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.
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.
What does customer service mean to you? Personally when I think of customer service, I can’t help but have my thoughts be overshadowed by frustrating experiences, automated call services and plenty of dead ends. If you provide any product or service, no matter what it may be, you have to be 100% dedicated to assist your customers when something goes wrong. You can’t simply provide a service and then turn a cold shoulder on your customers when something goes wrong. Customer service is a HUGE factor in how your brand is viewed and when your customers need help with your products or services, they should be able to count on you to provide them the information that will help them, which in turn will increase their loyalty to you in the long run. You may be reading this now and thinking that the connotations attached to a brand’s customer service is something that is hard to change. However, I was recently involved in a scenario with a certain internet service provider that left me utterly amazed.
Mary Beth Sullivan from Capital Performance Group, in her recent blog article The Future of Branches: Reinvention in the Banking Strategies section of the BAI website proposed an interesting solution to retail branch profitability. It’s called sales. She referenced a huge market that banks can own by leveraging their branch network. This market is people who are looking for advice. Martha Stewart realized this a long time ago and built a business around it. People want to be told what to do. It holds true in personal finances as well. People are looking for simple and easy to understand information and guidance from someone they trust. And they will do business with the one who is there to provide it. This includes the enormous baby boom generation that has been turned upside down by the Great Recession. They want to be told what to do as they face retirement – without the confusing jargon.
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.
For the past year, the social media revolution has been gaining traction in the financial industry. A recent article in the popular social media blog, mashable.com, highlights some of the ways banks are using social media today.
One tool that’s played a large roll is Twitter. Recently, the ABA announced that they would like all their attendees at the ABA Marketing Conference in San Antonia this week to use Twitter and to use the hashtag “#abamc” when tweeting about their experiences. The hashtag is a popular tool among users as it allows for people to connect in a way that wasn’t possible prior to its invention. The hashtag phenomenan came about because of Twitter Search. People type in the hashtag they want to follow into the search engine. This brings up everyone in Twitter who is talking about the event or happening that’s related to the hashtag. Read more >>
When we talk to bankers, we often talk about the old way versus the new way of bank marketing. If you want to be seen in your community as the place to go for more then just checking or savings accounts, there are three key areas where changes are necessary:
- Referral generation
- The website
There aren’t too many investment programs in the financial industry that can tell you they’ve had consistent growth in their branch referral program since 2007 with no signs of slowing down even during these tough times. Yet one program in Vermont at the New England Federal Credit Union is doing just that.
For starters, in order for branch referrals to be successful, you first need support from upper management. This is one point Susan Zahn, manager at New England Federal Credit Union who oversees the operations and integration of Baystate Financial Services, was clear in pointing out during our recent phone conversation. Referrals to this program are a part of the branch employee’s goals and the referral system that tracks investment referrals is the same as the credit unions. An incentive program is in place. Susan considers a referral to be when the program is mentioned by an employee to a member. Referrals are considered qualified when a member gives permission to have an advisor call or to schedule an appointment to meet. The employee only receives their incentive if the member shows up to their call or meeting.
While incentives are important, Susan went on to state, they’re not the main reason referrals are coming in. Employees refer because they understand the importance of the program’s goals for their members. Which leads us to the next important factor. Besides top management support, the next most important component is advisor credibility, or what we like to consider the “Chemistry Factor”. If the credibility of reps or... Read More >>