Commoditization of bank products and services continues to accelerate due to new technology and new channels.
Bank marketers are right in there fighting, though. They have new tools with which to accelerate their own effectiveness. Thus, now, there’s the rise of digital marketing.
The thing is, how, in this new world, does one measure marketing success?
PWC spotlighted earlier this year in a post “the increased commoditization of retail banking products. This new reality is putting pressure on banks to distinguish themselves in an intensely competitive, low-growth, low-margin environment.”
The post, like many others that have appeared this year, advocates for a “client-centric” (or customer-centric) approach to improve revenue by attracting new customers and increasing the bank’s wallet share of existing customers.
More to the point, it says, “What’s more, greater marketing precision can direct banks’ spending more efficiently and help control costs.”
That ushers in the need for digital marketing. To be sure, it’s not just banks facing this new challenge. Many industries are embracing this, and general observations can certainly apply to banks.
Everybody needs digital outreach
Gartner, in fact, claims recently in its research of several industries, including financial services, that “Digital marketing is now mainstream.”
Gartner finds that marketing budgets increased 10% this year, with most of those polled expecting increased budgets next year.
“Marketers no longer make a clear distinction between offline and online marketing disciplines. As customers opt for digitally led experiences, digital marketing stops being a discrete discipline and instead becomes the context for all marketing,” says Yvonne Genovese, group vice-president, Gartner.
But there’s a catch. “Bigger budgets, however, come with sizable expectations,” says Jake Sorofman, research vice-president at Gartner. “Marketing is expected to drive profitable growth through the acquisition, retention, and expansion of the most valuable customer relationships. As customer buying journeys and customer expectations expand, so, too, does marketing’s scope of responsibility.”
What today’s marketer needs
Oracle and The CMO Club, a nonprofit group, took on this issue in an attempt to provide practical advice to digital marketers. They solicited advice from a wide variety of major brands, including MasterCard and PayPal, and boiled it down to four main areas:
• Acumen—Enhancing skills within the marketing department should be a top priority, including developing valuable customer insights through data mining, investing in content creation, and providing greater evaluative analytics.
• Alignment—From top to bottom and across all functions, it’s critical for everybody to follow the same processes and corporate culture.
• Agility—Businesses should have strong cross-functional teams and the flexibility to pilot something new to test and learn best practices.
• Accountability—Establish the right measures from the outset and instill a culture of personal accountability around those parameters.
This last point is particularly important.
“I can measure everything today, and that is both a blessing and a curse,” says Heidi Melin, CMO, Plex Systems, one of the participants in the research. “The curse is you have to decide what the most important things are to measure to demonstrate accountability.”
“Big Six” for financial marketing
Which brings up what Harland Clarke says in a white paper about “the Big Six” metrics that financial services marketers ought to embrace to drive performance:
1. Propensity to buy—Marrying the institution’s own data with purchase potential models allows quick assessments about which account holders and prospects have the highest propensity to buy a specific product or service. Similarly, a next-most-likely product model can indicate the next product or service they are likely to buy.
2. Cost per acquisition—Divide acquisition costs by the number of accounts generated. Then find out how the cost of acquisition compares to peers and how profitable the acquired accounts are.
3. Loan-to-deposit targets—Align marketing strategies to concentrate on priorities set by senior management, which could be either to raise or lower these targets from year to year.
4. Portfolio penetration—Determine overall growth metrics in terms of loans, deposits, and account holders in order to subsequently determine where to concentrate marketing efforts more profitably.
5. Products/services per account holder or household—Knowing this allows for better targeting of marketing resources.
6. Return on marketing investment (ROMI)—Track not only response rates, but also track conversion, such as opened accounts, purchased products, or approved loans. Then follow up with the CFO on the value of these results and how much revenue the marketing campaign generated compared with how much the campaign cost.
So, the point is: measure, measure, measure, especially in this digital age. Nobody says it will be easy, but that’s the way it is.
2016’s a year of transformation
Says Kevin Akeroyd, senior vice-president and general manager, Oracle Marketing Cloud:
“As we look ahead to 2016, marketing’s ability to modernize existing processes and embrace data, technology, and content will increasingly define the success of organizations across all industries. For many marketers, this will require a significant transformation.”
Sources used for this article include:
- How Banks Can Prepare Customers for Lower Mortgage Rates
- Bold Move by BB&T-Suntrust Bank to Become Truist Financial
- World Elder Abuse Awareness Day: What Can Financial Institutions Do to Become More Aware?
- A New Product Launched Aimed to Help Community Banks with Cross-Border Payments Experience
- The Fed to the Rescue? Perhaps: Banks Weigh in