Financial Marketing and Cross Selling Blog
Dodd Frank legislation will undoubtedly translate into less fee revenue. So how are banks going to make it up? With rates so low and flush with deposits, many banks are focusing on lending, especially to small business. But right now there doesn’t seem to be enough demand from qualified borrowers to make up the revenue shortfall. Once again the industry is talking more and more about the need increase revenue per customer, cross selling, building share of wallet. It all means the same thing. The real challenge is that this need is coming right at a time when cost controls are forcing budgets down, including marketing budgets. That means that bank marketers must find more efficient ways to market.
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 >>
In a recent article from the Financial Brand, Datamining Social Media Profiles for Actionable Results, the first paragraph talks about the biggest challenge to cross selling. ”If a financial institution could know that one of its customers just got married…Or had a baby…Or got divorced…Wouldn’t those life events create selling opportunities for that financial institution? If a bank or credit union understood its customers’ life situations, wouldn’t they be able to market specific products and services centered around people’s unique needs? If only there was a way to figure out what was going on in people’s lives…”
As the title of the article indicates, it went on talking about data mining as a way to see these customer needs.
Essentially, “Social Media” is really just a buzz word that has come to be used to describe the ever changing landscape of the internet that we’ve all grown to know so well. The phrase simply refers to all the social networks in existence and the way we, web users, customers, and brands interact with each other online today. Not only can a single social network be used as a marketing tool in itself, but integrating social media channels into your website gives you the power to leverage your website in ways that didn’t exist years ago. The difference between traditional websites and the ones within social media communities is the simple notion that traditional websites speak to a single customer at a time, where as social media sites allow everyone to have a voice. In this sense, social media is the catalyst that makes our everyday web experience so much more dynamic and it has opened the doors for individuals and brands to create their own unique online presence.
This story goes back to the mid 90’s but I will never forget it. It was a Saturday morning and I was standing in the kitchen when the phone rang. (This was before the “do not call” lists that we have today.) My young daughter answered and said, “Daddy, it’s for you.” As she handed me the phone, a pleasant sounding woman on the other end said, “Hi, I’m from MCI, and I’m calling to explain how our long distance service can save you money.” Now flash back to the time that MCI was making inroads into the long distance business that had been dominated by AT&T by offering lower long distance rates. I had always been with AT&T. In my mind, they were the standard and I was not interested in saving a few cents per minute for what I assumed was an inferior service.
Having been in sales as a cold calling stockbroker early in my career, I tried to be polite in my response, but I also wanted to be direct. I responded, “For the past two years I have seen your advertising, I have had countless direct mail pieces show up in my mailbox, and I am really not interested, but thank you for the call.” As a sales person knowing what you’re up against in cold calling, I was absolutely floored when I heard her response. She said, “You’re just the person I want to talk to?” How could I be just the person she wants to talk to when I said, “No thanks”? She continued without hesitation, “Most people don’t understand one key fact about long distance service; all carriers use the same transmission lines.” I responded immediately, “You mean to say that MCI uses the exact same lines that AT&T uses?” “Yes”, was her answer. “Then why the difference in price?”, I said. “That’s just my point”, was her reply.
Research will tell you that a bank brand attribute as a trusted institution is worth millions of dollars and the envy of so many other types of financial institutions (see recent article from The Financial Brand.)
The problem is breadth. Banks are seen too narrowly, as the place to go for deposits and loans; a place to go to transact. That’s fine if a bank is comfortable with a small share of their customer’s wallet (2 of 10) and are willing to watch other financial institutions earn more and more money by selling other products to their customers; products and services that can help people with other needs as they save for college tuition bills, save for retirement, and move into retirement and old age.
Is a bank’s brand image cast in stone? For the most part, the answer is “yes”. Think of this for a minute. You walk into your dentist’s office. This is the dentist that you have been seeing for several years. He suddenly says, “Take off your shoes and I’ll take a look at your feet, I’m also a podiatrist.” What do you think? “Oh no you’re not, you’re my dentist.” It doesn’t matter if a degree in podiatry hangs on the wall – you are in your dentist’s office and he is your dentist. An image cast in stone. If he really wanted to practice podiatry, he would be better off if you had no preconceived image of him as a dentist.
Banks are in the same trap. They want to take care of more of the needs of their customers but they are tapped by their image – a trusted place to go for deposits and loans.
Read more >>
It isn’t really the problems that build your brand but how you address them. For years banks have done research to find out what brand attributes are most compelling to customers. And year after year, they got the same answers – customers value good service. So banks built their ad campaigns around the promise that they provide excellent service.
But most of the time, the promise fell flat. Why? Because people perceived good service in many different ways. That all changed when those messages evolved from a simple claim “We have good service”, and started to show a particular problem being solved. Demonstrating a problem being fixed defined service in terms customers could understand. The power of the message was not in the claim of providing good service but in the demonstration of providing good service.
Then marketers went to work to find problems and show how the bank worked diligently to solve them. And guess what they found? Customers that had experienced a problem that was fixed had stronger relationships than those that had never experienced a problem.
If you follow social media news then you’re most likely aware of Foursquare, the latest location-based service that rewards you for frequent visits to near by retail shops, restaurants, churches, night clubs and most recently, banks. Like Twitter, I was a little hesitant about Foursquare when I first started “checking-in”. I didn’t quite understand the badges or why I would want to take my phone out every time I was at a bar or restaurant to check in. Then my colleague shared an article from TechCrunch that discussed the way Foursquare is rewarding users directly through retailers that are on the site and I’ve been intrigued ever since.
An introduction to Foursquare
To have your business show up within Foursquare, users can enter your location in manually if it’s not already listed (take a minute to enter your location). There is no charge for having your business on the site. To “check-in” at your location, users simply open the application through their smart phone and all locations within a certain radius pop up. When you check in you can add personal messages such as “hanging with friends and having cocktails on this beautiful spring day”. Most users connect their activity to their Twitter and Facebook accounts. You can also add tips to the location you’re at so that other users can see your advice when they check in at the location – “Try the house martini with blue cheese stuffed olives. It’s to die for”.
The NFCC has announced that April is Financial Literacy month. They’re pulling out all the stops by making trips to Capital Hill and launching two new websites, one in Spanish – www.termineconsudeuda.org – the other a blog providing debt advice – www.debtadvice.org. Many banks and credit unions should join in with NFCC in supporting this cause.
I’ve had many people ask me, “Luke, you guys talk alot about using education as part of your marketing initatives. How is that any different then the financial literacy campaigns that banks and credit unions conduct throughout the year?” For starters, one of the main reasons we stopped using the term “education-based marketing” was because of this close relation in semantics to financial literacy. As you may know from reading our company blog, we’ve been using the term Content Marketing to better explain how the process works.