Bank Marketing Strategy

Banks and Credit Union Marketers Taking Different Paths in 2012

2012-01-26T07:07:00.000-05:00

According to a Rand Corporation research study, consumers usually select a financial institution based on convenience of branches, convenience of ATMs and bank fees. While bank users were more likely to select based on convenience, credit union users more likely chose with a desire to avoid fees. Consumers also cite personalized service when selecting a credit union.

With this as a backdrop, it is interesting to study the divergence of opinions expressed by more than 300 financial marketers from larger banks, credit unions and community banks as part of the 2012 Bank and Credit Union Marketing Survey covered on January 17 on both The Bank Marketing Strategy blog and on The Financial Brand.

Faced with many of the same environmental challenges of increased availability of data, a proliferation of delivery options, imminent changes in how payments are processed, new marketing communication channels and consumer sentiment that has at times been polarizing, there are significant differences in how bank and credit union marketers view their roles, challenges and opportunities. There are also differences in the channels different types of organizations will use to communicate in the next 12 months.

Breakdown of Participants and Budgets

The survey was completed by slightly more than 300 financial institution marketers, with more than half the respondents being credit unions and more than 30% being non-community banks. 82% of respondents worked in a marketing capacity. As shown below, financial institutions in all asset ranges were well-represented, including organizations with over $100 billion in assets. More than 50 total responses came from financial institutions with less than $100 million in assets.

Distribution of Respondents by Institution Type

As noted in the initial analysis, it was interesting that more than 80% of marketers surveyed indicated that their marketing budgets would either stay the same or increase over the next year, with credit unions having a slightly lower likelihood of having their budgets cut this year.

Challenges and Priorities

As shown below, all classes of organizations indicated the expectation of a resource constraint challenge in 2012 (despite equal or higher budgets), yet that is where the similarities end between banks and credit unions. Banks indicated a significantly higher challenge due to the lack of trust in the banking industry, which credit unions have used to their advantage in the second half of 2011 and into this year. Banks also are much more challenged by the presence of silos within the organization as well as by regulatory and compliance issues that credit union marketers indicated. Interestingly, non-community banks seem to have it easier when it comes to getting employee support for programs initiated.

From a prioritization perspective, loan growth was less of a priority for larger banks than for credit unions, while the desire for checking and deposit growth was significantly more important. In addition, while cross-selling was an important mission for all classes of organizations, the importance of this goal was much greater for larger banks, with almost half of the banks ranking this as a top priority. Alternatively, none of the organization types ranked stemming attrition as a significant priority which is interesting given the cost of acquiring a new customer/member. Finally, credit unions seem to be much more focused on changing the demographic composition of their member base, putting a high priority on acquiring a younger clientele.

Product Emphasis

Reinforcing some of the findings above, credit unions will be focusing on virtually all types of loans in 2012, with a much higher emphasis on auto loans and credit cards than their larger bank counterparts. Not surprisingly, credit unions and community banks will also continue to market free checking accounts, while large banks will focus on fee-based checking. Finally, both community and larger banks will be focusing on small businesses this coming year, doubling the percentages found at credit unions.

Marketing and Media Tools

As noted in our original analysis, traditional marketing channels will continue to be used by all classes of organizations, with only print looking to have significant potential reductions based on our survey. As expected, banks and credit unions will be increasing their emphasis on digital and online marketing with onboarding programs also getting more attention across the board. Interestingly, there was virtually no statistically significant difference in the marketing tools that will be emphasized based on the type of organization for the coming year.

While most of the trends in use of online marketing tools by the different organizations were consistent, one of the most surprising findings as we analyzed the results by type of organization was the significantly higher use of social media and estatement advertising by credit unions compared to both community and larger banks. While this may change in the future, the ability to have front-runner status at this time may be advantageous for credit unions if their underlying strategies and measurement of results are sound.

Social Media Use

It appears the primary reason for the differentiation between banks and credit unions in the social media space is due to the much higher presence on Facebook by credit unions than by banks. Being local in nature, this makes sense to build this community following, but it will be interesting to see what is done with this channel and whether financial organizations are using this simply as a landing zone for members or if this channel becomes an effective marketing tool.

State of Bank and Credit Union Marketing 2012

2012-01-17T06:34:00.001-05:00

Today's bank and credit union marketers are facing a period of big data, increasing devices and more communication channels than ever before. In addition, consumers are challenging the pricing and service levels they receive from their financial institution, and are willing to speak their mind using lightning fast social media channels.

To better understand what bank and credit union marketers are thinking and doing during this period of unprecedented change and opportunity, I partnered with Jeffry Pilcher from The Financial Brand to develop the 2012 Bank and Credit Union Financial Marketing Survey. More than 300 bankers responded from banks and credit unions of all sizes thanks in no small measure to our many friends on Twitter who helped distribute the links to the survey and to ACTON Marketing, who recruited many of their clients and friends.

The results of the survey underscore the primary challenges facing financial institution marketers today:

The need for better measurement of marketing results during a time of constrained budgets and limited human resources.
The importance of expanding share of wallet through cross-selling, especially with credit products
Changing the media mix used for integrated customer communication - with a greater emphasis on less familiar online and social media channels

View Entire Survey Results

Participants

Over 300 financial organizations participated in The 2012 Bank and Credit Union Financial Marketing Survey, including 101 banks (33%), 143 credit unions (47%), 33 community banks (11%) and 26 other types of financial organizations (9%). All asset sizes were well represented.

SURVEY HIGHLIGHTS

Majority of Challenges For Marketers Are Internal

With all of the external challenges facing financial organizations over the past several years, ranging from new regulations that impact fee revenues to the continued distrust of the financial services industry in general, it is interesting that marketers viewed the majority of their challenges in 2012 as being internal in nature. Even though 84% of respondents mentioned that their budgets would either increase (45%) or remain the same (39%), 46% of marketers believed the primary challenge would be insufficient budget or manpower. As could be expected, this challenge was less prevalent at the largest banks.

As has been noted in various studies and covered in a recent Bank Marketing Strategy post, difficulty in measuring results was also a significant challenge, but this was inversely correlated to the size of organization, with more than 40% of banks under $1 billion noting measurement as a challenge and less than 25% of organizations over 10 billion noting this as a challenge (my travels indicate that measurement is better at the larger banks, but by no means considered adequate). Conversely, the challenge of 'silos', I.T. inflexibility and regulatory issues were much more challenging at the larger organizations than is noted by the consolidated results.

Many of the internal challenges shown above could be reduced if marketing departments could better align with other C level players within their organization. By providing better analysis of results from an ROI perspective and through better marketing planning, marketing would be invited more often to the strategic planning table, allowing them access to the players who could partner for improved departmental integration.

Customer Acquisition and Organic Growth are Job #1

When asked about the top priorities over the next 12-24 months, there was significant consistency between large and small institutions, with the majority of respondents agreeing that there is a need to acquire and cross-sell additional products and services. This makes sense due to the focus on fees and revenues in 2012 and beyond (and with the public highly sensitized to any fee changes). Bottom line, the only way to improve margins will be to make every relationship count and to improve on acquisition program effectiveness.

There was consistency as well around the fact that loan products (especially mortgages) would be of primary importance in 2012 from both large and small organizations. As can be expected, there was a disparity in the responses around the importance of free checking, with the smaller community banks and credit unions placing more emphasis on these products than the larger organizations. The desire for auto loans and the refinancing of autos was also the domain of smaller financial organizations. Interestingly, there was also a reverse correlation between the desire to promote online banking/bill pay and the size of the financial institution. This may be the result of larger banks believing that these are services sold at the new accounts desk and don't require additional promotion.

Communication Channel Shift Impacting Marketing Emphasis

The 2012 Bank and Credit Union Financial Marketing Study shows that financial organizations of all sizes are responding to the public's use of digital and social media in their shifting of dollars away from traditional channels such as print, radio and TV. What is interesting is that the shift is occurring much more dramatically in larger organizations than in smaller firms. In addition, while direct mail use is either staying the same or increasing at small and mid-sized firms, the largest organizations are definitely reducing their use of this channel.

Finally, if the survey results are any indication, onboarding at banks of all sizes will become mainstream in 2012, with more than 50% of banks in all asset ranges placing a greater emphasis on new customer welcome programs this coming year.

In 2010, The Financial Brand conducted an online marketing survey to measure the use of digital and online channels. In that study, only 69% of banks and credit unions said they utilized email. In this year's study, that number increased by 10%. Similarly, 68% now indicate that they pay for online banner ads compared to only 54% in the 2010 study. Those pursuing an SEO strategy also grew by 13 percentage points since 2010. It is anticipated that these shifts will continue as more people consume information electronically.

	Yes	No	No, But Plan To	Not Sure
Email marketing	79%	9%	12%	-
Banner ads (paid)	68%	24%	7%	1%
Social media	68%	21%	11%	-
eStatement ads	63%	28%	8%	1%
SEO	57%	27%	13%	3%
Search engine ads	53%	31%	15%	1%
Smart phone app	42%	30%	27%	1%
Microsites	38%	50%	10%	2%
Full online account opening	37%	40%	23%	-
Online switch kit	28%	54%	17%	1%
Live online chat	22%	59%	18%	1%
iPad/tablet app	19%	48%	31%	2%
Online PR/media center	17%	70%	7%	6%

Finally, almost three-quarters of the banks responding indicated they used Facebook for marketing, a dramatic increase from the 2010 study when only 46% used the most popular social channel. The change in use of Twitter increased by 19% since 2010, while the use of YouTube increased by 24%. In both the 2010 and 2012 surveys, virtually the same number of banks and credit unions said they had a blog (18%), while several of the other channels were just coming into existence in 2010.

	Use	Don’t Use	No, But Plan To	Not Sure
Blog	18%	57%	20%	5%
Twitter	54%	34%	10%	2%
Facebook	72%	17%	10%	1%
YouTube	49%	32%	17%	2%
LinkedIn	48%	36%	13%	3%
Discussion forum	6%	76%	10%	8%
Foursquare	14%	69%	9%	8%
Google+	11%	59%	20%	9%

More to Come

In the next several weeks, more insight from the 2012 Bank and Credit Union Financial Marketing Survey will be analyzed and shared, highlighting more variations found between types of organizations, sizes of firms, etc. In addition, we hope to use the findings from this survey to provide strategic recommendations around where banks and credit unions could best allocate time and resources for the greatest impact.

In the meantime, if you have any thoughts on the survey, please share them with us in the comment section below. In addition, if there is a section of the research that you would like us to dig into quickly, let us know.

View Entire Survey Results

10 Resolutions Bank Marketers Can't Ignore in 2012

2012-01-03T07:44:00.002-05:00

2011 was year that many bankers, and especially bank marketers would love to forget. Not only was focus diverted by the need to respond to new regulations for the second consecutive year (this time it was the Durbin Amendment), but the image of our entire industry was challenged as foreclosures and bank failures continued to be in the news.

We didn't do ourselves any favors in 2011 either, as some of the larger banks learned the power of social media when they decided to increase (and then rescind) debit card fees, or when the industry fought internally with Bank Transfer Day.

The biggest impact of all of this noise was that attention was diverted from what should have been accomplished in 2011. As I reviewed my post from last year, Ten Bank Marketer Resolutions for 2011, it is clear that most bank marketers lacked the time/focus to make much progress on any of last year's goals. So, in writing this year's Bank Marketer Resolution post, I could have simply posted the same resolutions from last year (similar to what I do with some of my personal resolutions). Instead, I reached out to bank industry leaders from across the globe for their ideas. There was surprising uniformity in their suggestions, and a sense of urgency around the need to achieve much more than last year.

So here are the resolutions bank marketers should not ignore in 2012 according to industry leaders:

1. Validate The Value of Marketing Through Measurement: As highlighted in my recent post 100 Years Later, Marketers Still Have Difficulty Measuring Up, there is still a tremendous gap between what bank marketers implement and what is measured. Not only are there almost 20% of marketers who don't find measurement of results imperative according to recent research by Ifbyphone, but less that 50% of any channel is measured. Dan Marks from First Tennessee says, "Bank marketers should resolve to measure and optimize true marketing ROI – having the courage to seek out the unproductive part of the marketing mix and replace it with other activities that generate real shareholder returns." Serge Milman, CEO of Optirate states, "In 2012, bank marketers should resolve to have a more diligent focus placed on business drivers that can help manage and grow the bank," while Bradley Leimer, vice president of online/mobile strategy at Mechanics Bank said that, "The number one resolution for bank marketers in 2012 must be to 'put data first,' since the proof of any program resides in the measurement of results."

Jeffry Pilcher from The Financial Brand added a common sense resolution that is not always followed . . . "stop doing things that don't work." It is clear that if only one resolution can be accomplished in 2012, the measurement of attribution and program results is the most important.

2. Don't Confuse Channel Economy with Channel Effectiveness: One of my resolutions from last year that needs reinforcement is that bank marketers should leverage the measurement mentioned above to ensure that the right channel (and mix of channels) are used for the right customers. While social and digital media seems less expensive, it doesn't work as well on its own as it does when mixed with traditional channels. In fact, recent research discussed on this blog has shown that for financial services, many of the traditional channels are more desired and effective than new media. In addition, many bank customers are not reached at all with phone, email or social media programs. As mentioned above, 2012 should be the year of improved measurement and improved attribution analysis, which will help to answer the questions around which channels should be used.

3. Be Customer-Centric: Ron Shevlin, senior analyst from Aite Group and author of the book and blog Snarketing 2.0 stated in a recent post, “banks need to be perceived as doing what’s right for their customers and not just their own bottom line.” One of the banks I work with stated it best when they said that customer centricity means:

Know who the customer is and what they want
Look out for the customer and help them make the right decisions
Reward the customer for their patronage with tangible and intangible benefits

Saying you're customer-centric is not enough, though. "When claiming your bank is customer-centric, actions speak louder than words," warned Elizabeth Lumley, special projects editor at Finextra. This was especially evident in 2011, when many large banks made fee changes that created an uproar in social media, resulting in reversals of those decisions. To this new phenomenon, Chris Skinner, author of the Financial Services Club Blog suggested, "Bank marketers should resolve to make 2012 the year where good communication and real transparency ensures that we don't get screwed by social media campaigns."

4. Build a Social Media Strategy That Complements Your Overall Marketing Plan: Instead of engaging in social media because other industries are doing so, it is time to treat social media like other channels, with defined goals, strategies and expected ROI outcomes. "While simply having a Facebook page or Twitter account may have been sufficient in the past, customers are expected to utilize these channels to connect with their bank even more in 2012," says Karen Licker, financial consultant and social banker (independent) for J.D. Power and Associates. "Given the public nature of these contacts, bank marketers should have a resolution to be aware of these conversations and direct customer outreach, and be equipped to respond quickly to questions or issues raided via these channels."

Nicole Sturgill, research director for delivery channels at TowerGroup, suggested that bank marketers should resolve to engaging the front line in social media since many don't realize they are being talked about. Alex Bray, managing consultant at IBM recommended, "Bank marketers should create a clear vision for social media based on a genuine customer value proposition while killing vanity projects that don't add value." Added John Owens "In 2012, bankers will need to understand the role and importance of social media to better serve clients and receive feedback."

5. Leverage Big Data for Better Conversations: There is a lot of discussion in the marketplace about the use of 'big data' to transform customer communication and the customer experience. There are very few places where more customer insight is available than in the financial services industry, where we not only have access to demographic and financial service ownership data, but also transactional insight that gives us a view into financial and purchase behaviors. But big data is nothing new, and should not be overwhelming in an environment where the ability to process data has also grown exponentially.

Unfortunately, as was found by Ron Shevlin from Aite Group earlier this year and in a soon to be published report, bank marketers are still not very comfortable with communicating online or through mobile channels using available insights. This may require new talents and new teams according to Brett King, founder of Movenbank, and author of the best-selling book and blog Bank 2.0. "In 2012, bank marketers should have a resolution to build a team that can create compelling customer journeys in real-time," states King. "Marketing is no longer about 'pushing' messages," continues King. Fred Hagerman, CMO of Firstmark Credit Union adds, "Bank marketers should have a resolution to combine web analytics and database knowledge to drive even more relevant communication."

6. Build Customer Value From Day 1: While there has been a great deal of discussion around the cost of a checking account since the December 9 American Banker article on the subject, there is no disputing the fact that fees alone can't make a relationship profitable. As a result, it is imperative that bank marketers look at customers as valuable assets to the bank that need to be nurtured and grown through increased engagement, relationship expansion and retention. As stated by Matthew Wilcox from Zions Bank, "2012 is a year when all bank marketers should resolve to have multichannel new customer onboarding programs as well as highly targeted relationship growth initiatives. To not have these programs in place would leave valuable money on the table and risk losing potentially valuable relationships."

7. Build Bank Value Daily: The past few years have been difficult for our industry, with the faith and confidence in many leading financial organizations being shaken. In 2012, consumers will look for solid value in products and services with every purchase and decision they make. Those organizations that don't reinforce the value they provide - every day - will be challenged. Dan Marks said that bank marketers should resolve to "refine, renew, and reinforce the bank's key brand distinction across the entire enterprise – everyone should know and exhibit how the bank uniquely serves customers’ needs." Steve Cocheo from the ABA Banking Journal suggested a rather straight forward resolution, "Bank marketers need to accentuate trust and value in the communications they develop and strategies they build." Bank consultant, Lori Philo-Cook seconded this resolution when she recommended, "Bank marketers should resolve to find new ways to communicate with customers in order to rebuild trust and strengthen relationships."

8. Innovate: Plain and simple, 2012 is a year where bank marketers should try new things and support innovation done in other areas of the bank. Bryan Clagett, CMO and investor at software services provider Geezeo put it best with his recommended resolution, "Bank marketers should not be afraid to experiment and think outside the box in 2012." For those organizations where budget, philosophy or other variables may make true innovation challenging, payments pro Scott Loftesness provides a suggestion, "Bank marketers should prepare to be a fast follower, especially in mobile for 2012, unless they have the budget to be an innovator."

9. Focus on Personal and Professional Development: While the skills needed to do effective bank marketing remain pretty much the same (targeting, messaging, measuring, etc.), the channels available have definitely increased. Therefore, bank marketers can no longer rest on their laurels and hope to succeed in the new marketing environment. More than ever, there needs to be a dedication to becoming familiar with the changes in the marketplace from a product and channel perspective. As stated by bank consultant Jeff Marsico, "The goal for bank marketers is to earn a place at their bank's strategic planning table and to be more than just an ad budget." Being aware of the changes in the marketplace can help earn this respect.

For me, I find that following industry leaders on Twitter and subscribing to industry blogs (like mine) are a great way to keep up to speed. Throughout this post, I have provided links to some of the industry pundits who share valuable insights and research on Twitter. Following them will go a long way towards keeping you in the loop. Watching who they follow will further expand your depth and breadth of knowledge. Bob Williams from Harland Clarke put it well in his suggested resolution, "Bank marketers should resolve to listen, discuss, think, read, and write. In short, they should be part of the conversation." Community banker David Gerbino provided a more basic, yet important resolution that, "Bank marketers need to resolve that they will understand finance, financial reports, and know how to calculate product profitability."

10. Don't Be Afraid to Break From The Herd: The banking industry is notorious for having a 'herd mentality', following each other's lead as opposed to thinking independently. In the past, the logic for doing this was usually based around risk aversion. Today, following other bank's can be both risky and can inhibit value creative. Look at the events around the raising of debit card fees by Bank of America, where many large banks followed the strategy of Bank of America only to have to follow the bank again as they rescinded the fee. The same can be said for the jumping into the social media waters without a defined strategy. While almost all banks are doing something in social media, very few can define the value it is bringing to their bank or what the ROI on this investment is.

2012 should be the year of breakout opportunity for those bank marketers who want to embrace the challenges associated with change. It is definitely not 'banking as usual', but is the environment where market leadership is gained and disruption creates new business models and customer segments.

I doubt if any bank marketer will succeed at all of the above resolutions. There may even be better resolutions than the industry experts provided above. If you have one that we missed, let me know. If you think some of the resolutions above are not valid, let me know as well.

I look forward to your comments and to a very exciting 2012.

100 Years Later, Marketers Still Have Difficulty Measuring Up

2011-12-17T09:25:00.001-05:00

At the turn of the last century, store merchant John Wanamaker stated, "Half the money I spend on advertising is wasted; the trouble is I don't know which half."

Based on just released research from Ifbyphone, those may have been the 'good old days'. The report, 2011 State of Marketing Measurement Report found that, while 82% of CMOs expected every campaign to be measured (what's up with the other 18%), only 29% of the marketers believed they could effectively measure ROI of each channel.

Potentially more troubling was the finding that more than a quarter of marketing assistants did not find the measurement of results important. "It's concerning to hear that many marketers don't understand the importance of measuring the success of their campaigns," stated Irv Shapiro, CEO of Ifbyphone. "We need to determine the root cause of this sentiment, and whether it's a lack of education in best practices, or rather a gap in leadership and mentoring. Businesses can only get better at marketing if they are held accountable for improving upon what didn't work in the past."

From a channel perspective, marketers indicated they could only measure ROI on 47% of email programs and 41% of direct mail programs, with all other channels seeing significantly smaller percentages. This is despite having more tracking technology, greater human skill sets, and more attention to ROI and even though only 6% of marketers surveyed thought email was the most difficult to measure (only 5% found direct mail to be the most difficult to measure).

Part of the problem overall is the use of harder to measure channels such as social media and even traditional channels like television. And while the marketers surveyed believed they had many of the tools needed to measure results and build an ROI argument, the problem may be the challenge of attribution where an integrated multichannel strategy is implemented. The survey found that 71% of marketers believed they had the needed tools to measure the ROI of marketing campaigns.

The tools used to measure marketing campaigns included web analytics (48%), email marketing software analytics (47%), leads from contact forms (38%) and social media monitoring (30%).

In 2012, the key will be to take advantage of the vast amount of data at our fingertips and determine what we want to measure, how we will measure, and most importantly, what insights can be taken away that are actionable. Here are some recommendations that may assist in focusing efforts on seeing results of your programs.

Develop and leverage a marketing measurement playbook that includes standardized measurement inputs and outputs you will use for your organization. Within this playbook, show how testing will be done and channel attributions will be measured.
Set an appropriate budget and timeline for the implementation and delivery of analysis. Many of the banks I work with under fund the analysis portion of their programs and do not set specific time lines for the delivery of results.
Set a standardized ROI formula that all impacted parties agree to. There has been a great deal of dialogue recently on how to establish social media ROI measures. Your team and management at your organization will need to agree to these measures.
Build a reporting template that will be used for all of your marketing programs. This will help to standardize your reports and build credibility within the organization.
Continue to look for new outside partners that can assist with your measurement efforts. New tools and processes are coming to market every day, with highly sophisticated process for measuring individual channels and multichannel attribution.

Channels will only increase in the future and the use of social media by your customers will have a greater impact on your results than ever before. So, how will your organization do a better job at measuring success (and failure) in 2012? What tools will you leverage and what standards will you set so that you don't embark on new programs without the benefit of analysis from prior programs?

I would love to hear your comments below.

Bank Marketers Face Challenging Times With Great Opportunity

2011-12-15T05:53:00.000-05:00

After two years of responding to government intervention into the revenue structure of financial organizations, bank marketers are now faced with heightened levels of competition, a more demanding customer base, an unfavorable rate environment and, in many cases, a shrinking budget. But potentially most challenging to financial institution CMOs I meet in my travels is the ability to respond to the shift in the ways we interact with customers and prospects.

The flood of data, channels, devices and changing consumption patterns have marketing departments in financial organizations of all sizes trying to determine if they are prepared. They are reviewing the skills sets that will be required to take advantage of the opportunities these challenges present, and realizing that gearing up may require a heightened level of personal engagement from all members of their team.

These challenges are reinforced by a set of studies that I recently reviewed that surveyed marketers from all industries. IBM's 2011 Global Chief Marketing Officer Study entitled, From Stretched to Strengthened found that the majority of CMOs feel unprepared when it comes to the explosion of data available (71%), the impact of social media (68%) the growth of channels and devices (64.5%) and the movement from mass markets to micro markets (64.5%).

More importantly, several of the areas where CMOs stated they were least prepared were also those they believed would be the most important for their businesses. As shown below, each of the top four areas of preparedness gap are also in the quadrant where the impact on the marketing function was thought to be the highest.

Preparedness vs. Impact on Marketing Comparison - IBM CMO Study, 2011

But while there were many references to the growing analytical side of online measurement and monitoring in the IBM study, only 26% of CMOs surveyed track blogs, 42% track third-party reviews and 48% track consumer reviews. The need for a much better understanding of ROI was referred to many times in the study, going as far as saying that the CMO of today is in position similar to that of the CFOs 10 years ago.

Turning data into action was also the primary organizational issue in Unica's Annual Survey of Marketers, with the need to harness the power of the mobile device and to leverage the potential of truly integrated marketing also ranking high. As with the IBM study, the Unica research indicated that there is a significant gap between desire and achievement, with much more progress needed in the use of insight for better customer communication and measuring the impact of efforts across channels.

Three Most Important Issues for Marketers - 2011 Unica Survey of Marketers

What was interesting about the Unica study was that, while social media definitely registered as the champion of emerging channels in terms of use (53%), the enthusiasm for the channel was less than in recent years, possibly signaling the desire to see more tangible results from efforts. This also seems to be true in the bank marketing industry, where many are questioning the financial impact of investments made in social media and wanting to connect 'fans' and 'follows' into leads and sales.

Just like most other industries, bank marketers are being tested daily during a period of unparalleled change and will be required to respond to these new market realities:

The consumer is definitely in control of the business relationship, with the ability to shop with a click and change bank partners without ever confronting us face-to-face.
While margins are thin and the tolerance for fees is low, delivering customer value is the table stake in the game both from a perspective of products offered as well as access afforded.
There is a greater need for seamless integration of marketing channels with an eye towards both effectiveness and efficiency.
Accountability for marketing investments has never been more important at a time when bank revenues are at a premium, with new tools for measurement and skills for assessment being leveraged.
Each of the above realities will require a more robust and continuous level of testing as tools, approaches and consumer attitudes continue to change.

Over the last few days at the National Center for Database Marketing Conference, where hundreds of practitioners met to discuss current trends and share success stories from a variety of industries, one thing was clear . . . there is no silver bullet. In fact, most marketers are working hard to hone their skill sets in a very fluid environment.

The good news is that there are amazing solutions being developed daily to help marketers do their jobs more effectively. The bad news is that the change is continuing at a more rapid pace every day. To be effective, bank marketers will need to have both great learning agility and adaptability to 'what's next'.

What do you see as the biggest challenge facing your marketing department in the coming year? Is your team prepared for the changes ahead? What are you doing to prepare for the new marketplace?

I would love to hear your comments below.

As Channel Proliferation Increases, Consumers Still Prefer and Trust Direct Mail for Financial Services Communication

2011-12-02T05:59:00.001-05:00

According to a just released consumer channel preference study from marketing services firm Epsilon entitled, The Formula for Success: Preference and Trust, 36% of consumers prefer to receive financial services communication through the mail (compared to only 8% preferring email), while 50% state that they pay more attention to direct mail than email. Interestingly, U.S. consumers actually receive an emotional boost from receiving mail, with 60% agreeing that they "enjoy checking the mailbox."

The 2011 study is the latest in a series of studies conducted by Epsilon around communication channel preferences. In the latest study, it was found that the preference for direct mail extended to the 18-34 year old demographic, highlighting the risk in making assumptions around age and channel preferences. Part of this preference bias compared to email and other channels could be caused by the level of trust associated with the channels reviewed, since 26% of U.S. consumers found direct mail to be more trustworthy than email. The least trustworthy channel continued to be social media, with the channel only being viewed as trustworthy by 6% of consumers. Consumers also found direct mail to be more 'private' than email or online channels (important for 37% of consumers).

"Consumers use and trust certain communication channels more than others," states Warren Story, VP of product marketing at ICOM. "This means that marketers need to understand which channels resonate most at various stages of the consumer purchase cycle and incorporate a cross-channel strategy that leverages data and technology to communicate on a 1:1 basis." Story also suggests starting with direct mail and layering other channels into the marketing mix for message reinforcement.

Not only do consumers seem to prefer direct mail communication, but there seems to be an increasing frustration with the amount of email received and the level of satisfaction received from receiving emails. The study showed that 75% of U.S. consumers get a lot more emails that are not opened, with 65% saying they get too many emails overall. Conversely, 43% of consumers surveyed still enjoy receiving emails from brands on new products, indicating that targeting and messaging of communication is needed to capture attention.

For financial services communication, consumers also overwhelmingly preferred personally addressed mail as opposed to 'dear occupant' mail that doesn't have the emotional pull of a personally addressed communication. (This should be tested on an ROI basis however, since I have found that the financial benefits of less personalized direct mail can work in some instances).

Even with the strength of direct mail indicated in this study, financial marketers should not exclusively use direct mail or remove email from their marketing mix. In fact, the Epsilon study showed a greatly increasing use of Facebook and mobile phones as communication channels, while showing that the most trusted channels were newspapers, company websites and television. The study also showed that there were many perceived benefits to both direct mail and email as shown below from people who preferred direct mail to email and visa versa..

In this time of communication message overload, financial marketers need to balance the use of multiple channels based on consumer preference, financial considerations, objective of the marketing program, and the results of multichannel effectiveness measurement initiatives. Bankers also need to continue efforts to improve the targeting of messages through all channels from both a financial and customer satisfaction perspective.

And while social media did not perform well from the perspective of trust, social channels provide several benefits that should be leveraged in a multichannel communication program due to economic considerations and the expanded use and reach of social media. Mobile channel communication should also be tested as we enter the new year and are building our marketing plans.

Of greatest importance is the development and use of advanced metrics that can assist you and your team in measuring the effectiveness of channels and channel mix. As opposed to measuring only single channels independently, advanced analytics are now available that can provide a view into the consumer's media consumption patterns and the impact of different channels.

As we enter 2012, the importance of an effective and efficient marketing communications mix is important. Budgets should be shifting to digital and social channels to build a reservoir of learnings that can be leveraged in the future, but it appears that the projected demise of traditional channels such as direct mail has been overstated.

How will your team be shifting marketing channel dollars in the new year? How will you be measuring the impact of your efforts?

I would love your comments.

Benefits of Social Media Sign-In Must Offset Privacy Concerns

2011-11-30T05:17:00.005-05:00

One of the most important yet tedious components of opening a new account account at a bank is completing the new account form. Whether done at a branch or online, the new account registration process is the first (and sometimes only) time when a bank can learn about a customer's needs, behaviors and expectations of the relationship.

Unfortunately, this process has changed very little over the years and is usually only comprised of gathering the most rudimentary of information from the potential customer (name, address, phone, social security number, account type desired, etc.) and collecting funds/obtaining a signature. The rationale for only collecting the most basic information has been to balance the desire for insight with a respect for the customer's time. This balance becomes even more important in the online world, where a customer can easily abandon the account opening process with little repercussion.

Online Account Opening Abandonment
According to a recent report from Javelin Strategy & Research entitled, 2011 Online Account Opening: Faulty Process Hobbles FIs in the Battle for Customer Acquisition Profitability and Retention banks lost close to $1 billion and 5.8 million customers due online abandonment during the account opening process over the past year. In fact, it was found that only 53% of new account applicants were able to successfully open and fund their new accounts. While some may later go to a branch, many new customers may be lost forever.

The research underscored the importance of delivering a fast and relatively simple account opening process for online/mobile consumers. "Most people open accounts online because they expect it to be faster and more convenient than doing it over the phone or visiting a branch," says Mark Schwanhausser, senior analyst with Javelin. To succeed, Javelin outlined two primary areas of focus:

Reduce abandonment rates by focusing on usability and simplicity to minimize points of friction.
Reduce rejection rates for qualified consumers by upgrading and optimizing identity and funding verification.

The research from Javelin is reinforced by research done late last year by Blue Research on behalf of Janrain that found that three out of four web users would rather leave a website than complete a registration process. Among those that would complete a brand new registration, 76% said they would give false or incomplete information.

This creates an interesting dilemma for banks where every new online and branch based customer could be worth hundreds of dollars in annual revenue and where understanding the new customer is paramount to an enhanced customer experience. On the other hand, the information collected needs to be accurate.

Social Sign-In (SSI) as a Potential Solution

Social sign-in could provide a viable and highly profitable enhancement to the traditional new account opening process. With a single click, anyone who has already registered on Facebook, LinkedIn or most other social networks could have a significant amount of required information transferred to the new account form in addition to insights associated with the social network.

"With social sign-in, there is greater engagement and companies have access to richer profile information because the data elements collected on social networks are more extensive than what firms usually request from customers," states eMarketer principal analyst Jeffrey Grau in his report Social Commerce: Personalized and Collaborative Shopping Experience. When a consumer gives permission to access personal (or business) data on Facebook or another social network, the bank can see more about what these people like and their interests. And the insight can be updated over time as opposed to traditional collection techniques where the insight goes stale.

While banking is definitely different than retail from a consumer's perspective of need for privacy, two-thirds of respondents to the Janrain study preferred social sign-in to completing an entirely new registration form. Interestingly, according to Forrester and Nielsen, the people who preferred social sign-in were also more valuable as consumers and more likely to be active on social networks.

"Consumers are frustrated with the traditional online registration process and will favor brands that make it easy for them to be recognized . . . the rapid growth of social media has dramatically impacted consumer's expectations of websites . . . ," states Paul Abel, Ph.D, and managing partner of Blue Research.

Social sign-in is not unfamiliar to people who use the web regularly. According to recent statistics from Janrain, Facebook is the most popular choice for sign-ins, used by 39% of consumers, with Google being ranked second with 30%. Even Twitter is used by 8% of the respondents even though this network is used to share 32% of the content.

Movenbank Social Sign-In

While still in the start-up (Alpha) phase, Movenbank is requiring it's first members to register and log in using Facebook. Over a breakfast with Movenbank founder and Bank 2.0 author Brett King a few weeks ago in Chicago, Brett mentioned that the current method of new account application is outdated in today's highly digital environment.

"A customer doesn't want to sit in front of their computer or on their phone completing lengthy forms. A social sign-in provides an easy way for the customer to start the process while providing us more (and probably more accurate) information," said King. He added that he has found no regulatory stipulation for the traditional signature card, and that there would be instant cross referencing of traditional databases (possibly credit bureau data) to help solve identification issues.

Of particular interest to King and Movenbank is the enhanced level of insight provided through the integration with Facebook (and eventually other social networks such as LinkedIn and Twitter). With this insight (and the completion of a relatively short survey), Movenbank can create a 'Financial Personality'. According to King, the intention is to provide a unique customer experience where financial solutions can be developed based on the customer's behavior and lifestyle.

Social sign-in also provides the opportunity for social sharing beyond the 'liking' of a product within a social network. By connecting friends that are using the same social channel (with their permission) people can interact, share experiences and potentially even be involved in the product development process. In my breakfast with Brett King he mentioned the possibility of customer panels that can digitally interact and make the Movenbank experience 'richer'.

Security and Privacy Concerns

Along with almost any discussion around social media and banking come security and privacy concerns. How will the bank (or retail site) use my personal information on Facebook or another social sign-in site? How will my information (and identity) be secure?

Movenbank addressed some of the concerns in a recent blog post stating that Facebook would not be the sole source of information used for setting up an account or determining your needs. In addition, the customer would control what insight is collected and shared. As Finextra stated in a recent post dealing with the issue of security, Movenbank (and others) need to tread carefully when accessing personal data.

Consumer concerns are evident in the comments to a recent blog post in the Harvard Business Review by Larry Drebes, founding member of the non-profit OpenID Foundation and CEO of Janrain. While his blog post is definitely a bit biased towards the benefits and growth of social sign-in, the comments of readers illustrated the sensitivity of people around privacy and the return they need to get for the sharing of their social history. One reader stated, "Marketers are digging the hole for the intelligence community's future mass data-mine, and ordinary people will get the shaft".

Probably the best response to the HBR post was from a gentleman who stated that each time he is asked for a social sign-in, he needs to balance the benefits with the potential 'risks'. He stated, "Over the past few years , online offerings have become increasingly rich and complicated. I am a heavy consumer of online services and have used social media sign-ins on a number of occasions, Any time I am faced with logging in, I have to look at; 1) The cost in time and effort of completing a new registration, and 2) The value of my information I am asked to ante up". He continued, "My hypothesis is that the entities that are offering social sign-ins right now are more sophisticated in the social space and realize there is a fundamental shift in the way businesses interact with their customers online.

To help alleviate some of the public's concern over both privacy and security of information associated with social sign-ins, the National Strategy for Trusted Identities in Cyberspace (NSTIC) has been established by the White House to improve on the password and log in process on the web. This organization is a collaboration of both private, public and consumer organizations established to develop a common 'Identity Ecosystem that benefits all constituents.

Whether social sign-ins are a 'data capture deal changer as presented by Loren McDonald from Silverpop in a recent blog post or a non-starter as some will profess, it is clear that the sharing of personal information is a value exchange between the potential customer and the business/bank. If a clear value enhancement proposition is not offered in exchange for the insight (or social network) requested, we will be relegated to traditional data collection with the inherit application abandonment that is costing our industry billions of dollars and millions of customers annually.

I would love to hear your thoughts on what Movenbank is doing with Facebook sign-in integration and on the concept of using social sign-ins to enhance and streamline online new account opening. I would also love to hear what enhancements to your current product solutions could be provided with the enhanced insight collected?

Direct Mail Still Has Impact in Digital World

2011-11-18T08:32:00.002-05:00

As more and more marketing dollars are funneled into digital and social media, and as postal rates continue to climb, direct mail marketing has been getting less and less attention. While there is definitely a case to be made for building a multichannel communication plan integrating a number of different channels to reach customers, recent research indicates that direct mail should still be part of the mix.

A study entitled, Using Neuroscience to Understand the Role of Direct Mail conducted by the research company Millward Brown found that direct mail actually leaves a deeper impression on the human brain than its digital counterpart. The research project used functional Magnetic Resonance Imagery (fMRI) brain scans to show that our brains process paper-based and digital marketing differently and that direct mail actually created a greater emotional impression than digital communications.

During the study, participants were given marketing messages on a screen and printed on a card with brain scans done to assess how the processing of messages was impacted by the medium of communication. It was determined that tangible communication (direct mail) left a deeper 'footprint' on the brain even when the physicality of the channel (sensory impact of touch) was discounted.

Material shown on cards generated more activity within the area of the brain associated with the integration of visual and spatial information (the left and right parietal)
This suggests that physical material is more 'real' to the brain. It has meaning and a place and is better connected to memory because it engages with spatial memory networks.

The study also found that direct mail involved more emotional processing which is important from a memory and brand association perspective.

More processing is taking place in the right retrosplenial cortex when physical material is presented. This is involved in the processing of emotionally powerful stimuli and memory, which would suggest that the physical presentation may be generating more emotionally vivid memories
Physical activity generates increased activity in the cerebellum, which is associated with spatial and emotional processing (as well as motor activity) and is likely to be further evidence of enhanced emotional processing.

Finally, the study found that physical materials produced more brain responses connected with internal feelings, suggesting greater 'internalization' of the ads. According to Graham Page, Executive Vice President of Consumer Neuroscience at Millward Brown, the results suggest, "The brain is more emotionally engaged and is potentially reflecting more on a response" when viewing direct mail. "Due to the fact that the brain recognizes mail as real, memories of that piece are being created. Our brains seek to understand the thing that we hold in our hands more so than a transient image on a screen." said Page.

Even understanding some of the neuro benefits of direct mail, digital communications have distinct advantages over paper such as interactivity and the ability to integrate audio and video. In addition, with continuously improving targeting tools, digital communications can more effectively target audiences based on interests, behaviors, past transactions and other characteristics that direct mail can't match.

Bottom line, this study and other studies covered in one of my previous blog posts (Marketers Not Aligned with Consumer Marketing Channel Preferences) indicates the importance of integrating multiple channels to communicate your marketing message to people who will process and react to different channels differently. More importantly, while response rates to a credit card, new customer acquisition or cross-sell campaign may seem low, direct mail can still have a positive impact on the brain from a brand perspective . . . even to those who did not respond to the direct offer. According to Graham Page, "each point of contact with the consumer gives marketers another opportunity to communicate broader brand messages."

As marketers, we need to realize the advantages and impact of different channels and realize that each channel needs to both compliment and supplement the the other channels and the campaign as a whole. We also need to consider more tactile and emotional elements of direct mail to increase the impact of the printed piece. For instance:

Consider heavier stock, textured finishes and unique shapes and die-cuts that may increase the tangibility of the direct mail piece
Try to build on the emotional power of direct mail with more emotional messaging
Don't forget to build a brand message as part of your direct mail package since even those not responding will be left with an impression
Remailing has an advantage of reinforcing the brand communication in a way that digital communication can not

Finally, we need to be careful about making assumptions as to which channel(s) may have the greatest impact on different demographic groups. For instance, while our gut may tell us that the tech-savvy millennials may only respond to social media and digital communication, studies have shown that direct mail is still important in making a purchasing decision.

The 2010 Consumer Channel Preference Study from Epsilon found that for certain categories including financial services, the preference among millennials and even Gen X participants for receiving marketing communication from offline sources such as direct mail and newspapers was 2-3 times greater than for digital communication and social media. Likewise, a 2009 survey from ExactTarget found that 75 percent of the people 25-34 had made a purchase resulting from direct mail. The rationale for these results was due to the ability to cut through the clutter and due to the way the media was consumed (at a pace and time that was convenient to the reader).

In fact, 53% of all respondents to the Epsilon study said they paid closer attention to information they received by postal mail than through email. The research also found that there was an overall strengthening in attitudes toward postal mail between 2008 and 2010 mainly due to the convenience factor (the mail can be read when and where they want and can be saved and passed on).

On additional telling finding from the study is that respondents believed they were getting significantly less mail than in the past and that they were able to spend more time with the mail received. The implication for marketers is that there may be an opportunity to get the attention and more dedicated readership using direct mail since mail volumes are lower. The opportunity may be even greater given the overload of email marketing received by many prime consumers.

So, as you make budgetary decision for 2012, how will you allocate your media funds? What channels will get less and what channels will get more funding. More importantly, how will you measure the impact of the integrated marketing programs you will be implementing?

I would love to hear about the shifts you may be considering.

Banks Must Develop Apps for Tablet Banking

2011-11-11T07:47:00.007-05:00

According to Javelin Strategy and Research's just released third annual report, '2011 Mobile Banking Financial Institution Scorecard - Money Begins to Move on Mobile', tablets are the next wave of technology that will have a major impact on mobile banking. Similar to the smartphone, consumer adoption of the tablet is increasing rapidly and financial institutions will need to quickly accommodate this platform with a user experience that is unique and different from any other platform.

"The tablet is going to be a game changer.", according to Mary Monahan, executive vice president and research director at Javelin who oversaw the development of the new research. "Eight percent are already on a tablet, which is a huge amount when you consider how long the tablet has been out. . . . We think, with the mobile tablet, we will see much more mobile banking. " Link to Bank Info Security interview with Mary Monahan, Tablet: A 'Game Changer for Mobile Banking.

Of the top 25 banks reviewed in the study, 23 offered at least one form of mobile banking services (92%) compared to only 63% in June of last year and 48% in July 2009. In addition, 65% of the banks offered 'triple play' support (SMS text banking, mobile browser and downloadable apps). This was the first time more than half of the top banks supported all types of mobile phones for consumers to access their accounts whenever, wherever and however they wanted.

Financial Institution Mobile Banking Offerings, Javelin Research 2011

Compared to the growth in development of mobile banking applications, the support of downloadable apps for tablets is much slower. According to Javelin, only 30% (7) of the FIs surveyed provided a downloadable tablet app for the iPad, with Bank of America having a 60% market share. No bank currently offers a downloadable app for the Android or any other type of tablet. "FIs need to step up and provide mobile banking services specifically designed for tablets, because that’s where mobile banking is heading.”, said Monahan in an interview.

The experience definitely needs to be enhanced on the tablet since the consumer will spend more dedicated time on the device at a sitting and expects the interactive capabilities of the device to be fully utilized. Being something of a cross between a computer and a smartphone, tablets benefit greatly from applications being written specifically for them so users can easily move through touchscreen menus. "It's an entirely new kind of device, and needs a new type of user experience to go with it," says Carl Tskahara, vice president of Clairmail. "It can't be smartphone banking, only bigger. And it can't be a shrunken version of online banking.".

One of the main differences between tablets and smartphones when it comes to banking is the time users have (and spend) with the device. Tablet banking is usually done at home where there are fewer user distractions and where a richer visual experience is expected. While banks develop native apps for the tablet, they also will need to make the transition between devices seamless. Citibank, for instance, just relaunched their homepage and online banking application, making the PC experience similar to an iPad application (see video here)

From a perspective of growth potential, 8% of mobile consumers own a tablet (it has only been 18 months since the iPad was released in April 2010). Since the introduction of the iPad, many new tablets have entered the marketplace including Android-based and Windows supported tablets that compete directly with the iPad as well as more moderately priced options such as the Nook Tablet (Wi-Fi and 3G) and soon to be released Kindle Fire (Wi-Fi). These developments are important to watch since Javelin indicates that 51% of current tablet owners have conducted banking on their tablet in the past year, with 34% doing so in the past 7 days.

Brand new research from eMarketer indicates that one in three online consumers will be using a tablet by 2014, representing 90 millions users or 35.6% of all internet users. In addition, the research indicates that iPad growth will continue. And while the share of market will decrease (to 68%), the number of users will double by 2014. Finally, the research indicates that the disparity between male and female users will decrease and that the average age of a tablet user will decrease (due to lower costs).

This holiday season could mark the tipping point for tablet ownership, with Retrevo Research indicating that as many as 69% of consumers are considering the purchase of a tablet. Potentially more interesting, the research finds that 44% would consider buying the smaller Kindle Fire, while 12% say they would not consider anything other than an iPad. This could threaten the tablet ownership dominance enjoyed by Apple and could indicate that tablet ownership is reaching the mass market consumer.

It was also found that the presence of dual tablet families is increasing, with 20% of current iPad owners indicating they would buy another iPad and 27% saying they may buy a Kindle Fire. The question remains if owners of either the Kindle Fire or Nook will conduct banking on their devices or whether they view them as only e-readers, browsers or game units or if the less expensive units will be for children.

The demographics of the Fire owner are likely to be different from those of the Apple iPad or other Android tablets, says Monahan. For instance, the age of e-reader owners skews older than that of the more robust tablets, with about 14% being 65 and older compared to 10% who are between 18 and 24 years old. "One of the problems banks will have with this group is that many in the older demographic are content with doing paper banking and are not even online." Monahan says. But as the capabilities and quality of experience of the higher end e-readers continues to increase, the potential to convert this base to mobile/tablet banking increases.

Intuit Financial Services research found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate. "While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future," said Intuit spokesperson Tobin Lee in a recent interview. "Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer's needs. If they don't, someone else will . . . probably displacing a bank's relationship."

The desire for 'anywhere app access' was also discussed in one of my previous blogs and just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications - Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months.

Obviously, providing a point-and-click online banking experience on a PC is no longer enough. Natural user interfaces need to be developed for newer devices with unique capabilities. Just like the rapid development of apps for phones has occurred over the past two years, banks need to move quickly as consumers seek out slicker and more transformational options on their tablets. While porting an online banking experience on to a tablet may work in the short-run, we need to adjust to a consumer base that lives with touch-based interfaces.

Is your organization building unique user interfaces for tablet banking? Is anyone building a new app for Android supported devices? Is there a market for a tablet banking application for use on the Kindle or Nook?

I would love to hear from you.

Big Bank Vulnerability to Attrition Provides Opportunity

2011-11-10T11:38:00.000-05:00

On the heels of Bank Transfer Day, a new study suggests that many of the top banks in the country are vulnerable to continued outflows of customers and deposits. According to a just released 84 page study entitled, "2011 Retail Banking Brand Vulnerability Study" conducted by the Connecticut-based boutique consultancy cg42, the nation's top 10 banks are at risk of losing almost 9% of their customers and $185 billion in deposits during the next 12 months.

The study, based on surveys of 5,600 customers of the top U.S. banks used a proprietary Brand Vulnerability Index (BVI) to compare each bank's risk of attrition, decreased acquisition effectiveness and potential financial loss based on the frequency of customer frustrations; customer sharing behavior (for example, disclosure of frustrations on social media); the impact of frustrations on customer behavior; and the uniqueness of those frustrations to a particular bank.

Source: cg42 Brand Vulnerability Index, 2011

Interestingly, the study was conducted between June 23 and July 25, before the announcement of new debit card fees at many of the larger banks (which were later rescinded). It can be assumed that the events since the study was conducted could only negatively impact the very largest banks.

Not surprisingly, the top four banks (Bank of America, Chase, Citibank and Wells Fargo) have the most at risk, accounting for $135 billion in deposits, or roughly 73% of the projected attrition over the next 12 months. Alternatively, PNC and SunTrust were the least vulnerable of the top 10 banks with 7.4% and 7.5% considering switching respectively compared to an historical annual switching rate of 6%.

Source: Relative Brand Vulnerability Scores of Top 10 Banks, cg42 2011

The following takeaways represent several key findings from the study:

10.3% of Bank of America's customers are expected to defect and move their deposits to another institution in the next year
71% of customers believe that banks merely claim to have consumer interests at heart but in fact only care about their own interests
50% of customers are uncomfortable with how large some banks have become
70% of customers prefer to diversify their financial relationships across several providers

In addition, the study found three frustrations consistently appearing at the top of every bank’s list of frustrations:

Being nickeled and dimed
Not offering competitive rates
Being hit with overdraft charges
And to a lesser extent, “Making promises they don’t keep.”

"It's no surprise that customers are growing increasingly frustrated and feeling like many of these institutions are taking advantage of them -- the data reflects that," said Stephen Beck, founder and managing partner of cg42. "But now -- for the first time -- we actually have a way to determine the effects of those frustrations on the balance sheet. It's critical for financial institutions to understand how their products, services and operating policies truly impact customer behavior."

The study also found a significant difference between the vulnerability of the top 10 banks when customer segments were considered. For instance, PNC had a much more positive score with affluent customers than the mass segment, while TD Bank had a much more positive relative score with the mass segment.

The benefits of the study for banks of any size are that it can provide guidance as to how to allocate resources to improve customer satisfaction and retain relationships while also providing insights into how to exploit large bank competitor weaknesses and capture market share. While the number of people who say they will switch are usually significantly less than those that actually take action, it is clear there is an opportunity for customer disruption in the marketplace. And while the stud indicated that 59% of all consumers survey thought it was too much of a hassle to switch banks, it is clear from the past weekend that patience is wearing thin for many consumers.

What Can Banks Do To Take Advantage of Opportunity

For those banks who would like to take advantage of what appears to be an opportunity for market share growth, a 'disruptor' program many times is effective. In brief, a disruptor program is a form of guerrilla marketing where specific market areas of opportunity are targeted for direct communication.

Usually, a bank will evaluate their branch locations and determine where a trade area overlaps between a bank/branch they want to target and their branch trade areas. The overlapping areas provide an opportunity for unique targeting of customer and prospect communication. At times, multiple organizations are targeted.

Disruption communication can be targeted to areas of trade market overlap

While used frequently when a competitor changes their name, closes a branch, etc., this same program can be used when a bank(s) experiences a drop in trust or loyalty or when pricing gaps are evident. Obviously, the findings in this study could provide opportunities for banks of all sizes if a shift in market share (and deposits) are desired.

Is your bank hoping to grow deposits over the next 12 months? Is your bank hoping to shed deposits in this deposit rich environment? Do you have a disruptor plan in place to take advantage of the opportunities identified in this study?

I would love to know.

Banking Industry Leaders Discuss Findings of Intuit Financial Management Survey

2011-11-03T22:13:00.000-04:00

In conjunction with the release of Intuit Financial Services' 4th Annual Financial Management Survey, Banking.com hosted a Twitter Town Hall yesterday, bringing together financial industry leaders to discuss loyalty and channel migration as well as some of the challenges and opportunities facing the banking industry. The following is a recap of the very robust one hour dialogue. (the complete transcript can be found using #IFSsurvey on Twitter)

The Town Hall discussion began around the issue of customer loyalty and the finding that many consumers thought their financial provider was not 'in touch' with their needs. Given the events of the past week, where many large banks reversed decisions around the implementation of fees due to highly vocal negative sentiment amplified by social media and credit union trade group support, most participants believed that banks are not leveraging current insight and technology to make better decisions and provide value added service.

Tobin Lee (@Tobin_Lee), Intuit Financial Services spokesperson stated, "It is time for a banker mindset shift; cultivating deeper relationships, more meaningful engagement and stronger advocacy for growth". Campbell Edlund from EMI (@EMI_mktg4sales) added, "These findings provide a very strong argument for a communications plan around the customer lifecycle".

The already robust dialogue really took off as the discussion moved to the acceptance and utilization of banking channels (especially mobile and tablet banking). Bradley Leimer (@leimer) from Mechanics Bank in the San Francisco Bay area believed mobile strategy will be the key to future engagement due to the portability and 'always on' nature of the device. He also believed that the correlation between mobile banking and smartphone use (41% of respondents owned a smartphone) could indicate a lower engagement with financial technology in general for non-smartphone users.

Edlund added that while there is currently a higher penetration of smartphones than tablets, tablets can not be ignored by banks since Oracle found that tablet ownership is expected to increase significantly in the next year. She also warned that we need to be cautious not to get ahead of the acceptance curve. . . "we always underestimate inertia". Brett King (@brettking), author of Bank 2.0 and founder of Movenbank went a step further stating that within 3 years all bank websites will need to be built for tablets first. He also believed that branches will continue to diminish in presence and utility (according to the study, 27% of respondents still visit their branch once a month in addition to ATM visits).

Mark Zmarzly (@BankMarketing) did not believe bricks and mortar would completely go away, but definitely felt the relevance of branches will change. "It's easy to say branches will go away, but is that realistic? They have to evolve, but customers will never let them become 100% irrelevant." King responded that with the drop in branch transactions, the economics of the branch are not working. I (@jimmarous) illustrated the model of Boeing Employees Credit Union in Seattle, where only 2 of the 40 branch network have tellers, while the installation of multiple ATMs at offices and around the city have an average of 10,000+ transactions each. 94% of the transactions at BECU are done electronically, according to Howie Wu (@howie_wu) from the credit union.

"Relevance is the key to banking for tomorrow," stated King. "By 2015, mobile will be the #1 day-to-day channel, OLB #2 with the branch network being #5. The challenge for mobile and online will be developing great customer journeys". King doesn't believe these journeys exist today and believes the goal should be to have banking so pervasive that it is not tied to a branch, device or website, but is everywhere customers are.

Edlund pointed to the retail industry as a forerunner for what we will see in financial services. "Social and tablets will change the landscape in banking as they have in retailing", Edlund stated. (During the Twitter Town Hall, there was even a discussion of the integration of TV as a channel for banking). Representatives from EMI in Boston (EMI_mktg4banks) emphasized that we will continue to see a blurring of all channels with social media providing some of the glue for enhanced communication. Gamification and location-based rewards were also seen as a key elements of engagement by Leimer and Edlund.

A conundrum was discussed with regard to the needs of small businesses where checks still prevail and the need for branches. King believed that we will see significant attention paid to mobile payments for businesses in the next couple years, while I added that tablet apps for business are also being developed to respond to the needs of the business community. NFC was also seen as a game changer with regard to the need for branches for small businesses. Bob Williams (bob_williams) from Harland Clarke believed that, while check usage is definitely dropping, there are much greater efficiencies today than in the past with RDC and other electronic tools.

It was clear from the Intuit research that was just released, the Bank 2020 research released in April, and the discussion during the Twitter Town Hall today that there is significant disruption in the banking industry with regards to channel support and device utilization. The consumer movement to new banking channels is mirroring the movement to more sophisticated devices such as smartphones and tablets. Many consumers are NOT choosing one device or channel over another, but are using multiple devices depending on their personal needs.

Consumer desire for an integrated banking experience without friction will need to be supported by banking organizations in the future. Distribution networks (whether tangible or intangible) will need to support an expanding array of capabilities that may include integration within retail or social sites as opposed to standing alone.

As I stated to the participants of the Twitter Town Hall at the end of today's discussion, "If banks are not prepared for the channel migration that is already underway, they may experience the impact of 'Bank Transfer Decade'".

Note: A summary of the findings of Intuit Financial Services' 4th Annual Financial Management Survey and recently released related research is available in my previous Bank Marketing Strategy blog post.

If you weren't able to join us, what are your thoughts around the impact of channel shift away from the branches and towards other media? Will we see the elimination of branches completely? Will another device or technology unseat smartphones and tablets?

I would love to hear from you.

Consumers Are Increasingly Using Multiple Devices to Support Banking Needs

2011-11-03T00:51:00.002-04:00

Traditional bricks and mortar facilities are being visited less as the use and importance of online and mobile devices continues to increase according to Intuit Financial Services' 4th Annual Financial Management Survey released yesterday. According to the survey, while a large percentage of consumers still manage their finances offline (45%), the percentage of consumers using online services from their financial institution has continued to increase annually; increasing 11% since 2009 to 38% in 2011.

The main reason consumers said that they don't visit their bank branch as often as they used to is because they are visiting their FI's website and use their online banking tools (76%). These online banking tools are so important that one-third (33%) said they would switch their relationship to another institution if there were better online tools offered elsewhere.

Source: Intuit Financial Services' 4th Annual Financial Management Survey

The importance of online tools was reinforced by Brett King, author of the bestseller Bank 2.0 and founder of direct mobile banking start-up Movenbank at this year's BAI Retail Delivery Conference in Chicago. "Banking is quickly changing from a place you go to something you do everyday," stated King. He provided a chart from the American Bankers Association and Nielsen Research that illustrated the channel migration occurring today and projected in the future.

Source: ABA, Nielsen Research

It appears that the growth of mobile banking is only limited by the growth of ownership of a smartphone according to the Intuit study. Forty-one percent of all respondents indicated ownership of a smartphone, 23% said they used a mobile banking solution, and an additional 17% intend to try mobile banking in 2012. The primary reason consumers indicated that they do not use mobile banking was because they do not own a smartphone (25%) followed by the fact that they prefer to bank online (22%).

Source: Intuit Financial Services' 4th Annual Financial Management Survey

These findings are similar to the findings last week from comScore that drew a correlation between mobile banking and smartphone adoption. "The investments in mobile made by financial service institutions, along with the continued growth in smartphone adoption, have had a positive effect on the use of mobile financial services," states Sarah Lenart comScore vice president for marketing solutions.

As expected, the adoption rate of mobile banking is demographically skewed. Young adults (aged 18-32) are three times more likely to carry their bank in their pocket, compared to Gen X, baby boomers or seniors. And while 65% of mobile banking users access their accounts through the internet/Web, 28% use a mobile application. "Regardless of age, each customer expects to connect to their financial institution in their own way," said CeCe Morken, president and general manager of Intuit Financial Services.

In another Intuit study of more than 50,000 mobile banking customers, it was found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate.

"While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future," said Intuit spokesperson Tobin Lee in a conversation yesterday. "Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer's needs. If they don't, someone else will . . . probably displacing a bank's relationship."

The desire for 'anywhere app access' is also supported by a just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications - Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This is important to prepare for since the same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months. These findings were also reinforced in last April's, Intuit 2020 Report: The Future of Financial Services.

As customers continue to use multiple channels to connect with their bank, it will be increasingly important to have a 360-degree view of customer device touch points and to leverage the advantages of each device to provide an optimum customer experience. The current anxiety over online and mobile security needs to be addressed at the same time as innovations such as near field communication (NFC) and location based services get integrated into online and mobile solutions. Bankers will need to get ahead of the payments innovation curve and prepare for major distribution channel disruption. In short, banks will need to do a paradigm shift by becoming nimble at a time of increased regulation and consumer scrutiny.

Are today's banks prepared for the massive changes ahead? Or will new online organizations such as Ally, BankSimple, Movenbank and others steal the hearts and wallets of Gen Y and device savvy consumers?

I would love to hear from you.

Did Social Media Cause Big Bank About-Face?

2011-10-31T23:13:00.004-04:00

A month after Bank of America and other large banks announced the levying of a monthly debit fee for debit card use, virtually all of the big banks that were either testing or had implemented a debit fee have backed off of their plans amid a groundswell of negative publicity.

On Friday, Chase and Wells Fargo announced that their respective debit fee pilots would end, and today SunTrust and Regions Bank announced a change of fee policies with refunds for fees already charged customers. Over the past week, many of the other top banks in the country like U.S. Bank, PNC Bank and TD Bank made strong statements that they would not be implementing debit fees. And in an surprise move (after the initial posting of this blog), Bank of America rescinded their planned $5 debit fee based on 'consumer concern'.

Was this unprecedented big bank about-face caused by the significant public response initiated through blogs and social media?

Almost immediately upon the announcement of the $5 fee by Bank of America, a grassroots movement began on Facebook under the name of 'Bank Transfer Day'. President Obama and Richard Durbin blasted Bank of America for their decision and trade publications like the Credit Union Times immediately jumped on the Bank Transfer Day bandwagon, sharing local and regional initiatives while encouraging member organizations to extend November 5 Saturday hours.

CUNA and the state credit union leagues also joined the effort by quickly creating marketing and advertising support for the social media fed Bank Transfer Day, including model press releases, Q&As as well as management and staff talking points. Even independent organizations like the Consumers Union provided a 'How to Change Your Bank' video and a 'Move Your Money Checklist' on their www.defendyourdollars.org website.

In its own defense, Bank of America tried to blame the recent Durbin Amendment for it's new fee which was not well received by consumers and only added fire to an already growing discontent across social channels. "Bank of America's new debit card fee was the last straw for many consumers who are tired of banks that got bailed out and are now turning around and hiking fees," said Norma Garcia, director of Consumers Union's financial service program.

Despite all of these efforts and initial reports of increases in new accounts at several large credit unions immediately after the Bank of America announcement, the actual transfer of new accounts to small banks and credit unions may be less than spectacular. As Jeffry Pilcher from The Financial Brand wrote last week on his blog entitled, "4 Ways 'Bank Transfer Day' is Silly", this effort may not create any more new accounts than previous movements like the Huffington Post "Move Your Money" effort. As he and other industry pundits have mentioned, inertia is difficult to change, especially since transferring bank relationships is so difficult for the consumer.

But while social media efforts may not result in massive movements of funds, the impact did result in the movement of something much more significant . . . the previously stated policies of some of the largest banks in the country.

As mentioned by Jesse Torres on his Social Media and Banking blog last Sunday regarding Bank Transfer Day and related efforts, "Such an attempt 10 years ago would not have resulted in such an outcome. However, with social media's immediate and widespread impact, banks must now consider the the Social Media Effect when devising corporate strategies." He goes on to say that Bank of America and the other large banks that instituted a debit fee failed to realize the impact of potential public outrage.

The public responses associated with the debit fee reversal by SunTrust and Regions Bank today illustrate the dramatic impact that social channels can have in establishing (or changing) corporate pricing and policy. "We believe banking is a relationship business and recognize the importance of responding to client preferences," stated Brad Dinsmore, consumer banking and private wealth management executive at SunTrust. "We've listened to our customer's feedback and will provide the convenience and security of check cards at no additional charge as part of our checking accounts."

Similarly, John Owens from Regions Bank stated, "We have heard from our customers and are responding to their feedback by eliminating the monthly fee."

Do you feel the impact of negative consumer reaction that was amplified by social media efforts like Bank Transfer Day resulted in the reversal of debit fee decisions? Will this mark the end of banks moving en masse as they have done in the past with regard to fees and policy? Will future fees be less transparent?

I would love to hear from you.

Kaching Ushers In New Era of Mobile Banking

2011-10-26T07:16:00.008-04:00

The Commonwealth Bank of Australia has broken new ground in the advancement of mobile payments by introducing a new iPhone application that allows users to pay friends or businesses using Near Field Communication (NFC), Facebook identification, an email address or a mobile phone number.

Kaching (pronounced like the cash register sound Ka-Ching) will initially only be available for users of the iPhone 4 and 4S (with soon to follow Android support) using a specially designed case with built in NFC chip. With this case, the phone will allow the user to simply tap and pay at a PayPass terminal. 'This banking breakthrough marks a significant milestone in the evolution of how people pay and receive money from each other," stated Commonwealth Bank of Australia chief information officer Michael Harte.

According to a CBA spokesperson, the use of a specially designed NFC case is only an interim solution until iPhone, Android and other smartphones introduce new versions of phones with NFC integration built in. In what some believe could be the beginning of the end for plastic credit and debit cards and potentially even cash, this form of electronic payment would be conducted 24x7 in real time if both sides of the transaction are CBA customers and one to two days if the payment is made to a customer of another bank.

CBA has more than 6.2 million online banking customers and is the seventh largest bank in the world. According to the bank, more than 16 million logons from a mobile device were made in August (a 229% increase from last year) with close to 80 percent of these from an iPhone.

The integration with Facebook is a first in the payments world, but is felt to be a logical extension due to the acceptance of Facebook and the very strong smartphone usage by Facebook users. The iPhone application even integrates other iPhone features such a GPS function to find branches and ATMs.

Kaching iPhone Mobile Payments Screen

The Kaching app will include password encryption technology to ensure a lost or stolen phone would not be compromised and not banking information will be stored on the phone. Payment recipients will also be protected, with all un-retrieved funds credited back to the payer after 14 days the bank said.

While this technology or integration has yet to be introduced in the United States as a mobile banking application, it is expected that new virtual banks such as BankSimple and MovenBank will leverage this technology as part of their rollouts. According to Brett King, founder of MovenBank and author of the bestselling book Bank 2.0, the use of Facebook for payments or even to complete the new account application process is not so far fetched as security and acceptance of Facebook continues increase. In addition, King believes virtual currency like Facebook credits may replace today's physical currency ('The Bank of Facebook: How Will Facebook Interact With the Global Economy' Fast Company Expert Blog by Brian Solis).

NFC support is increasing in the U.S. with the launch of the Google Wallet last month that allows for consumers to pay in select stores with phones running its open source platform. NFC is expected to gain much wider acceptance with the anticipated integration within the next generation of smartphones, especially the iPhone 5.

So, is this the beginning of the end for credit cards, debit cards, checks and cash? Will this introduction hasten the full scale introduction of new banks and bank platforms that leverage new technology and payment methods? Will branches and ATMs even be needed in the future?

I would love to hear your thoughts.

Relationship Trumps Fees for Small Business Bank Satisfaction

2011-10-25T05:21:00.002-04:00

At a time when discussion around higher bank fees is at a fever pitch, small businesses value the human touch more than ever and are more satisfied with their banks than they were in 2010 according to the just released J. D. Power and Associates 2011 U.S. Small Business Banking Satisfaction Study.

The study, which ranks satisfaction in the areas of product offerings, facility, fees, account information, account manager, credit services, problem resolution and account activities saw all of these categories except fees improve on a year over year basis.

"Contrary to popular belief that most customers are unhappy with their bank, small business banking customers are more satisfied than last year with nearly all aspects of their banking experience," stated Michael Beird, Director of Banking Services at J. D. Power and Associates. In a webinar done yesterday by the firm, it was emphasized that having a person assigned to the relationship 'who understood their business' was a primary reason for improved satisfaction. It was also mentioned that banks should not 'boil the ocean' trying to be the best in each category, but should leverage relationship managers to improve performance in as many areas as possible. In fact, while missing a single KPI does not impact satisfaction scores significantly, missing 3 or more measures can dramatically impact satisfaction.

Source: J.D. Power and Associates 2011 Small Business Banking Satisfaction Study

Illustrating this point, M&I Bank was the highest rated bank in customer satisfaction this year (and the bank with the greatest increase), yet they also had some of the highest incidence of fees of banks in the study. In yesterday's webinar, it was mentioned that while much of the negative press recently deals with fees, having a relationship manager that could answer questions and discuss fee changes ahead of time went a long way towards maintaining a strong satisfaction rating for M&I and other top ranked organizations..

Source: J.D. Power and Associates 2011 Small Business Banking Satisfaction Study

Other studies reinforce the importance of a strong relationship manager to assist small businesses in navigating difficult economic and business conditions. An August study entitled, 'Businesses Seek the Human Touch from Their Banks by Greenwich Associates found that the importance of a relationship manager increased by 5% for small business since 2009 and by 11% by mid-sized businesses. And even though the internet is far and away the most used channel for transactions by small businesses, a drop in the value of the internet as an interaction platform also occurred during this period, indicating that business owners are looking for more direct and personal assistance as the business environment becomes more challenging.

Even with this improved satisfaction, the J.D. Power and Associates research and research released in August by The Aite Group entitled, 'Community Banks: Maximizing the Small Business Opportunity' indicated a significant opportunity for banks since small and mid-sized businesses are still willing to transition financial service providers.

According to the J.D. Power and Associates research, between 10-12% of small businesses say they are likely to switch relationships in the next 12 months. Only between 25%-30% said they would definitely not switch. The Aite Group research is more concerning for banks, since they found that 20% of small businesses would be looking for a new banking relationship in the next two years. The Aite Research also found that satisfaction had decreased in their study from 2009-2011.

Greenwich Associates consultant Pete Garrison states, “For banks, there is an opportunity to provide added value to customers at a time in which client trust and loyalty remains tenuous. For businesses, our research shows that some of your competitors are in fact receiving proactive outreach from their banks,

who are offering valuable assistance in areas like increasing cash flow efficiencies. If you’re not getting the same type of advice, you should ask your relationship manager why that’s the case. If you find your bank is unable or unwilling to provide this type of advice, explore other options.”

Some of this new business opportunity may come from the largest banks. In all recent studies reviewed, the largest banks in the country fared the worst, with significantly lower satisfaction scores than the regionals, super-regionals and community banks.

Source: Aite Group Community Banks: Maximizing the Small Business Opportunity, August 2011

Does your bank have a 'high touch' strategy for your small business clients? Do you you have a communication strategy for delivering fee changes that is clear and easy to understand? Do you find a way to reach your clients at least 3 times a year (found to be the tipping point by the J. D. Power and Associates study)?

I'm interested in how your organization is serving this very lucrative market.

Is Bank Transfer Day a Small Bank Trojan Horse?

2011-10-20T18:47:00.000-04:00

"A Good Day to be a Credit Union" is the headline of an article from Myriam Digiovanni in the October 19 Credit Union Times discussing the upcoming November 5 "Bank Transfer Day".

REALLY??

According to numerous news articles and coverage in both mainstream and social media, community banks and credit unions across the country are rallying around the anti-bank sentiment that has germinated from the announcement of a $5 debit card fee by Bank of America on September 29 and the increase in fees by other large banks. Not only have new account openings reportedly increased at several large credit unions, but social media traffic on the official Bank Transfer Day Facebook page and on other national credit union sites such as www.ASmarterChoice.org and www.CULookup.com have also seen spikes.

But is all this attention and potential new business a fortuitous gift or a potential threat to the well being and revenues of community banks and credit unions? It may just depend on who you ask and how the financial institutions on the receiving end of the disgruntled customer exodus handle their new customers and members.

Bank Relationship Inertia is Powerful
First of all, the number of people who are complaining may be much higher than those willing to switch. "As angry as you might be, the effort of figuring out some alternative relationship, choosing one, getting set up and the risk that the new one might be no better than the old one . . . those are huge costs," states Peter Fader, a marketing professor at The Wharton School of the University of Pennsylvania in an interview with the Chicago Tribune. "Personal relationships, the accumulated points, the brand relationship, the start-up costs and the learning curve are all intangible costs, but they are very powerful," Fader goes on to say.

The power of the relationship is also reinforced in an academic study conducted by Purdue University entitled, 'Relationships and Individual's Bank Switching Behavior' where a very weak correlation was found between the propensity to switch banks and pricing. In contrast, a much higher correlation was found between the depth and tenure of relationship and the propensity to stay with a current financial institution.

Banks have worked hard to achieve engagement with their customers through the cross-selling of additional products and services such as direct deposit, online and mobile banking, online billpay and other services. At Bank of America, there is even the possibility of a linked savings account established as part of the Keep the Change savings program. This 'stickiness', in addition to the potential tangible costs of switching at some banks who may charge a fee for closing an account (especially a newly opened account where a premium or offer may have been involved) make the changing of banks daunting for many.

The Friction of the Switch Process
For those consumers who decide to switch, many will not complete the switch process either by not associating the aforementioned engagement services or by not funding the new relationship. As a personal example, while my family moved from California to Ohio over three years ago, I have not completely severed ties with my previous bank where direct deposit and automatic payments still remain. While my new banking relationship in Ohio is sufficiently funded to avoid fees, my primary checking relationship remains in California.

According to a brand new research report from Javelin Strategy and Research, 'Faulty Process Hobbles FIs in the Battle for Acquisition, Profitability and Retention', the process of opening account online is both flawed and frustrating. In a study of the top 10 banks and 5 technologically advanced smaller organizations, the likelihood of being able to successfully open and fund a new checking account is just slightly over 50%. If you are new to a financial institution, the chances of success go down even further.

With almost one quarter of new account holders opening their desired account online in 2011, the financial and relationship impact of a poor online account opening process is significant. Hampering the process at many banks is the fact that there may not be a way to open the accounts online according to the Javelin study.

The Demographics of the Disgruntled
According to an American Bankers Association study conducted in August, as many as 70% of consumers don't pay anything for their checking account today. These households either were enrolled in a Free Checking account or (more likely) held balances or related services that allowed the fees on the account to be waived. Of those households surveyed, an additional 11% paid fees of $3 or less. That leaves only 19% of U.S. households that were paying a fee of more than $3 a month for checking as of the August survey date.

So who is still paying a fee and might be the most vocal of the disgruntled? Most likely, it is those households who do not carry an adequate balance in their account(s), do not have a direct deposit or online banking relationship, or do not have a deep enough relationship to get their fees waived.

The scenario that Bank of America (and other large banks) may be actually 'firing' unprofitable, low balance relationships was well documented in Ron Shevlin's blog, 'Maybe Bank of America Has a Plan'. With the new fee being imposed, the customer has the choice to pay a fee for their debit card at Bank of America, expand their relationship at Bank of America or leave. In his post, Ron shows how Bank of America's profitability could actually increase with the diminishment of lower balance accounts and how the recipients of these relationships (smaller banks and credit unions) could be adversely impacted by the influx of new customers.

The Importance of Engagement and Onboarding
Finally, for those customers who are walking into the doors of a new bank or credit union, the importance of a robust process of new customer engagement and onboarding couldn't be more important. According to Mike Bartoo, Regional Manager at Marquis and financial industry veteran, "Hope is not a strategy" when it comes to building new relationships. According to Mike, banks should look back to the last 6 months of account openings to determine how well they have done with getting new customers to open 'sticky' services. If success in cross-selling has been poor, attrition has been more than desired and relationships are not profitable, there is no reason to believe the new influx of accounts will perform any better. In fact, the results may be worse.

I have covered the importance of engagement, onboarding and cross-selling extensively in this blog over the past two years, illustrating that the future profitability of a relationship often will be determined by a bank's outreach during the first 6 months of the relationship. History shows that most relationships that are unprofitable after 6 months remain that way.

So, while there may or may not be a significant amount of movement of accounts between financial institutions leading up to and following Bank Transfer Day on November 5, banks should be cautious of the types of accounts they open and determine whether they are prepared to make sure these new relationships are profitable (or are relationships at all).

What is your organization's perspective on Bank Transfer Day? Does your institution stand to benefit or lose from customers leaving or coming to your offices? Or will Bank Transfer Day be a non-event in your opinion?

I would love to hear your thoughts.

Siri: My Bank 2.0 Concierge

2011-10-18T07:16:00.002-04:00

The introduction of Siri as the star feature of the new iPhone 4S already appears to be setting the stage for a major change in the way people interact with their phones. By combining insight reminiscent of IBM super computer Watson and the voice of a willing assistant, marketers from all industries can leverage this technology to simplify the way we complete tasks with voice commands. There is no doubt that Siri's introduction represents the mainstreaming of voice recognition and natural language interface in much the same way that the introduction of the iPad mainstreamed tablet computing.

Siri represents something of a paradigm shift in how we will interact with mobile devices going forward, and there are few places where this movement from keystroke to voice command will impact business more than banking. While today's voice technology in banking does fairly well in being able to recognize basic transaction commands and process rudimentary transactions, leveraging the technology and humanized tone of Siri and similar programs will allow banks to process an endless array of interactions seamlessly from the convenience of the phone.

Much like you would use a hotel concierge to ask various local-themed questions, imagine a world where my future banking concierge based on Siri technology will be able to work on my behalf and answer questions such as:

Where is the closest ATM where I won't have to pay a fee?
Where is the nearest restaurant with an NFC enabled payment device?
Please transfer $600 into my checking account from my money market account and make my mortgage payment at XYZ bank.
When will the most recent deposits I made clear?
Are there any merchant-funded reward offers that I am eligible for at Southfield Mall?
Where is the closest branch with Saturday hours (assuming I would ever need to visit a branch)

What is nice is that my future banking concierge would process all of my questions with the pleasant nature of my current GPS system, listening intently and not getting frustrated if my question seems trivial or repetitive. In fact, the intelligence behind applications like Siri would get more intelligent over time and evolve based on my behavior. And instead of receiving a link, search box, application or an ad, I will receive a verbal confirmation or a direct answer.

Leading banking organizations will most likely also find a way to allow me to open a new account without ever picking up a pen, typing in personal information or meeting a new account representative face-to-face. By taking insight already available within my mobile applications and various social media sites I use, my banking concierge could easily fulfill the requirements for establishing a new account whenever I desired. This capability will obviously hasten the potential reduction of vast branch networks.

While Siri only works with the iPhone 4S, alternative voice recognition applications like Vlingo (available on Android as well as iOS devices) and Nuance (which recently acquired Swype) will definitely benefit from the re-introduction of Siri by Apple as well. In fact, last week, Boston-based Vlingo saw activations increase by 50% daily, according to GigaOm at a time when usage overall has skyrocketed.

Source: PC Magazine, October 17, 2011

The key to success of Siri and other voice applications is the natural language interface, or the ability to add context to words spoken that enable the application to figure out what the user wants to do. That requires a semantic engine and artificial intelligence that continually gets better over time. In the banking world, however, the combination of transactional processes and questions are comparatively simple. In addition, with the heightened competition for the best interface, the capabilities of these systems will continuously improve while the investment needed to leverage these capabilities will become less.

Do you think Siri and related applications will be integrated into banking by legacy financial organizations? Will the integration be fast enough to fend off the new entrants into the industry such as BankSimple and MovenBank or even current online banking providers such as Ally?

I would love to hear your opinion.

Collecting Behavioral Insights Increases Value of Relationship

2011-10-12T09:59:00.000-04:00

Over the past 30 years, the new account opening process hasn't changed very much. Sure, there is a far greater use of technology at the new account desk and there is the opportunity to open accounts online, but the overriding objective for most banks is still operational efficiency as opposed to building the foundation for a lasting relationship.

This is why new customer onboarding has become so important to the banking industry. Without a rapid deployment of communication around the best way to use the product(s) opened and encouragement to expand the functionality of the product by taking advantage of engagement services such as online banking, direct deposit, bill-pay, mobile banking, etc., the customer experience will be lessened and the potential for attrition increases.

In fact, first year attrition continues to be a strategic challenge at most banks, with defection rates of 20%, 30% or even 40% not being uncommon. For those organizations with a multi-touch, multichannel onboarding program, however, the rate of attrition drops significantly. Unfortunately, even for those banks that have an onboarding program in place, the program may not be optimized due to a reliance on transactional and demographic insights as opposed to psychographic and behavioral insights.

While demographic and early transactional data can provide directional guidance, a deeper knowledge of the customer's financial goals, channel preferences, product usage, preferred channels and reason for coming to your institution is needed to personalize the onboarding communication and move the customer from product engagement to relationship entrenchment. The importance of gathering this additional insight was highlighted in the Javelin Strategy research entitled, '2010 New Account Onboarding: Using a Systematic, Tactical Approach to Deepen Financial Customer Relationships'.

According to the research, communication channel preference, messaging, offer selection and even transaction channel choice can be impacted by behavioral characteristics such as why the consumer came to your bank in the first place, the lifestage of the customer and the financial services the customer has used in the past.Unfortunately, these types of questions are usually not pursued during the efficiency-driven new account opening process.

To fill in this knowledge gap, best-in-class financial organization supplement traditional new account opening with an onboarding process that includes a short survey of needs and behaviors of the new customer. While this survey can also measure customer satisfaction with the new account opening experience, most banks focus on gathering insights into the reason for opening the new account, communication channel preferred, the financial goals of the customer and what financial services the new customer holds elsewhere. In addition, some banks ask questions to determine key life events that may be on the horizon and determine who in the household will be in charge of managing the new account.

According to Sherrie Riley, Vice President of Sales at Scantron, a leading provider of assessment and survey solutions, "New account surveying is another way that banks are reaching out to find out more about their customers. This first touch assessment fits within a series of strategic survey programs that help an organization measure, monitor and improve the customer experience". The new AllianceLink™ Financial surveys include the a New Account, Closed Account Survey, Teller Transaction Survey, and Product Survey.

Source: AllianceLink Financial

Without new account surveying, banks are limited to just basic demographic and transactional data since the customer has no history with your bank. This limited insight relegates a bank to treating all new households the same or building segmentation on only limited information as to the household's growth potential. With the application of additional insight, we have found banks improve the overall value of relationships by 50%, 100% and even more than 150%, while reducing attrition and increasing both engagement and share of wallet. In fact, the question around services held at other organizations has had the ability to impact relationship cross-sell rates by 1.5 to 2 services on average during the first year of the relationship.

In the same way that using the opening balance in the account is a poor proxy for determining future value of a relationship, an incomplete picture of the customer's needs and behaviors can lead to sub-optimal communication treatments, offers and/or messaging. By using additional insights captured through new customer surveys, banks can improve their onboarding program by identifying those customers with the highest potential and can better serve customers with lower potential by providing services geared to their unique needs. This will reduce attrition and will increase the likelihood of share of wallet build.

Does your bank capture additional insights to enhance the new customer experience and increase the potential value of the relationship to your bank? I would love to know.

Marketers Not Aligned With Consumer Marketing Channel Preferences

2011-09-19T22:27:00.000-04:00

Technology is rapidly changing the way consumers interact. We wake up each day to a barrage of messages coming from both traditional and new media. We check our Facebook posts and text messages at the same time we watch television, read the newspaper, listen to the radio or conduct work online.

Marketers have long recognized the shifts in media consumption that are redefining how customers absorb information and offers. However, recent studies indicate that marketers may not be in total alignment with consumers as to how the new media is consumed and their degree of reliance on various media for making buying decisions.

A new research study by Acxiom entitled, Tug of Love: The Changing Relationship Between Consumers and Brands found that more than four in five people (82%) believed they were in control of the relationship between themselves and their brands (with 'control' being defined as receiving the information they desire, when and through the media they want). This was more than 50% higher than marketers thought, indicating that 'push' broadcast marketing is quickly being replaced with 'pull' marketing where the individual is in charge of message consumption.

Interestingly, the perception of having the ability to filter messages that were either inappropriate or not of personal interest increased with age, possibly due to less messages being sent using electronic channels and due to improved targeting available for older households. Older households also benefit from having longer relationships with their brands, resulting in less bombardment of messages occurring.

Despite feeling in control, however, one in four households still say they receive 'inappropriate' marketing communications, while marketers feel they do a better job of targeting. Even with this ability to screen messages, only 27% of consumers believed their brands understood them or communicated with them appropriately. The good news is that some of the best numbers were recorded for financial services communications, even though less than half believed they were understood and communicated with well.

One of the most surprising findings in this study and in a recently published study from the European Journal of Marketing entitled, Comparing Perceptions of Marketing Communications Channels (Vol. 45, No. 1/2, 2011, pp 6-43), was that although email is well established and widely used by marketers, the traditional channels of television, radio, newspapers and to a significantly greater degree, direct mail retain historically favored attributes of trust and reliability. Conversely, some of the newer media such as SMS and mobile received much lower rankings than marketers believed they would, making these channels less powerful or accepted by consumers of any age category. In fact, direct mail was reported by both customer and prospect groups in both studies as being in the top two marketing channels preferred next to email.

In the Acxiom study, 71% of current customers cited direct mail as an appropriate way of reaching them, with 57% of prospects preferring direct mail. These acceptance ratings were far above what marketers thought who were asked the same question. Only 35% of marketers thought prospects would welcome direct mail. They were much closer with customer perception, noting that they believed 75% would be positive about direct mail. Email acceptance was 77% for customers and only 52% for prospects, still significantly higher than other newer media. In fact, only 12% of consumers felt mobile advertising was appropriate, with the figure for SMS being only 9%. As could be surmised, marketers believed the acceptance rate on these media options would be much higher. Despite the industry focus on and massive growth of interactions through social media, only 4% of consumers wanted to be reached using these channels.

Customer Acceptance of Alternative Marketing Channels (Acxiom, 2011)

Prospect Acceptance of Alternative Marketing Channels (Acxiom, 2011)

The European Journal of Marketing study dug deeper into the perceived attributes of the different media channels as determined by both the sender and recipient. As could be expected, channels that were considered annoying or irritating included SMS, phone, door-to-door and email. Consumers found direct mail to have the qualities of being informative, reliable and trustworthy, while they found most mass marketing to be informative and enjoyable.

Perceptual Mapping of Marketing Channel Attributes - Recipient (European Journal of Marketing, 2011)

'Senders' as defined by the study had a pretty close correlation with recipients regarding most marketing channels except they viewed email in a significantly more favorable light than consumers. Part of this bias may be caused by the lack of measurement between the stages of clicks and consumption of the email opened. The chart below illustrates the perception of the senders of marketing messages on the same dimensions as the above graph.

Perceptual Mapping of Marketing Channel Attributes - Sender (European Journal of Marketing, 2011)

Regression analysis found, not surprisingly, that a marketing offer is more likely to be successful if the recipient regards the information as important. In addition, higher involvement with the product or service is also more likely to result in greater engagement. Finally, it was found that receivers are more likely to be persuaded by the marketing offer in a particular channel if they find communications in that channel to be enjoyable and entertaining, and if the channel that has a reputation for reliable information. Again, this illustrates why some traditional channels such as direct mail and, to a lesser degree, email continue to perform well.

While the Acxiom study was conducted in Europe and the European Journal of Marketing Study was conducted in Australia may impact the specific numbers, but most likely dramatically change the trends found. Both of these studies and a recent white paper published by The Winterberry Group entitled, The Multichannel Revolution: New Media, New Approaches, New Opportunities also emphasized that no single channel strategy will be enough in today's multichannel world. Instead, marketers need to develop a long‐term, audience‐driven multichannel strategy, gaining insight into customer attributes, demand drivers and response cues that are the key to optimal budget allocation.

Finding that right balance of media (and having the courage to respond quickly to its changing dynamics) will
prove essential to growth in tomorrow’s competitive marketplace.

I would like to hear from you. How is your bank's media mix changing as you plan for 2012 to reflect changing media consumption patterns, shrinking budgets and greater emphasis on ROI?

An Open Letter to BankSimple

2011-09-15T06:39:00.002-04:00

On January 18, you impressed me when Rachel Giuliani from BankSimple wrote an email to me unexpectedly asking me for my "loves, hates, quibbles, hopes and dreams" regarding my financial life. Her email seemed surprisingly personal coming from a bank I had signed up to be part of a beta test several months earlier. In her letter, she piqued my interest when she told me she represented a 'new' bank that was committed to building the best possible customer service without surprises.

Her timing was great since I had been a bit upset with my current bank. Not only had my bank changed their fee structure without a clear notification, but they seemed to be looking for new ways to generate fees for actions I had become accustomed to not paying for. Sure, I could avoid the fees as I had in the past by maintaining a steady balance in my account, but even that had been raised to a level that really didn't correspond to the value I felt I was receiving from the bank.

You made it so easy for me to respond to Rachel's email since she even provided her email address (rachel@banksimple.com). And, as opposed to feeling like my response would end up in some black hole of customer service or would be responded to by a person not even named Rachel, it was easy to see that my new pen pal had been hired just a week earlier as the first of two customer service representatives to provide 'brilliant customer service'.

I was definitely impressed that almost immediately after a wrote my email to Rachel late at night, she responded within 10 minutes! I was falling in love with your bank even though it hadn't opened yet. I was so impressed that I immediately tweeted about my experience, spoke about my dialogue with Rachel at conferences, and posted a blog entry about my new friend from your bank on this site (A Little Note From Bank Simple, January 18, 2011). That blog post generated by far more traffic than any post I have done before or after. Talk about word of mouth marketing (WOMM)!

As with any new relationship, there were some of my friends (Ron Shevlin) who were naysayers. They said it I was getting my hopes up that the communication between Rachel and I would continue. They said that the proof of a good relationship is in the long term communication and caring, and not just a single series of emails. They said I was getting my hopes up that I had found a new bank and that I might be setting myself up for being disappointed.

I am starting to believe they were right. Not only has Rachel seemed to move on to other friends as your team has grown, but the promises of a great, new banking experience that she spoke of remain just a promise. Maybe my optimistic personality got the best of me again. Sure, your leader Josh Reich tells me about the fact that you have received a lot of new funding and that you have found new corporate partners in Visa, some banks and even TXVia. You even got my hopes up when you hired Alex Payne from Twitter. but it has been 6 months since Rachel last wrote and the only time I hear about BankSimple now is through traditional press releases and trade publication interviews.

Much like in the movie Jerry Maguire, where Renee Zellweger says that Tom Cruise 'had her at hello', you really had me at 'simple'. But now, there are other banks that are starting to look a lot like how you once looked. You have competition in existing banks like Ally, and ING where there are no fees, easy access and even interest on my accounts. You also have a new competitor coming down the road that is compared to you every time they talk to industry insiders. Brett King's MoveNBank seems to be looking for friends also, allowing me to be part of their beta group in 2012. There are some of my friends like Jim Bruene from NetBanker who wonder if MoveNBank may even 'outsimplify BankSimple.

So when is Rachel, Josh, Alex and the rest of your team going to let me see more than promises? I know you have moved to a new headquarters, but to say I am ready is an understatement. Since January, my old bank (yes, I switched once already) has raised fees and cut back the value they provide again, with many of the other large banks following suit thanks to Durbin and other pressures.

If you are not quite ready to let me kick the tires or take your bank for a ride around the block, the least you could do is have Rachel write me again and assume me that our potential relationship is still alive. Otherwise, I will consider the great communication 6 months ago a nice experience, but also another lesson that all banks are alike when it comes to customer service and promises. They love to tease you, but when it comes to delivering on a promise, they fall short.

Please write.

If not you, maybe some of my blog followers can either assure me that I should remain patient or that I should move on.

Banks Need to Make Love Not War

2011-09-14T23:05:00.000-04:00

Over the last three days, leaders from the top banks across the country convened at the Barclays 2011 Global Financial Services Conference in New York to present investors with a review of results so far in 2011 and provide an outlook for 2012. Unlike the past two years, where this conference was dominated by bank presentations focused on TARP, credit risk, capital reserves and liquidity, this year's presentations highlighted the opportunity for organic growth and improving client's share of wallet.

For instance, Jim Rohr, Chairman and CEO of PNC Financial Services Group said that PNC will be focused on adding new customer relationships and cross-selling going forward. "If we cross-sell new clients, we'll see an almost $220 million increase," Rohr said during his presentation.

Similarly, Tim Sloan from Wells Fargo discussed significant opportunities that exist as a result of the integration of Wachovia. According to the presentation done by Sloan, there is a variance of an average of one product per household between legacy Wells Fargo (6.25) and the results from the Eastern footprint (5.29). He further illustrated that there is a variance of two products when legacy Wachovia is compared to the top Wells Fargo region (7.36).

When reviewing the presentations done by all of the top 20 banks, virtually every organization referenced their strong branch footprint and their focus on cross-selling and improving share of wallet going forward. Interestingly, only SunTrust referenced a focus on the retention of current customers (a drop of 8% in checking account closures between 6/30/11 and 6/30/10).

I am definitely a major proponent of cross-selling (see previous post: Seven Common Sense Ways to Increase Cross-Sales), but how do ALL of the leading banks think they are going to battle each other for a greater piece of the pie if the pie itself isn't getting any larger? Sure, it makes more sense to cross-sell existing customers as opposed to acquiring brand new ones, but isn't showing love and retaining current customers a viable path to growth as well?

Over the past year, I have visited most of the major banks in the country and still find that the first year new customer attrition ranges from roughly 25 percent to greater than 40 percent, usually based on the aggressiveness of a bank's acquisition efforts (the more aggressive banks usually have a higher level of attrition). Unfortunately, this is a number that most banks, as well as many marketing and product areas continue to ignore.

Before banks beat each other up trying to reach Wells Fargo's household cross-sell objective of 8 services, or move all of the budget that was spent in 2011 on acquisition into cross-sell initiatives, maybe more thought and money should be diverted to help make current customers feel better about their decision to open an account at your bank. Onboarding programs, customer satisfaction initiatives, customer engagement strategies, rewards programs and recapture triggers can all assist retention efforts.

At a time when most of the leading banks in the country are increasing fees and reducing some of the benefits that customers had come to expect and enjoy (rightly or wrongly), maybe we should focus more on sharing the love for their patronage as opposed to waging war on each other vying for a greater share of wallet.

Maybe next year's presentations at the Barclays Financial Services Conference will have more presentations around how many customers were saved in addition to how many were cross-sold.

I'd love to hear what you think.

Links to Barclays 2011 Global Financial Services Conference Investor Presentations:

Bank of America
BB&T
Capital One Bank
Chase
Huntington Bank
KeyBank
PNC
Regions Bank
Suntrust
TD Bank
U.S. Bank
Wells Fargo
Zions Bank

How Effective Is Your Bank's Social Media Strategy

2011-09-13T05:56:00.000-04:00

Whether it is a company asking you to visit their Facebook page and 'Like' a product or brand or a peer wanting to keep in touch on LinkedIn, people are continually being driven to social networks according to Nielsen's latest report on social media. In this first report of its kind by Nielsen, it was found that social networks and blogs reach nearly 80 percent of active U.S. Internet users, and that social media accounts for 22.5 percent of the time Americans spend online. As expected, Facebook was by far the strongest social media brand.

In addition, it was found that nearly 40% of social media users access content from their mobile phone and that Internet users over age 55 are driving the growth of social networking through their mobile devices. As a result, "there is a need for companies to engage more strategically in the social space than they do currently," according to Radha Subramanyam, senior vice president for media and advertising insights and analytics at Nielsen.

Social Media Demographics, Nielsen Q3 2011 Report on Social Media

With networking continuing to increase, and the need to connect with customers and prospects in the most efficient and effective manner possible, more banks are using social media as part of their overall communications strategy. But, while interacting with customers through social channels can be effective, measuring the effectiveness of your marketing investment is no easy task. In fact, while many of the largest banks in the U.S. and overseas are leveraging many of the primary social networks, their strategies usually involve non-financial initiatives such as sweepstakes, charitable causes, etc.

For instance, on August 16, Citibank used the front page of the Wall Street Journal to promote its Facebook page. On the Facebook site for Citibank US, visitors were prompted to hit 'Like' to learn how to get special access to Beyonce tickets. According to Jim Bruene from NetBanker there were 36,500 likes by midnight of that day for an increase of around 2,000 fans. Today, the page registers more than 125,000 likes (see below). But what is the return on investment for this strategy?

Citibank US Facebook Page, September 13, 2011

To show how fast what is considered a success in social media changes, we only need to look back to last March when Chase used their Chase Community Giving Facebook page to serve as the foundation for a voting process to allocate $5 million in charitable donations. At the time, this program was considered the industry standard with around 2 million 'likes'. Again, however, there was not a clear linkage between the buzz and revenues.

Chase Bank Community Giving Facebook Page

American Express, on the other hand has built very direct link between their Facebook page and credit card acquisition and engagement with their 'Link. Like. Love.' program. Unlike the Chase strategy described above, the American Express strategy is not limited duration and the program is all about their card product. With 'Link. Like. Love.', followers link their AmEx card using the Facebook platform to receive merchant-funded rewards. As rewards are communicated via Facebook (as opposed to on an online bank statement), the customer can link the offer to their card and are prompted to share the offer on Facebook with others in their network for a word of mouth marketing (WOMM) impact. As of today, AmEx has over 2 million fans with over 100,000 'likes' being generated each month based on a comparison to results on July 26.

American Express 'Link. Like. Love' Facebook Page - September 13, 2011

So how do you build a social media strategy that is effective from a financial perspective? How do you know how much to invest in a strategy and whether the strategy is successful from an ROI perspective? There is a great deal of debate today around 'attribution' and the real value of efforts that may not be directly tied to sales. And until we can do a better job of tying intangible benefits such as traffic, fans, mentions and views to some traditional metric, we should continue to be challenged by the finance departments of banks to provide more accurate measurements.

As shown in the infographic below developed recently by MDG Advertising, the vast majority of current measures used by CMOs are 'intangibles,' which by their very definition should prompt caution when using besides metrics like revenue, average order volume, reduced call volume or sales. And while 72% of CMOs cited that social media helped to close business, there was no direct connection between the investment and the return.

Finally, even though the infographic indicates which social channels were thought to have the best ROI (Facebook), the majority of respondents didn't know what the return was on their investment or did not think there was an ROI. Obviously measurement and correlation needs to improve for social media to continue to grow as a viable financial institution marketing channel.

Infographic from MDG Advertising, September 2011

As with any marketing strategy, your social media strategy should begin with a clear establishment and understanding of your social media objectives. Look at how your competitors and those outside the industry are establishing goals and make sure that your measurement criteria is fully integrated with your current analytics system. Will your social efforts be to increase sales, improve customer service, generate customer engagement/loyalty, assist with product development or simply increase awareness of your brand?

Once your objectives are delineated, you need to determine what percentage of your marketing budget should be allocated to your efforts. Be careful. Social media is not 'free'. Not only is there a cost for the internal team that manages the program, but there are usually external agency costs as well. In addition, since most banks don't have the luxury of simply implementing a social media strategy and getting immediate traction, most programs will need to integrate traditional media to promote social media efforts (advertising costs). Finally, there are creative, placement and tracking costs that also should be considered.

The banking industry is known for moving en masse towards the next 'shiny object'. I would suggest viewing The Financial Brand's 'Reality Check 2.0: Myths and Facts' Webinar to understand some of the 'false reads' you could be getting from industry publications. While social media should definitely be part of every bank's strategy (customers expect a social presence), be cautious of building strategies that do not have a clear metric associated. Until key performance indicators (KPI) are established and agreed upon, bank marketers would be well advised to move conservatively and focus on integrating all communication channels.

Let me know: How are you leveraging social media at your bank? How are you measuring success? I am interesting in any success stories.

Differentiation Is Key Component To The Value of Rewards

2011-09-08T21:59:00.003-04:00

Yesterday, it was announced that merchant-funded rewards leader, Cardlytics had signed a global strategic alliance with loyalty leader Groupe Aeroplan allowing for the expansion of transaction-driven marketing (TM) to Canada and abroad.

Unlike traditional rewards programs used by financial institutions that are points based and driven by the volume of transactions processed, the Cardlytics platform provides the ability to present highly targeted retailer offers to customers through a bank's online statement, mobile device or email based on the customer's recent transaction activity. Since the Cardlytics decisioning tool resides within the bank's firewalls, customer insight never leaves the bank and retailers never have access to proprietary customer information. In addition, as opposed to the points reward program being a cost to the bank, the Cardlytics pay-for-performance model not only eliminates risk for the merchant, but also can provide much needed revenues for the partner bank.

The Cardlytics solution has been so well received, that as many as 70% of U.S. households could have such a program tied to their bank's debit and/or credit card relationship by Q1 of 2012, according to Scott Grimes, Cardlytics' CEO. This amazing growth and acceptance begs the question . . . if all the banks have the same program, how can differentiation be achieved and maintained?

In an interview with Lynne Laube, President and COO of Cardlytics earlier this year, I asked her how banks can leverage the Cardlytics platform and retail partnerships beyond simply offering the same offers as the bank down the street. She explained that while most bank clients will have many of the same nationwide retail partners, there will the capability to offer significant regional or even local offers. While some of these merchant partnerships might be initiated by Cardlytics, individual financial institutions can also link retailers to the platform.

For industrious financial organizations, the ability to offer current or prospective corporate, commercial or small business clients with highly targeted audiences who are prone to buy their products could be a strong business development and retention strategy for calling officers. It also would differentiate the bank's reward program from others across the country. By expanding the program's merchant partnerships, the retail and small business customers will also receive more targeted offers, making the program more valuable to the customer.

Another way a bank can differentiate a merchant-based rewards program will be to expand the channel integration of the merchant offers. Beyond simply providing the targeted offer as part of online statementing, the individual bank's ability to seamlessly integrate the offers into email, SMS alerts and even mobile channels will increase customer engagement and loyalty. Leveraging GPS capabilities could enable customers to receive onsite rewards at merchants they frequent or merchants within a defined radius.

According to an eMarketer study released today, while mobile coupons still represent a small portion of digital promotions, popularity and usage is growing at a rapid pace. It is believed that mobile couponing may grow by as much as 80% over the next two years fueled by the growth of smartphone users. Banks' ability to take advantage of this mobile trend will be the foundation for future rewards program growth.

Potentially most powerful from a differentiation perspective, Laube mentioned that insights from ongoing transaction monitoring can provide valuable behavioral insights that can assist in customer and household segmentation and even financial product cross-selling. Banks could leverage merchant rewards as a 'virtual currency' for different segments of customers or could provide merchant offers as an incentive for consolidation of relationships. As banks begin to introduce more advanced PFM and other money management tools, this type of rewards platform can also be integrated into the customer dashboard.

In a world filled with offers from Groupon, Living Social and more than 600 other competitors, the marketplace for untargeted offers may be reaching a saturation point. According to research firm, Lab42, while 44 % of households use deal websites, 55% feel overwhelmed by the number of offers filling up their email box. Given this mixed landscape, the ability to provide highly targeted, timely and valuable offers will be the key to effective differentiation.

What do you think?: How else do you think banks could differentiate themselves using merchant-funded rewards?

Brand Advocates Should Be Cultivated

2011-05-10T06:00:00.002-04:00

Every bank talks about customer loyalty and advocacy, but many find it difficult to define what a brand advocate is, or what the value may be to their bank.

According to a study just released on the actions, motivations and influence of brand advocates conducted by Dr. Kathleen Ferris-Costa at the University of Rhode Island for social networking leader BzzAgent, brand advocates are 83% more likely to share information about a product than typical web users and 50% more likely to influence a purchase. Since they enjoy solving problems and helping other to make purchases and decisions, they are also 75% more likely to share a great experience and three times more likely to share their opinion with someone they don't know (they are also more likely to share a bad experience). In other words, this segment of your customer base acts and thinks very differently from your typical customer and should be searched out and cultivated.

According to the study, brand advocates thrive on social networks and in all types of social media communities. When researching products, they turn to social networks first and fully understand how to leverage the web for insight. When sharing product information, they recognize the power of social media to spread their messages to a wide audience. In fact, brand advocates write more than twice as many communications about brands as the average Web user. As for content curation, brand advocates forward between two and three times more of other people’s online communications about brands. Bottom line, they are not shy and they want to be recognized as a good source for advice.

To better understand the dynamics of the brand advocate, BzzAgent developed a Field Guild to Brand Advocates to illustrate the findings from their study as well as the infographic shown below.

Finally, brand advocates also want to be good stewards of the brands they promote and want to be recognized by the brand for their efforts. So how can a bank find advocates and promote their efforts as part of the overarching marketing communication strategy? You need to find them where they discuss your brand - on Twitter, Facebook, discussion boards or even personal blogs.

In an interview for this blog of Jeff Stephens, CEO of Creative Brand Communications, most banks think they already have “good word of mouth” or advocacy when, in reality, what they have is reactive word of mouth which really isn't advocacy. The real goal, according to Stephens, is to create and encourage proactive word of mouth. "With proactive WOM, a customer would eagerly approach another person on their own and say 'have you heard of Acme Bank? You have to check them out!' With proactive WOM, there's no prompting required for the referral."

The key thing to remember is that while Word of Mouth Marketing (WOMM) is related to and can integrate with traditional marketing, the thought process required to develop WOMM strategies has some key differences. According to Stephens, with traditional marketing, the question is “what can we say to the target market to get them to pay attention?” In WOMM, the question is, “what can we give people, that they will find so interesting, they can't possibly keep it to themselves?”

Not only should you provide good products for the advocate to share, but for those who utilize the web for positive word of mouth, you need to provide strong content which is of interest, special offers for 'friends' and 'followers', exclusive videos and items of interest that are easy to find and share. Find a way to reward those who spread the word (focus on quality as opposed to quantity) and measure your results. Using an online referral program can assist in this process. As Jeff Stephens says, "The key to a successful WOMM strategy lies in a simple principle: if you want people to talk about you, you have to be worth talking about".

Most importantly, it is imperative to look at your WOMM and advocacy efforts as an ongoing commitment as opposed to a program or campaign remembering that advocacy is difficult to achieve, but very easy to lose if not cultivated and nurtured.

Banks Slow to Embrace Potential of Tablet Computing

2011-05-05T00:01:00.000-04:00

One year ago yesterday, Apple announced it had shipped it's first million iPads. Since then, it sold 14 million more in 2010 and is expected to sell between 30 and 40 million units in 2011 despite supply challenges in Japan. New research from Gartner predicts that global tablet sales will increase from 17.6 million in 2010 to nearly 70 million in 2011 and close to 300 million by 2015. During this time, the average price should fall to about half of the current level, which is just under $500 for entry level models.

Given this growth trajectory, and with banks continuously touting their desire to 'enhance the customer experience', how has the industry completely fallen asleep at the developmental control switch when it come to leveraging the tablet computer for engaging the customer? Given the demographic profile of the early adopting tablet owner (higher income, technology savvy, business traveler), and the retention experience found with mobile banking, it is even more surprising that only a handful of banks have even introduced iPad banking applications.

According to a recent ranking of financial and banking iPad apps by Netbanker, there are only 7 banks ranked in the top 200 apps related to finance and only 2 banks (Chase at #9 and USAA at #20) ranked in the top 20. Chase was not only one of the first banks to develop a native iPad app (as opposed to a converted iPhone app), but they have leveraged the camera included on the iPad2 to facilitate their remote deposit capture service. USAA rebuilt their already industry leading iPhone application for the iPad, providing users with the ability to manage a wide range of financial transactions such as paying bills, transferring funds, placing trades, getting real-time stock quotes and viewing their USAA insurance policies. Members can also electronically add or replace a car on their policy, receive an electronic auto insurance ID card and receive free financial advice in the form of stories and videos customized for a unique iPad experience.

USAA iPad Financial Literacy Library

In the past week, Bank of America also introduced an iPad banking application that leverages the capabilities of tablet computing. Highlights of the new app include an enhanced bill pay calendar, a ledger format for showing account balances, some transactional enhancements and other functions that come closer to mimicking their online banking site as opposed to their mobile banking app. While not providing remote deposit capture capabilities within the iPad app, the app is already ranked in the top 50 in the finance category.

Another bank that was quick to introduce a native iPad banking application with enhanced functionality was BBVA Compass. According to Alex Carriles, SVP and director of mobile and internet strategies for BBVA, "One of the first goals that we had when we decided to develop something for the iPad was to avoid the mistake of looking at the iPad as a large iPhone".

The most noticeable difference between the bank's iPad app and its iPhone app is its appearance. The iPad app's display looks like a bound book with an image of a staple on the center of the page and the image of a ribbon separating different sections. There is a tool that lets customers scroll through images of cashed checks much like albums on iTunes and allows a customer to look at pie charts that illustrate distribution of funds in various accounts.

While a bit cumbersome for everyday transactions such as balance transfers, balance inquiries, and online bill pay, the larger, tactile screen and increased navigation are just perfect for Personal Financial Management (PFM) functions like self-serve wealth management, financial literacy and investing. Many of the more progressive investment firms such as TD Ameritrade and Charles Schwab have already developed robust apps that allow customers to conduct research and conduct more complex transations on the tablet.

In the same way that investment firms can use the enhanced capabilities of the tablet to illustrate charts, graphs and investment recommendations, banks could apply the same logic to engagement and cross-sell messaging and the building of financial dashboards specifically for the iPad. Comparison charts, links to third party financial service firms, illustration of rewards program benefits and even opportunity alerts are perfect for the tablet user. Another unique capability of the tablet is the ability to leverage high definition video or even face-to-face chat in the sales or relationship enhancement process. This provides for an excellent expansion into the small business and commercial customer space where financial advice can be delivered via either online or offline webcasts to executives on the go.

Based on a recent study by eMarketer, tablets provide the perfect online shoping experience where owners are both highly engaged as well as more captive than with smartphone applications.

So, what will it take for more banks to build native tablet banking applications that take advantage of the functionality of the tablet as opposed to trying to expand a mobile app or compress an online banking app onto a tablet? With the introduction of the Blackberry Playbook (with enhanced data security features), numerous Android supported tablets and other players entering the market, how can banks not allocate resources to provide their customers an enhanced experience?

As a avid user of my iPad, I am disappointed my bank has not moved beyond an already market leading online and mobile banking application to support my expanded expectations on my iPad. As was the case with mobile banking, the institution that is first to create the 'WOW' factor will grab the lion's share of the lucrative first adopter market that has already fallen in love with their tablet.

But, I want more than what traditional mobile banking applications can provide. I am looking for financial statistics, financial advice and financial management tools all provided in both an engaging and entertaining package. Kind of like Angry Birds for banking.

Maybe the yet to be introduced BankSimple or MovenBank will surprise me.

Revenue Replacement in a New Regulatory Environment

2011-05-04T17:01:00.001-04:00

In my travels over the past 18-24 months, a single unifying theme seems to be of primary importance for all of the banks I visit . . . the need to find new sources of revenue to help offset the impact of environmental, competitive and regulatory changes that have occurred in our industry. With the potential of the Durbin Interchange Amendment hanging over our heads, lost overdraft fees from Reg E in our rear view mirror, the ability to pay interest on business deposits and the implications of the Card Act just 18 months ago, bank earnings are being squeezed from all directions.

According to Novantas, the regulatory changes alone have slashed retail banking revenues by more than $50 billion per year compared to pre-crisis levels. To make this number even more staggering, Novantas estimates that the equivalent cost savings needed to offset these lost revenues would entail closing 50,000 branches or would require a 1500% increase in maintenance fees. Neither of these options are feasible.

As banks look forward, while it will definitely be important to control costs across the organization, the immediate challenge will be to focus on ways to generate revenues that are significant and sustainable over time. To do so, banks should analyze opportunities across the entire customer lifecycle including product innovation, repricing, new engagement and cross-sell strategies, channel migration, improved marketing and enhanced measurement of results.

Here are the top ten revenue replacement strategies I believe banks should focus on in today's environment. Some are rather rudimentary, while others may entail a paradigm shift within the organization in order to be implemented. Still others may not be consistent with your bank's brand or position in the marketplace. These strategies were the foundation of a presentation done at the 2011 Louisiana Bankers Association Annual Convention in New Orleans.

Move Beyond Free Checking: With the implementation of Reg E and the potential impact of the Durbin Amendment, virtually every bank in the country is reviewing their checking product offerings to determine how they can positively impact earnings without negatively impacting their customer franchise. Much of this customer portfolio and product review is long overdue. The reliance on a 'free' lead product where penalty fees from the lowest balance accounts fund the majority of the portfolio is not sustainable. While some banks are building a much more robust segmentation strategy, where the relationship value will be more in line with the cost to the customer, other institutions are looking to a menu based approach, where components of the account (debit card, rewards program, ATM transactions, security services) are priced independently. Integral with this repricing strategy is the need for effective communication of changes and the opportunity to place customers in the best product set for their lifestage and transaction behavior. I cover this in a previous blog post entitled, Minimizing the Impact of Unintended Consequences.
Focus on Quality Customer Growth: With the cost of new customer acquisition increasing and the quality of many new customers no longer meeting expectations, many banks are focusing their efforts on quality as opposed to quantity of customer acquired. Models are being developed that are based on incremental lift, potential for engagement, balance growth (using tools such as IXI wealth indicators) and likelihood for cross-sell and retention. In addition, many banks are fine-tuning their acquisition strategies to focus on branch trade area, neighborhood level direct communication as well as time tested programs like new mover acquisition. Many of these acquisition programs are at the carrier route level, taking advantage of postal economies. Finally, some organizations have had tremendous success leveraging their web sites, search engines and even social media to drive quality new account growth.
Improve Customer Engagement: According to a study from Aite Group entitled, Measuring Customer Engagement: Making the Metric Matter, customers who have a higher level of engagement (more money movement, more transactions, online bill pay, direct deposit, more inquiries) are more likely to open another account with their bank in the next 12-24 months (27% vs. 5% for low engagement households), are more likely to recommend their bank to a friend (41% vs. 23%), and have a much more positive view of their financial institution. In addition, a more engaged household is significantly more profitable as shown by numerous research studies and covered in my blog post, A Business Case for Onboarding, where I illustrate the many financial benefits to a robust, multi-channel customer communication process in the first 90 days of the relationship.

Onboarding touchpoint roadmap example

Restructure Rewards Program: In the past, the majority of rewards programs were funded primarily with interchange income. With the potential for this revenue stream to be negatively impacted by the Durbin Amendment, the structure and underlying strategy for bank rewards programs need to be evaluated. Options that banks are considering include the complete removal of a rewards component from some or all classes of accounts, an adjustment in the value of the reward program currency and even the potential for an annual fee associated with the program. Another strategy is to move the funding of the rewards program from the bank to the retailer with a merchant-based rewards program partnership. Leading providers in this space include Cardlytics, BillShrink, Segmint and Bling Nation as well as home grown options that connect the merchant to the customer. The benefits of a merchant-funded reward program are many, with the primary advantage being the offering of much more targeted rewards to a finite audience of the bank based on online transactions. For more insight into merchant-based rewards, visit my blog post on the subject.
Expand Share of Wallet Initiatives: In the BAI Banking Strategies article written by Sherief Meleis from Novantas entitled, Relationship Expansion: Sharpening the Focus, he points out that a bank would only need to increase the amount of business done by each customer by 15% in order to offset the $50 billion revenue shortfall facing our industry. While definitely not a slam dunk by any means, the concept of expanding share of wallet with current customers is far less daunting than trying to increase fees to compensate for the impact of legislation over the past 24 months. According to Novantas, approximately one quarter of deposits ($900 billion) as well as one half of loans ($4 trillion) and half of investments ($3.7 trillion) remain unconsolidated with primary financial institutions. Their research also indicates that as much as two thirds of these relationships are held by customers who are attitudinally willing to consolidate. The key for banks implementing this strategy will be to avoid boiling the ocean or overwhelming the customer with blanket communications. Instead, it is imperative to reach the right customer, at the right time, with the right message using the channel they prefer. A good discussion of some easy to implement cross-sell strategies is available on my blog post from April 15, 2011.
Shift Debit/Credit/Prepaid Emphasis: While the Durbin Amendment may change the financial benefits of the debit card, it definitely doesn't change the importance of debit as an engagement and payment device. Some banks may be impacting the equilibrium of this payment device by adding annual fees, transaction fees and spending thresholds to the product. It is yet to be seen if these charges will stick or if they have a negative impact on the customer experience. Alternatively, banks can continue to encourage usage of the debit card while expanding their marketing efforts to include the potentially more profitable credit and prepaid debit cards. Serving alternative ends of the demographic spectrum, the appeal of credit cards is usually for people that want to leverage the grace period to their advantage. The appeal of the prepaid debit card is for people that want the convenience of a debit/ATM card without the fees of a checking account. The growth of the prepaid debit market has been significant in both the lower and mid demographic segments as people get frustrated with banking fees or have been closed out of the traditional banking system.
Optimize Communication Channels: As the number of marketing messages received by each consumer has skyrocketed exponentially over the past decade, the control of consumption of these messages has definitely shifted from the marketer to the consumer. As economic growth has slowed and budget constraints at banks have impacted the amount of funding we have for marketing initiatives, there is a need to leverage less expensive, but potentially more expansive channels such as email, social media and even formal word of mouth strategies. Instead of replacing traditional media with electronic channels, however, banks need to manage a blend of channels that will yield the best results. For most initiatives, it is not an either/or proposition, but a media mix that needs to be optimized for each customer segment and marketing objective. This is definitely an area where a test and learn mindset is needed and where improved analytics are needed to determine channel attribution.
Deliver on the Mobile Banking Promise: According to recent comScore research, 29.8 million Americans accessed financial services accounts (bank, credit card, or brokerage) via their mobile device in Q4 2010, an increase of 54 percent from Q4 2009. The report also found that preference for online access and security concerns topped the list of reasons why consumers have not yet used mobile banking. With such a skyrocketing growth and with the vast majority of banks now offering mobile banking, strategies need to be set forth that will ensure that mobile banking customers become engaged with their mobile banking provider as opposed to using the channel as a utility similar to an ATM. Studies show that mobile banking can effectively reduce costs related to call center usage and increase retention if the channel is enhanced with Personal Financial Management (PFM) applications and if the channel becomes more interactive and intuitive (a delivery device for rewards). The development of mobile banking strategies also need to include strategies for iPad applications that expand the mobile banking horizon far beyond what can be done on a smart phone.
Reconfigure the Branch Model: As the use of electronic channels continues to increase, the functionality of the traditional bricks and mortar branch changes as well. Over the past several months, several innovative branch models have been tested including the Citi version of an Apple store as covered on The Financial Brand website. Going a different direction, but still focusing on the branch, Huntington Bank has recently purchased the rights to dozens of supermarket branches, extended hours to include evenings and Sundays and is in the midst of a $70 million branch refresh in which it will make over all of its 608 branches with new digital signage and e-merchandising. A third strategy is to significantly downsize the retail space, recognizing that the opening of accounts, responding to inquiries and handling transactions can be done using a much smaller footprint. The 'right' answer is not clear yet, and may reflect the bank's brand promise more than being strictly a cost or revenue decision. (Discussion on making the ATM channel more productive can be found on my November post)
Increase Focus on Metrics That Matter: As opposed to being a cost center, marketing is increasingly being looked upon to generate revenue and to be able to show the impact of their programs. Measurements such as marketing ROI, incremental revenue lift, lifetime value and internal rate of return are all metrics that matter to the CEO and CFO and need to be built into all revenue strategies. In addition, where the sales cycle is longer, marketing is now expected to develop Demand Generation programs as opposed to simply lead generation initiatives, nurturing leads much farther in the sales funnel with an eye towards the final sale. I covered the new sales funnel in my blog post on February 26.

I am sure I have missed revenue opportunities that banks are pursuing to replace revenue lost due to recent changes in the marketplace. Can you share some of your ideas on my blog for others to react to?

Seven Steps to Reduce Offline and Online Bank Product Purchase Abandonment

2011-05-01T13:27:00.001-04:00

According to Forrester Research, the number of consumers using the Web to research, buy and manage their financial products has grown steadily. In 2009, 63% of US online adults who researched a financial product did so online, with the number increasing over the past two years. Virtually all products were researched, from mortgages and student loans to savings and checking accounts. Interestingly, more than a third who researched products did so exclusively online.

The Web provides inherent advantages when researching and applying, including the convenience of being able to research whenever the user wants, the ease of comparing providers, and in some cases the ability to open the product or service in real time. While the use of the Web is correlated to age categories (with Gen Y using the Internet more frequently), all age groups are increasing their use of online and mobile channels to evaluate options before purchasing financial services.

Online purchase of financial services varies significantly by product type, with complexity and locational considerations driving the sales process. For instance, while almost half of online adults applied for a credit card online, a far lower percentage purchased a checking account online since convenience is a primary consideration, making the ability to walk into a branch to open an account more feasible.

Building awareness and even consideration online, however, does not guarantee the prospect will apply for or open their relationship online. According to a recent Forrester Research study entitled, Injecting Next-Generation Thinking Into Your Financial Services Acquisition Website, almost 40% of online households who researched a financial product online used another channel to complete the sale. This cross-channel selling behavior provides both opportunities and challenges for banks.

Source: Forrester Research 2011

In the example above, a customer may gain awareness through mass media or even direct or online channels, only to further research the service online, over the phone or in person, with the actual purchase of the product or service culminating either online or in a branch office. Each of these steps in the buying process (or sales funnel) can lead to abandonment of the process by the prospect due to complexity, competitive considerations, other prospect priorities or poor sales inquiry follow-up at the bank.

While research indicates that the success rate of moving a prospect from the awareness to consideration to purchase stage varies significantly depending on the product, the research channel, and the ultimate sales channel, the opportunity diminishment can be 80% or higher. In fact, with lending products where there are numerous steps between the awareness stage and loan closing, close rates can be as low as 10% of the shopping universe.

This sales inefficiency provides many opportunities for banks at a time when the cost of new customer acquisition has never been higher and the competition for customer share of wallet is extreme. Some of the ways to improve conversion of awareness to sales include:

Provide online information from alternative perspectives: Some people will shop for a specific product (credit card), while others research to solve a specific problem (debt consolidation), while still others may inquire from a lifestage perspective (student). A bank website and search engine strategies need to be built with this interplay in mind, providing alternative paths to reach the best solution.
Leverage dynamic and customized content: Whether the Web, the phone channel or in the branch system, dynamic and customized content needs to be developed to assist in moving a prospect from the awareness to the purchase stage. Understanding segments, purchase intent and competitive position in the marketplace can greatly improve results both online and offline.
Capture prospect insight from all channels: Surprisingly, some of the newest channels (online) have the best refinement of insight capture through digital tracking and jump page data collection. Alternatively, far fewer banks capture insight from prospects who indicate potential purchase intent by phone, in the branch or through direct mail. Without a formal method of capturing information on how to follow-up on inquiries, we greatly reduce the potential for sales success.
Develop a multichannel follow-up strategy: In the same way that prospects leverage many channels in their consideration process, it is important to follow-up on all leads using multiple channels. Dependent on the level of insight capture done when the prospect initially inquired about your product or service, quick and consistent follow-up on leads using all channels possible will improve chances for success.
Monitor the sales funnel: As important as a strong follow-up strategy, the monitoring of each prospect in the sales funnel is needed to better understand the paths prospects take to purchase different products and the success of your follow-up efforts in generating a strong close ratio. Similar to online navigational pattern monitoring, internal monitoring of prospects allows for the development of a sales waterfall that can assist in the identification of service and communication gaps that depress sales results.
Develop metrics for improved results: Focusing only on the beginning and end of the sales funnel oversimplifies the opportunity cost of lost sales. By better monitoring each stage of the sales process from awareness to consideration to final sale allows for the potential improvement of ROI. For many banks, an improvement of 5-10% in the consideration stage and similar improvement in the closing stage of the process can improve results by more than 100%.
Online and offline retargeting can provide big returns: Sending an email, making a call or delivering a piece of direct mail to a person who has abandoned a shopping cart has been found to be the most efficient online strategy for all categories of online merchants. While banks don't have online shopping carts per se, they do have abandoned purchase processes for a number of reasons. Retargeting allows you to show your ads to visitors that left your website (or other channel) as they surf elsewhere on the web. These potential customers can get highly targeted ads that are designated to entice them to return to your website and convert their visit into a completed action. Many studies have found that the open rate on these emails exceeds 50%, while the conversion rate can exceed 20%.

In a content-driven world, with the number of messages consumers receive on a daily basis continuing to increase, making follow-up communication personalized and pertainent is extremely important. Therefore, any form of sales communication (even if the prospect indicated interest) needs to respect the prospect's time and privacy.

In addition, the timing of the communication should reflect the channel that the prospect used to shop for a service. In the first 24 hours following an online abandonment, 54 percent of returning customers who make a purchase will do so within the first few hours according to research from the remarketing firm SeeWhy. In other words, more than half of customers will abandon the cart for good if not remarketed within 24 hours of the abandonment. Alternatively, if a prospect is shopping for rates or asking questions about a checking account fee schedule via phone, a person should reconnect within 24-48 hours to answer any follow-up questions.

How many channels can a prospect use to investigate one of your services? Do you capture insight from the shopper and follow-up in a timely manner to determine if any other questions can be answered? Do you measure the effectiveness of these efforts and maintain a waterfall illustrating where improvements can be made? Do you know the cost of lost potential sales if effective management of the sales funnel does not occur?

I am interested to know how your bank manages this process. I also discussed the various views of a sales funnel in a world where prospects enter from various channels late last year on this blog.

The Business Case for Onboarding

2011-04-27T23:41:00.000-04:00

Over the past several months, I have spoken to large and small groups of bankers from organizations of all sizes and have been surprised by the number of banks that still do not have a formal onboarding process for customers opening new accounts. Given the amount of trade press, webinars, white papers and research done on the value of onboarding, I would have thought that virtually every bank would be communicating with customers aggressively during the instrumental 90 days after account opening.
According to the recently released J.D. Power and Associates 2011 U.S. Retail Banking Satisfaction Study, one of the most powerful ways to unlock customer value is to build a multi-channel, multi-touch onboarding process that begins at the new account desk with needs identification and extends to a post-sale communication sequence that builds engagement and share of wallet.

In a presentation at the Retail Financial Services Symposium in Miami, J. Michael Beird from J.D. Power and Jean Lubbert from BBVA Compass shared that a strong onboarding process is needed in response to the 'perfect storm' of challenges facing banks including:

A reduction in core deposit growth from customers opening new accounts
An increase in customers switching their primary financial relationship
A rise in the average number of financial institutions considered before final selection

The best onboarding practices shared reinforced results of the same study done in 2009 and 2010, where it was shown that both satisfaction and sales increased with relatively rudimentary steps such as a thorough needs identification, a timely post-sales follow-up, and a series of communications that emphasize early product engagement. In fact, the studies even showed that satisfaction and sales increased with each subsequent contact in the first 60 days up to seven touches.

The good news is that, compared to last year's report, each step in the onboarding process is being done more frequently than in the past. Unfortunately, only 64% of households surveyed indicated that there was any follow-up done (vs. 61% in 2010), with only 17% of the households saying that any contact was made within 2 days.

A new component of this year's study was the correlation between an optimal onboarding process and both the intent to reuse the same financial institution in the future and the intent to recommend the bank to others. According to Beird, "intended advocacy is an additional bonus to implementing a high contact onboarding process". He also shared that BBVA Compass sets the bar on almost all components of a strong onboarding process with a resultant recommend rate at the high end of all banks reviewed.

So, given the potential positive impact on retention, engagement, sales and customer satisfaction, what are the key components of building a business case for onboarding?

When working with clients, I always begin with the impact onboarding has on attrition, since it is both the easiest to measure against a control group and because the financial impact almost always exceeds the cost of the onboarding program. While first year attrition at banks across the country usually range from 20% to 40% (dependent on aggressiveness of a bank's acquisition efforts), a conservative benchmark for first year reduction of attrition is between 2-3% assuming a multi-touch onboarding process. While that may not seem like a significant movement from norm, the cost of this attrition is significant.

In the example above, I provide a very simple calculation using different annual account opening levels, different attrition rates and the financial impact of $400 for each account lost. I use a $400 cost of lost account based on a $200 replace cost for the lost customer (very conservative) and an additional $200 in annualized revenue potential lost due to attrition.

Moving beyond retention, a well constructed onboarding program also has a positive impact on the level of account engagement compared to control groups. For most banks, engagement includes the cross-sell of direct deposit, online banking, bill pay, the active utilization of the debit card and in some cases mobile banking and reward program enrollment.

According to Novantas, the positive impact of direct deposit and bill pay alone can increase relationship value by more than $400. Assuming an increase in engagement compared to control of 5%, the financial impact for a bank opening 10,000 accounts a year would be $200,000, with the impact jumping to $2 million for a bank opening 100,000 accounts annually.

Capital Performance Group found similar results with banks they worked with when evaluating the impact of households adding online banking, bill pay and direct deposit.

Finally, onboarding definitely has a positive impact on average account ownership and share of wallet as illustrated by the 2009-2011 J.D. Power and Associates studies. In my experience, however, the financial impact on cross-sell effectiveness is the most disputed within banks where an onboarding program is implemented due to factors including an inability to set aside a control group large enough to measure product level results and the desire by many banks to focus on new account engagement as opposed to cross-selling during the first 30-120 days of the relationship.

The critical nature of the first 90 days of a relationship has been known to the financial services industry for years but internal obstacles and a lack of focus on organic growth has limited deployment of this foundational program. Today, as the cost of new customer acquisition continues to escalate and the need for revenue replacement increases, the most successful banks are discovering ways to implement and enhance onboarding programs using multiple channels and customer touches. The result is improved retention, increased engagement, accelerated cross-selling, an improved customer experience and optimized customer lifetime value.

Successful onboarding can quickly cover the both the cost of new customer acquisition and the deployment of a robust onboarding program in a very short period. Instead of having a period right after account opening where nobody from the bank communicates with the new customer, you can reach household profitability faster and achieve a quicker return on investment.

I have covered the onboarding and engagement processes extensively within my blog over the past year and will continue to focus on the benefits of using multiple communication channels to generate positive results. I am interested to know how well your onboarding program is going or, if you don't already have an onboarding program, what hurdles to implementation still remain.

7 Common Sense Ways to Increase Bank Cross-Sales

2011-04-15T07:36:00.004-04:00

Every financial institution needs to generate a steady stream of new customers, yet one of the easiest and most steady sources of new businesses and related revenue is to reach out to current customers for additional business. With the cost of acquiring new retail, small business or commercial customers being five to ten times the cost of retaining an existing one, and with the average spend of a repeat customer being 50- 100 percent more than a new one, bank marketers need to remember that the most efficient investment of marketing funds is to market to customers that already bank with you. Here are 7 relatively easy techniques to do just that:

Start With the Lowest Hanging Fruit: The easiest sales that can be made to current customers are engagement services that help a customer use an account they already own. These 'sticky services' include a debit card, online banking, direct deposit, bill pay, automatic savings transfer, personal line of credit and security solutions such as privacy protection. These services help to ensure the customer will use the products they own more frequently, will significantly improve retention and will help to improve the overall customer experience.
Stay Connected: About a year ago I was talking to a friend who said, "I was very impressed with how much love my bank gave me when I opened some new accounts, but amazed that I never really heard from them again except to tell me about new fees". While some banks have very successful onboarding programs to help stay connected with new customers, a surprising number of banks still rely on the customer to onboard themselves. And unless the customer expands their relationship, their bank may never include them in a model-driven cross-sell program.
Continually Evaluate Upsell Opportunities: Rather than using product-driven programs that are done seasonally, consider funding more customer-focused programs that evaluate each customer's propensity to open one or more of the products and services you offer. With some of my clients, we evaluate each customer's transactional, product ownership and even behavioral characteristics to determine what would be the most likely next purchase and whether the propensity to purchase is high enough to make an offer. In some of most successful programs, this evaluation of opportunities is done monthly, with smaller mailing universes, but much higher response rates.
Empower Your Customer Contact Teams: For most customer facing employees of your bank, their primary responsibility revolves around efficient processing of transactions and/or customer service. To leverage the thousands of customer engagements these employees have each year, you need to provide easy ways for them to extend their conversations to include relationship expansion opportunities. Many banks provide prompts on their employee's computer screen around recent sales communications received by the customer, most likely products that may interest the customer and even special offers that can be made as part of their transaction or service conversation. The best programs don't stop there, but include tools for the customer to take advantage of the offer. This may be an immediately generated custom printed sales document, a follow-up email or sales call or a referral form.
Ask for Referrals: One of the easiest ways to generate new business and increase loyalty of current retail or business customers is to ask (and possibly incent) for referrals. If a customer is happy with the way they are treated at your organization, they usually want others to know. This is especially true with satisfied small businesses, private banking customers and with retail customers that are part of a bank-at-work program. And it doesn't hurt if you provide an incentive to your current customer. At a time when new customer acquisition offers often exceed $100 and when the overall cost of acquisition is more than $250, offering a 'bounty' of $50 would be less expensive and would most likely generate a more loyal customer.
Leverage All Channels: Never assume that customers understand all that your organization offers or absorb communication the same through all channels. Remind your customers continuously that you know who they are, understand their needs, are looking out for them and that you are willing to reward them for their loyalty. And use as many direct channels as possible to reach out to your current customer base, including direct mail, email, statement inserts, banner ads on your website, ATM messaging, outbound calling efforts, etc.
Measure and Reward What You Want Done: By providing ongoing measurement of the cross-selling objectives you want to achieve and paying for this achievement of these objectives, you have a much better chance of reaching your goals. This continuous reinforcement of your cross-sell mission allows your team to be focused on what's important. You can also turbocharge your results by communicating how you are assisting in their efforts. Provide Opportunity Reports of the customers where they may have the greatest opportunity for success. As part of these reports, it is also helpful to provide background as to why the customer is being selected for a specific offer.

Finally, remember that current customers like to be rewarded for their loyalty. One of the best ways to do this is to remember to include an offer with any cross-sell or upsell message. Without an offer, you may be perceived as simply 'pushing product' without leveraging the relationship value already in place. A strong offer will not only generate a better response to your communication, but also remind the customer of the value of doing business with your organization.

I would love to know other ways you are improving cross-sales within your bank, credit union or investment firm. I know I have missed some great ideas and I would love to hear from you.

QR Codes Are Mobile Gateway for Bank Marketers

2011-04-10T11:14:00.014-04:00

As the use of smartphones increases, more and more marketers are leveraging QR, or quick response, codes to drive prospects and customers to promotional content or to expand a conversation. While usually a black and white square, QR codes can also be colorful and can have patterns or logos embedded in them and around them, as long as the code itself works properly.

To access, the viewer only needs to download one of several free QR code reader apps on to their smartphones (some phone are already loaded with this application). When the viewer sees a QR code on a poster, billboard, print advertisement or even on a product itself, they focus their camera on the image and the application will recognize the code and automatically open up the link to an offer, video or other unique content in the phone's browser giving the marketer the ability to share information or offers immediately at a very low cost (marketers can generate QR codes for free).

Retailers, bankers and other marketers are increasingly taking advantage of this relatively low cost marketing tool. Walmart, Target, Macy's and Starbucks are already in on the QR Code wave by offering coupons and membership benefits with a simple scan of the code. Airlines are using QR codes instead of tickets for check-in and consumer product companies are placing QR codes on their products to illustrates uses, nutritional information, etc. One thing's for sure, it is only a matter of time before more marketers start seeing how effective QR codes can be and how it can save them lots of money in advertising dollars in the future.

And consumers are responding. According to a February survey of U.S. smartphone users by MGH, a Baltimore social-media marketing company, 65% of responders had remembered seeing a code with half scanning the code. Of those, 53% said they used the code to get a coupon or discount while 52% used the code to get additional information. When asked why would they be interested in using a QR code in the future, 87% mentioned the desire to get a coupon or discount while more than 60% would use the tool to access more information. Possibly due to the newness of the marketing tool, 72% said they would be more likely to remember an advertisement with a QR code.

Source: MGH, February 2011

While many QR codes are general in nature and used in mass channel marketing, these codes can also send a person to a landing page to collect additional insight before sending them to the content or a personalized QR code can be generated to deliver personalized messages on direct mail, email and other direct channels. Since the QR code is unique and tied to a specific recipient, the marketer will have the ability to see who responds to a marketing piece and when. This type of data could then be used to further refine and personalize marketing messages or for targeted follow-up campaigns.

Other benefits of this tool include:

Anytime, Anywhere Marketing: Since any smartphone can decode and special software is not needed, your message can be made available anywhere a person carries their phone.
Channel Shift: QR codes make it easier to move from mass media or even print based marketing to the web increasing the effectiveness of a campaign and integrating media.
Tracking: QR codes can measure how many people are using the code and at what time. By having easily traceable analytics, firms can view results and know if their QR code campaign is successful. If using personalized QR codes, this enhances the value of the insight to the household or customer/prospect level.
Cost Savings: Instead of continuously reprinting promotional or sales material, a QR code can be used to direct a prospect or customer to continuously updated content or offers.
Brand Enhancement: Using QR codes can enhance your brand's image as a technologically advanced firm and can expand your mobile channel's use. If the linked offer or content is unique, it can also set the stage for improved program results in the future and positive word of mouth.

There are some drawbacks, however. For instance, not everyone has a smartphone or is familiar with QR codes, and scanning is not always intuitive. Therefore, QR codes should usually be accompanied with text such as, "Scan with your barcode scanner on your phone."

So how can banks leverage the interactivity and immediacy of QR codes?

Many banks are starting to use QR codes in conjunction with billboard or display advertising where space is limited and where there is a desire to provide additional information. For instance, TD Bank is using QR codes on bus shelter advertising to promote the locations of their branches with Sunday hours. Simply scan the code and the TD Bank branch locator opens on the smartphone's browser providing the closest branch with Sunday hours.

AXA Bank got extremely innovative with their QR code enhanced marketing campaign, using 3844 tins of paint on a billboard to promote their renovation loans. When a person scanned the three dimensional code, they were taken to a mobile application that described the promotion. A video of the program development is even available on YouTube.

Last year, Colorado based FirstBank used QR codes on a series of airport signboards to support their 'Helpfullness' campaign. For those people on the go, they provided free downloads of classic books, Sudoku and crossword puzzles. The signboards provided clear instructions as to how to download and even provided a URL for those without a smartphone.

While QR codes are usually used in conjunction with non-electronic media, Chase has integrated a QR code to simplify the download of their new Android mobile banking app. As part of an animated marketing sequence for mobile banking on their web site, Chase provides an alternative to traditional keypunching to download the app with the QR code starting the process for the customer.

TD Bank also provides three different QR codes on their mobile banking site for customers wanting to immediately download the mobile banking app for a Blackberry, iPhone or Android.

The key to using QR codes is that the rewards one gets for scanning a code need to be valuable. This form of marketing works best in conjunction with a special offer not available elsewhere or to deliver unique content when customers or prospects are not in front of their computer. In other words, QR codes should not be used to simply take customers to more printed material.

Here are additional ways banks could leverage the power of a QR code:

Supplement billboard, print or branch marketing with video content that more fully describes a promotion or provides a special offer.
As a replacement or supplement for a traditional product brochure rack in a branch allowing for product offers and continuously updated product information.
Link to bank spokesperson or other representative of influence in the bank (economic reviews, annual shareholder meetings, etc.).
Promotional offer for mobile banking customers in branch or on website.
ATM screen integration to provide expanded information or offer instead of traditional receipt printout.
Supplemental information in conjunction with a direct marketing campaign (sweepstakes entry, branch locator, video program description)
Updated rates and/or competitive grids and linkage to online financial management tools.
A means to capture permission-based mobile phone numbers, email addresses and other customer insight.

I am sure there are more ways to use QR codes that we will see in the coming months as bank marketers try to leverage their mobile banking and mobile communications technology. Are you using QR codes currently? Do you intend to in the next several months? Let me know by leaving a comment here or on my Linkedin page (QR code provided above).

Addendum: Thanks to Nathan King and the people at Austin & Williams advertising for the great infographic below that compiles many of the industry statistics around QR codes.

DDA Under Siege

2011-03-10T10:27:00.000-05:00

As part of the planning committee for this year's BAI PaymentsConnect 2011, I would love to take credit for the great title of this program track, but I am not sure even the great minds at the BAI could have foreseen how apropos "DDA Under Siege" would be for bankers attending this year's conference that wraped up today in Phoenix.

If there was a unifying theme from the many sessions I participated in this week, it was that revenue lost from last year's Reg. E and this year's Durbin amendment can not be completely recaptured through repricing. Instead there needs to be a stronger focus on targeted customer acquisition, share of wallet growth strategies, retention, product innovation and cost containment. While everyone at the event seemed to be interested in what others were going to do around checking repricing, the energy was definitely focused on building a stronger platform for the future.

Sessions at the conference started with a review of the BAI/Finacle Innovation Imperative Customer Sentiment Study completed last Fall, which found that while there is still a ways to go in the customer's confidence in the economy and the banking industry in general, the view of bankers is more closely aligned with the consumer than in the past couple years. This uniformity of beliefs should assist as banks try to build messaging around their checking repricing and try to improve the customer experience. The study also found that the customer's perception of their bank being 'innovative' tends to correlate with satisfaction, product ownership and overall confidence in their bank.

Steve Mott from BetterBuyDesign followed the BAI research presentation with a very fast paced competitive overview of the payments industry, including a discussion around Google, PayPal and several potential payments platforms from the U.S. and even China. His message was that it will be up to the banks to leverage their customer relationships, distribution network and trust advantages to maintain some level of ownership of the consumer payments continuum. He emphasized, however, that the bank 'ownership' of payments is anything but guaranteed.

David Stewart, Senior Expert from McKinsey & Co. expanded on his recent BAI Banking Strategies article, emphasizing the continued importance of the debit card in the bank's payment product arsenal. In addition to providing financial metrics around the value of the debit customer and the real impact of repricing with net interest margin and other fees are included, he emphasized that trying to move mindshare or marketshare from debit to credit may be close to impossible in today's economic environment. David also shared the view of McKinsey that the potential for merchants to 'steer' payments from one payment vehicle or another was unlikely since doing so may actually cost the merchant more in discounts than could be retrieved in interchange savings.

David also left the attendees with the following strategies for trying to reposition the debit product in the future:

Base debit strategy on new debit economics as opposed to the old economics
Price products for competitive advantage
Rationalize customers on the relationship level not just checking level
Remember that the debit product is still sticky and builds customer engagement

Ending the morning sessions was a presentation by Hitachi Consulting around the findings of their semi-annual Consumer Payments Preference Study released last Fall. Some of the highlights included:

The millennial generation provides a good opportunity for growing payment volume (especially around mobile)
Ease of use and convenience drive payments behavior
Debit is still the preferred payment method
Credit for online purchases expected to increase
Micropayments will continue to increase

Hitachi also emphasized that security continues to be a concern of consumers and is impacting the take up rate of mobile for payments.

The afternoon sessions revolved around ways that banks are trying to take back the payments franchise and extend relationships beyond just the DDA, with speakers from the Federal Reserve, Fiserv, Comerica, Fifth Third, Peak Performance Consulting, Novantas, TD Bank and Huntington Bank all providing unique viewpoints. It was clear during these sessions that the days of every bank having close to the same product set are over. While some of the larger banks may retain a Free Checking program (PNC's decision was referenced often during the conference), many are completely revamping their deposit product portfolios in a way that reinforces their brand and leverages their customer franchise. All of the banks were also bullish on credit products as well as the need to continue to capture increased share of wallet.

Hank Israel from Novantas stated that banks should segment their customers based on channel preference and will most likely price their product set in one of the following ways:

Keeping Free Checking (hoping to make it up on volume)
Fee for services (make it up within the checking product set)
Product bundling (packaging product sets based on customer needs)
Relationship pricing (drive value from relationship perspective)

A strong case was made for all banks to move more to a relationship focus that can optimize customer profitability and focus on customer needs.

Tuesday's sessions focused on how banks can go on offense through mobile banking, prepaid debit and mobile payments as well as how institutions can better defend their customer base through onboarding and rewards. Some of the key takeaways from the mobile banking session presented by FIS and M&I Bank included:

Smart phones will be used by the majority of consumers by the end of 2012
Mobile banking will surpass online banking by 2015
Remote deposit capture is the 'power app' that engages the customer (more are needed)
Mobile banking customers have a 53% lower attrition rate (Tower Group)
Mobile banking customers decrease VRU use by 55%

The speaker from M&I Bank also emphasized the need for banks to build mobile banking critical mass quickly, with a focus on expanding the solution set coming after 'getting the basics done right'. He referenced that mobile banking customers at his bank had higher balances, increased check card usage, and a better bill pay adoption rate than similar customers without mobile banking.

Greg Schreacke from First Federal Savings Bank and Robert Gitner from Velocity Solutions discussed the market potential for prepaid debit and how a bank could build a checking product set around the card. Research was presented that showed the following characteristics of a prepaid debit user:

53% have a checking account
50%+ want a prepaid debit because of overdraft fees
47% want immediate access to funds
46% believe they can get better service at a retailer than a bank
43% have had a previous problem that limits their ability to open a traditional checking

In the mobile payment presentation done by Calvin Grimes from Fiserv and Emmett Higdon from Forrester Research, the impact that mobile banking has on the customer relationship was again emphasized. It was shown that not only is a customer who uses mobile banking 30% more likely to stay with a bank, but the customer is also 26% more likely to recommend their bank. The team emphasized that now was not the time for banks to stand on the mobile financial services sidelines, but instead should be searching for ways to move their mobile solutions from being simply informational to being more transactional.

While many banks are still trying to build the business case for mobile payments, the following benefits were shared:

Customer acquisition and retention benefits
Lower cost of servicing
Revenue generation potential and revenue retention
Competitive parity
Better customer experience
Deeper customer engagement

It was also mentioned that, while security and privacy concerns still remail around mobile payments, these concerns will eventually work in favor of traditional financial institutions since customers inherently trust banks more than companies like Google, Apple or even their phone company.

The presentation that I did in partnership with Bill Stamp from KeyBank focused on the market trends around onboarding as well as the basics on development and implementation of a successful onboarding program. Interestingly, when the attendees were informally polled as to their current onboarding programs, while the majority were doing something, less than half were using more than one communication channel, very few were leveraging three channels, and only one bank was communicating with their customers more than 5 times in the first 90 days. It was stressed that this lack of a focused and consistent onboarding process could hamper organization's objectives of improving customer engagement, increasing fee income and definitely hurt cross-sale and retention efforts.

Bill's presentation around KeyBank's onboarding program illustrated that developing and managing an onboarding initiative is an ongoing process where testing of offers, channels, and communication sequence and cadence is continuously needed. Bill also shared how an onboarding process can reinforce cross-selling done at the new account desk and the importance of reinforcing engagement with services before the cross-selling of other products.

To further reinforce the importance of engagement and retention in a highly competitive and revenue challenged marketplace, Tom Brooks from Regions Financial Corporation, Lynne Laube from Cardlytics, and Aaron McPherson from IDC Financial Insights showed how a highly innovative merchant-funded rewards program may be the answer for banks looking to move away from a 'reactive' interchange funded program to a 'proactive' program that could be bring higher value to the customer and even make money for a bank.

Lynne Laube discussed two macro trends in the banking industry that has paved the way for a merchant-funded program:

Digitization of payments (where and how payments are made)
How customers relate to banks (>50% have online banking with 7 visits a month to their online banking site)

The benefits of a program like Cardlytics offering shared by the panel included the ability to target actual transactions for incremental growth and engagement. The benefit to the customer is that offers will always be relevant, while the merchant benefits from only providing offers to people very likely to be interested in their services. Since the targeting potential is so strong, more valuable offers can be developed as opposed to when a merchant is discounting to the masses.

While the program at Regions is relatively new, the benefits included:

No enrollment is required (all customers with online banking and electronic statements are included)
Ease of value transfer (no coupons are needed since the customer can electronically 'activate' an offer and 'redeem' the offer simply by using their debit card)
Immediate notification of earnings/rewards
Rebates deposited directly into account
Offers are targeted and relevant
Integrated user experience
Fully funded as opposed to being a contingent liability like with points programs

The success of this innovative rewards program was probably best illustrated when Lynne mentioned that Cardlytics is partnering with 2 of the top 5 banks already and expect their customer base to grow from 15M today to more than 60M by the end of the summer. For more information on Cardlytics, read my earlier blog on the company done last year.

Without a doubt, this was a well-timed conference covering a broad range of topics on the front burner of many banks. On each attendee 'to do' list upon leaving, I am sure there will be a review of any pricing changes not yet implemented, a strong focus on ways to engage and retain new and existing customers we can ill afford to lose, and a much more accelerated movement to future payment products like mobile and even P2P.

I would love to hear from other attendees about their experience and takeaways.