Bank and credit union marketers “seem to be using strategies and tactics from the 1970s and 1980s” finds the 2016 Financial Marketing Trends study.
A clear message from this study is that if insanity is doing the same thing over and over again, and expecting different results then bank marketing is truly insane.
The study’s publisher, Jim Marous concludes his summary of the study with:
“The models and strategies in place today at the majority of financial institutions are not going to generate the acquisition, share of wallet or loyalty goals that financial marketers say they aspire to.
…there needs to be a revolutionary reset of marketing and retail banking strategies before the marketplace finds alternatives that are more responsive and in alignment with their needs.”
This should be good news for fintech challengers…
… but only if they learn the lessons and avoid making the same mistakes as the incumbents!
The underlying problem
According to Jim, an underlying theme identified by the study is that:
“There continues to be a product (rather than consumer) focus and the movement to digital communications is occurring at a snail’s pace.”
A word on ‘consumer-focus’
Potential customers don’t care about your product or service. They only care about what’s in it for them.
The more you bang on about yourself, your tech and your product the more you’ll drive them away.
Focus instead on the customer and help them be the people they want to be, make the change they want, and deliver the outcome they seek.
…and digital communications
Hmm. Well, for an incumbent bank or credit union to fully adapt itself to the digital age requires a fundamental transformation along the lines I describe in What is Fintech?
Just tweaking ‘communication’ is like rearranging the deck chairs on the titanic. Good luck with that.
Top marketing challenges
Here’s a summary of the specific financial marketing challenges mentioned by respondents to the study.
Challenge #1 – Measurement of results
Two-thirds of incumbents said:
“We could do a better job establishing a marketing ROI”
Just 6% said:
“We have a sophisticated and robust approach for measuring our marketing efforts”
Maintain a clear line of sight across marketing activities, marketing goals and bottom-line business objectives. Know why you’re doing everything you do, and measure its effectiveness.
At any point in time, know your overriding goal. It could be:
- Testing your market & getting to so-called product/market fit
- Building awareness
- Customer acquisition
- Customer retention
- Customer referral
- Customer revenue
Continually improve your ability to measure your Cost to Acquire a Customer (CAC) as well as the Life-time Value (LTV) for each customer. And do this by channel.
Virtually every action taken by a visitor to your website or app can be measured and ascribed a meaningful $ value. Actions like starting a video play, downloading an eBook, or signing-up for a newsletter. But this only works if you track these actions along the customer journey, across each channel, and track conversion rates at each stage. Google Analytics is a good place to start.
Challenge #2 – Lack of focus
The study found:
“financial services executives believe, ‘We have too many initiatives and/or take on too much at once.’ This can result in a lack of focus and potentially a lack of capacity to measure results.”
“‘feeling overwhelmed’ in marketing also results in a status quo mentality.”
Lack of focus can quickly lead to scope creep in terms of too many things going on. A blog here, a Twitter ad campaign there, etc..
Focus comes from clear priorities and goals which feed clearly and directly into bottom-line business objectives. Marketing is the key to revenue growth and that’s how marketing needs to position and align itself.
Once properly aligned to the business bottom-line, the team, execs, founders and investors will get why it matters.
All stakeholders need to be aligned and focused on the right things at the right time.
In my experience the trick is to focus on a handful of prioritised activities at any one time but to simultaneously be actively trying new things on a rolling basis.
I always maintain a pipeline of experiments to try next. Be clear about what’s most likely to work (and why), have a clear pass / fail litmus test, and be prepared to move on if it doesn’t.
Challenge #3 – Limited data analytics tools/capabilities
The study found that:
“only 36% of organizations were planning to increase their data analytics budgets by more than 10% in 2016, reflecting a surprising lack of commitment to alleviating this challenge.”
If you’re clear on your goals and priorities then you can choose, setup and use the right tools to measure so-called multichannel attribution, across the so-called Customer Journey.
In other words, who’s coming from where, and what are they doing on the road to becoming and staying a customer.
The right tools do the job, work together, are simple enough to use, and are within budget. Google Analytics is often a good starting point.
Challenge #4 – Marketing automation & personalisation
As Jim says:
“…consumers are demanding that partners in their daily lives know them, look out for them and reward them as individuals, yet most banks and credit unions are not budgeting or committing to this requirement.”
“Consumer expectations are being set by other industries and the bar is getting higher every day.”
There’s much confusion about what marketing automation means.
From a marketing perspective the aim is to tap into and usher people along a so-called Customer Journey from ideal-but-disinterested potential customer to one whose thinking about addressing a problem or desire, to one whose actively looking for a solution, to purchase, to re-purchase and to referral.
As our audience members and potential customers progress along the Customer Journey, across all the channels we’re engaged in, the role of marketing automation is to:
- track their behaviour, and
- give them every opportunity & encouragement to take the next step
- … ‘automatically’, hands-off’, ‘without human-intervention’
Personalisation is all the above but the process adapts itself around each individual in a unique, two-way, interactive journey over time.
There are many tools to choose from. While most are over-complex and over-budget for startups there are some that fit the bill depending on your goals and budget.
Challenge #5 – Insufficient internal resources / budget constraints
The study found:
“many banks and credit unions have not made significant changes to their marketing strategies to adequately address the changing consumer and competitive landscape. When we look at trends over the past four years, most institutions seem to make only small adjustments to goals, strategies and tactics hoping for an evolutionary result.”
“82% of banking organizations allocate 30% or less of their budget to online channels. It also appears that there is still only a minor commitment to mobile channel marketing, since nine in ten organizations allocate 20% or less of their budgets to mobile (70% allocate 10% or less)”
Allocating the right type & level of resource comes down to being clear on your priorities, goals, timeframes and expected ROI.
Meeting these 5 challenges does not need to cost $ millions nor does it require a small army…
…if, you can answer these questions…
What is your top priority right now?
- Validating there’s a market for your offering?
- If you’ve got to PMF, then have you found & systematised a reliable path to growth?
- If you’ve systematised a growth engine then what’s your top priority: awareness, acquisition, retention, referral or revenue?
Once, you’ve settled on your top priority, then what’s your objective, and how will you know if you hit it?
What’s your timeframe (and who’s available to do the work)?
To hit your Objective, do you know what needs to be done, when & by whom, and what tools you’ll need?
What will all that cost? (Not forgetting that your time has a cost)
What’s the trade-off between that cost and the expected benefit?
Size your cost to budget and go…
At Engorah we set a fixed 90-day Sprint for the current Objective.
We find that 90-Days is short enough to maintain focus, and long enough to make a meaningful impact or discovery.
Before the end of each Sprint, we recalibrate for the next Sprint: reseting the Objective as needed.
The key is to keep learning and achieving as much as you can along the way. It’s a never-ending process that iterates and makes incremental (and ideally compounding) progress toward your Objectives.
But, as the old saying goes if you don’t know where your going, any road will take you there.
What will you do next?
As Jim concludes about the incumbents:
“…most organizations need to start from scratch and rebuild their marketing plan to mirror organizations in other industries”
“Alleviating the insanity in financial services marketing is not impossible. It requires changes in priorities, strategies, budget allocation and even personnel. It is time for a paradigm shift from the financial marketing strategies used by the last generation of bankers and credit union executives.”
As for the fintech challengers…
I’m excited for you. It’s all to play for. You have a blank slate. No out-dated systems, strategies, tactics, cultures and mindsets to reset.
The scale of opportunity to learn from the old-guard, avoid their mistakes and do things right, is mind-boggling.
Good luck and let me know if you have any questions.