Financial Marketing and Cross Selling Blog
Let’s start with a definition. What is the mass affluent market? Various financial organizations define it differently, but I will use a definition and data from Forrester Research published in a March 10th article in The New York Times by Nelson D. Schwartz entitled, “Got $100,000? Have a Cookie: Banks Try Luring the Top 10%”. Forrester defines the market as those with assets between $100,000 and $1 million, not including the value of their home. They estimate that there are 40 million people in the US today that fit into this category. Forrester also estimates that a third of all retail investment assets are held by this mass affluent market segment.
That’s where the money is and that’s where banks want to sell more. As Schwartz says “The aim is to sell higher-margin products like mutual funds, stocks and retirement advice to depositors who have traditionally looked to their local bank only for checking and savings accounts”. He cites some research done by Pinnacle Financial Strategies of Houston that supports this effort. It says that a study of a West Coast institution revealed that they earned $1,193 from a typical mass affluent household while only $630 from a mass market household in general. That’s a big difference; nearly double.
We all know the phrase “you only get one chance to make a first impression.” This is never more true than with banks and credit unions today. Based on research completed by Truebridge, Cross Selling Success Factors, one of the biggest problems that financial institutions face when it comes to cross selling is that they are seen narrowly; as the place to go for transactions involving deposits and loans and not much more. How much easier would it be for banks and credit unions to cross sell if they were also seen as the place to go for so many other financial products that people buy as they move through life from sending kids to college to living in retirement. Research shows that people only buy an average of two out of ten financial products from their bank or credit union. That’s because these financial institutions often fail to take advantage of a golden opportunity to change perceptions.
At Truebridge, we have done research to identify the barriers to cross selling and published the results. In a nutshell, we identified the need for banks to shape their image as the place to go for more of their customers’ financials needs beyond deposits and loans. We also highlighted the fact that banks needed to do a much better job in creating referrals. There are several ways that these barriers can be overcome. Why aren’t banks attacking these problems with more force?
A recent conversation with the president of a community bank gave me a good understanding of their points of pain and it sets up a real catch 22 for the whole industry. The low interest rate environment has squeezed margins and driven down revenues forcing expense cuts. On top of that, new regulations are adding to the cost of banking. What is needed most now is revenue growth. But growth takes money. Money that is not there to spend. Read more >>
According to the recent 2012 Bank and Credit Union Financial Marketing Survey developed by Jim Marous of Bank Marketing Strategy and Jeffry Pilcher of The Financial Brand, cross selling is at the top of the list of marketing priorities. With fee revenue under pressure from new federal regulation, it is not surprising that generating more revenue per customer is so important. This is nothing new. Looking at this year’s Grant Thornton LLP’s 18th Annual Bank Executive Survey, along with previous years’ surveys, you will see that organic growth (cross selling) has been a top priority for quite some time. Read more >>
A good reputation is undoubtedly important to any financial institution. It translates into more new and more loyal customers. A recent article in American Banker, discussed the results of the American Banker second annual survey of bank reputation. This 30 bank survey was conducted by the Reputation Institute an evaluated reputation across several dimensions including corporate citizenship, financial performance, governance, innovation, leadership, perceived workplace environment and products and services.
The article noted that BBVA Compass enjoyed the most improved image, moving up 11 slots into the No. 5 position. When asked about this, the bank responded by saying that they used social media such as Twitter to monitor and respond to complaints. In other words they listened to their customers and fixed their problems, building stronger relationships than existed before the problem. Problems can actually help build your brand. Their experience defined for them what good service is in banking.
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Education will create value if you provide it in such a way that it is useful and timely. There is a lot of ‘financial information’ available in the market, mostly designed to tease you with bits of good information then go for the kill – the sell. Education is not a priority in these cases and cross selling is not a priority.
Institutions have the ability to create one of two experiences for their banking consumers: A Selling experience or an Educational experience. It is understood that consumers will be significantly more likely to purchase a product or service from an entity that provides them with good information when they are in the ‘evaluation’ process than just trying to sell them the sizzle. It is especially true when it comes to financially oriented products and services where there needs to be a level of trust before they purchase. Read more >>
Overall, First National Bank and Trust Company in Wisconsin has a pretty standard bank site – rates, personal and business banking overviews, about us, online banking login, etc. However, there is a bright spot with the wealth management blog. This group has a good start to building a foundation of helpful online content.
It’s not the easiest blog to find. You have to click on wealth management so right away you know only people actively researching wealth management topics will be visiting this blog. Because of this, the bank is missing out on a number of customers that may very well be interested in some of the subjects discussed only they’re not actively thinking about or concerned about them while doing online banking or other research on the site. According to an article in the October 2009 issue of the Community Banker, Little Changes - Big Difference, “nearly 95% of visitors to a bank home page visit to login.” By not showcasing all the great, helpful information available to these frequent users of online banking, you’re missing out on a huge opportunity to deepen your relationships.
The wealth management home page in general has some positive
If you were an expert on helping people solve problems it would seem logical that when you provide helpful information it’s seen as coming from you and not another source. Unless, of course, you need to site the source in your own content.
Unfortunately for many banks and credit unions this does not translate. I’ve visited many sites where I’ve clicked on a link that said something along the lines of “learn more about…” and it links me out to a news article from a local or major media outlet. Or worse, it sends me to a government website.
But it was a recent Tweet that reminded me to write about this subject. The message said, “5 ways to kill your credit score”. A great subject for a client of a bank or credit union to learn more about. The shortened URL then took me out to an MSN Money article. Mind you, this was a credit union sending out the message.
Now, I’m all for sharing links to sources that may be of interest to your audience, but at the very least, link them first to your site where they can read a short overview about the subject the article touches upon – then provide a link to the article in the body of the overview. You want to position your institution as the authority on these subjects. By steering them to someone like MSN you’re only confirming what your audience most likely knows, that MSN Money is a trusted source for financial news.
The easiest way to achieve this is by having a blog. ... Read More >>
We all know what target campaigns are. This is where you pull out all your weapons (CRM, MCIF, etc.) to develop the perfect segmentation of your customer base. Knowing who to target when, where and how. And with the technology that’s out there today, the possibilities to create such a perfect list are more realistic then five or ten years ago.
But what about the customers being targeted. How do we (marketers) know that it’s 100% the right time to deliver a specific message? The answer, we don’t. And unless someone finds a loop hole for the legal right to place hidden cameras in their customer’s homes to listen in on family dinner time or during private gatherings, there will never be a magic solution to this old marketing dilemma.
The only true way to ensure your marketing messages are touching your customers at the right time is by positioning your institution as place to get answers 24 hours a day, 7 days a week. In today’s information rich culture where over 72% of our population (United States) has access to the Internet, people are taking it upon themselves to find answers to their questions. If you’re not taking the steps to position your bank or credit union as a place to go to find answers, then you’re behind in the new age of marketing. Gone are the days of product marketing. In are the days of education marketing.
When you focus on developing good, easy to read... Read More >>
In a recent American Banker article, “New Rules of Retirement Advice Get Mixed Reviews”, Lydell Bridgeford discusses the Department of Labor’s new regulation plans on how financial services firms that act as plan fiduciaries can provide investment advice to their plans participants.
The new regulations allow participants to receive investment advice through a computer model certified as unbiased. The idea is to create a regulatory environment where financial services firms could provide advice to plan participants in a way that doesn’t conflict with their own interests.
These new regulations were introduced back on January 21st but put on hold by the Obama administration to allow further review. The original launch date was set for March 23rd but it’s now set for May 23rd. Many suspect that senior Obama officials and Democratic senators are going to try and reverse some of the Bush-era regulations in the Pension Plan Act of 2006.
But according to Alan Vorchheimer, principal at Buck Consultants in New York, he’s not so sure these new regulations will help plan participants to have access to investment advice. He believes many fiduciary advisers will see the annual audits and compliance ensuring the advice being provide is unbiased as burdensome and won’t choose to provide such a computer system to participants.
How does this go in favor of banks? Simple, unlike plan providers, banks don’t care which product their customers eventually choose. There is no conflict of interest what so ever leaving the investment advice and education window wide open for banks to provide. And studies show that many consumers are more open to receiving messages from... Read More >>