Financial Marketing and Cross Selling Blog
The impact of life event marketing in the financial services industry has been known for years. When someone gets married, they may be looking to buy a house. When someone has a baby, they may be in the market for life insurance. When someone changes jobs, they may be thinking about rolling over their 401(k) plan. And when someone is getting into the retirement zone, lots more comes into play; retirement income, rollovers, and on and on. A recent Forrester Research study of 26,000 online households shows that consumers are 43% more likely to buy a financial product around a life event.
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.
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 >>
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 >>
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.
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.
If you had any doubts about the average American consumer knowing what direction they should take after retirement, two recent surveys conducted by Putnam and Prudential should help shed some light.
In the Putnam survey they found that 52% of respondents were in need of a better understanding of how much income they would need to maintain their lifestyle in retirement. As for the Prudential survey, one figure showed that 47% of those enrolled in 401k plans said they were unsure as to what types of investments are best to generate income in retirement.
This reinforces the opportunity that banks and credit unions have to help their customer base become more knowledgeable on financial topics. They should be making this type of information easy and readily accessible at all of their touch points – website, branches, email, mail. Those who are their first to help these individuals understand their options without putting product first will be the one who wins over their relationship.... Read More >>
What made people on this list so influential is how they’re adopting to the new rules of marketing and PR. You may have heard us use that phrase on this blog before. If you’re new to these rules, we recommend reading the book by David Meerman Scott, “New Rules of Marketing and PR”. The basic premise is that the old way of relying on big media to deliver your story and advertisements is no longer a functional model. While this may sound horrible to the traditional marketer, in reality it’s a huge opportunity for every business, especially small businesses, to grow exponentially by letting go and diving head first into the new world. Some are using elements of content marketing, an essential ingredient to the new rules.
These banks and credit unions are showing signs that they’re either moving in the direction of the new rules or in some cases, making it a top priority. But they’re clearely ahead of the curve in the financial industry.
We most likely missed a handful of people that should be recognized. But the beauty of blogs and social media in general is the ability to voice your opinion so we encourage you to leave comments about institutions you feel deserve recognition.
This list is in no particular order.
There are some great examples of banks and credit unions that actively conduct a Content Marketing approach. I’ve chosen two for this post but we’ll continue to highlight the best in the industry on our blog.
Example #1: Affinity Federal Credit Union in Basking Ridge, NJ
When you visit Affinity Federal Credit Union’s website you are exposed to five main navigation choices – Personal, Business, Loans, Advice & Planning, About Us. My guess is four out five of those options are on just about every bank or credit union’s site. The one that’s not - Advice & Planning.
By making this a key area of their website, Affinity is building themselves as the “advice & planning” experts. If you go into this section you’ll find a wide range of topics that cover most of the services their credit union provides. You can find offers to download “Quick Guides” (downloadable PDF files) or to contact professionals who can help further.
Example #2: Nevada State Bank in Las Vegas, NV
Jeffrey Pilcher of The Financial Brand turned us on to the Nevada State Bank, who created an online content marketing strategy with their “Economic Forecast” section of their site. The site includes a... Read More >>
A popular sales consultant once said that when all you do is talk about your product you’re only engaging 3% of your audience. But if you talk about how your product can solve a problem that affects everyone, you’re connecting with 100% of your audience. This mindset falls right in line with the new direction of marketing and PR – Content Marketing.
Content Marketing is a term that has a fuzzy origin but some may argue Joe Pulizzi and Newt Barrett made it popular with their book, Get Content, Get Customers. The approach revolves around the theory that the Internet and especially the introduction of the massive search engine, Google, have drastically changed consumer-purchasing habits. In the old days it was a few TV companies and newspapers that dominated the marketing and advertising scene. The type of marketing that was conducted for over 50 years was about getting your message inside of these mediums and “interrupting” the consumer, as Seth Godin would put it, with your story.
While the idea of a good story hasn’t died, the type of story that customers are looking for has changed.
Instead of the Michellin baby, consumers want to know the best techniques for making their tires last longer. Instead of catchy taglines they want catchy information. This new generation of consumer spends 60% less time watching TV and 600%... Read More >>