn (or addresses going bad). Roughly 40% of banks and credit unions found both of these issues to be an impediment to success.

To address these concerns, the SubscriberMail study suggested a holistic, company-wide approach to collecting and confirming customer's email addresses at every touch point. This would include collection and verification at the branch level, call center, and even as part of direct mail efforts and at the ATM. The key is to establish the collection and maintenance of an email address database as an overarching corporate initiative that will result in both lower communication costs as well as improved marketing effectiveness.

Unfortunately, senior management support of such an initiative was far from a reality according to the survey, with less than 30% of the bank respondents stating that senior management was supportive of email marketing strategies. With a subscriber email address valuation estimated to be an average of $118 according to a recent DMA Email Experience Council calculator, marketers need to continue to seek managerial support for their email collection initiatives.

Another challenge to keeping a subscriber database up-to-date comes from the customer's perspective, since allowing email communication is directly correlated to the relevancy and value derived from the emails a customer receives. As with traditional direct mail, relevancy depends on effective segmentation of the email database and timely communication of opportunities, events and offers. Again, both banks and credit unions were found to fall short in their efforts to segment customers, with far fewer than 50% segmenting their email database in any manner. Interestingly, only half of the responders had email initiatives planned in the next six months, indicating a less than robust email strategy and the potential for the customer to undervalue email communication from their financial institution.

Overall, the SubscriberMail survey results illustrated a tremendous amount of untapped potential with the email channel and the need for the same type of discipline with email marketing as with other direct channels. With increased focus on the collection and cleansing of email database files, improved segmentation and more consistent use of this communication tool, return on marketing investment can be improved at a time when bank marketing budgets are being reduced.

I am interested in your results and use of email within your bank.

If you are interested in this free survey, simply follow this link to the download.