The Digital Disconnect in Financial Services
I’ve just returned from the Financial Services Marketing Symposium in Orlando where I saw and heard some really interesting things.
First, I saw an affinity card program from a company called ServerSideGroup that can be issued for small groups, like a church congregation or a local school. Second, I heard the CMO of CapOne, Bill McDonald declare that “Web 2.0 is about consumers selling to consumers” which I think is great way to describe it. So if you look at these two things together you see a potential revolution in the way credit cards are marketed. In one scenario, you have the marketing scientist at CapOne trying figure out the “killer” value prop that will get you to open the third DM piece they sent you that week and fill out that credit application; all based on sophisticated models that try to figure your “profile” based on various data sources that really don’t know you from Eve.
In the other scenario you have Betty, who teaches your children at Sunday school, calling you about the new St. Joe credit card that will become a valuable fundraiser tool for your church…you don’t need divine powers to figure out which value prop will win. Look around your industry and you’ll probably find a similar analogy.
So you would expect FS companies to be all over Web 2.0 right? Well you would expect that, but you’d be wrong according to our research. MarketBridge just completed an industry research project on the use of Digital Marketing in the Financial Services industry. The research was conducted in partnership with SourceMedia the publisher of American Banker , The Bond Buyer and other FS focused publications. The study drew nearly 250 respondents across a variety of titles and functions within financial services. Nearly 40% had executive-level titles and close to 20% had marketing budgets of $100 million or more.
Here’s what we found out;
I’ve just returned from the Financial Services Marketing Symposium in Orlando where I saw and heard some really interesting things.
First, I saw an affinity card program from a company called ServerSideGroup that can be issued for small groups, like a church congregation or a local school. Second, I heard the CMO of CapOne, Bill McDonald declare that “Web 2.0 is about consumers selling to consumers” which I think is great way to describe it. So if you look at these two things together you see a potential revolution in the way credit cards are marketed. In one scenario, you have the marketing scientist at CapOne trying figure out the “killer” value prop that will get you to open the third DM piece they sent you that week and fill out that credit application; all based on sophisticated models that try to figure your “profile” based on various data sources that really don’t know you from Eve.
In the other scenario you have Betty, who teaches your children at Sunday school, calling you about the new St. Joe credit card that will become a valuable fundraiser tool for your church…you don’t need divine powers to figure out which value prop will win. Look around your industry and you’ll probably find a similar analogy.
So you would expect FS companies to be all over Web 2.0 right? Well you would expect that, but you’d be wrong according to our research. MarketBridge just completed an industry research project on the use of Digital Marketing in the Financial Services industry. The research was conducted in partnership with SourceMedia the publisher of American Banker , The Bond Buyer and other FS focused publications. The study drew nearly 250 respondents across a variety of titles and functions within financial services. Nearly 40% had executive-level titles and close to 20% had marketing budgets of $100 million or more.
Here’s what we found out;
- Marketing is in the Driver’s Seat… More than 60% of respondents said they had a “reasonable” to “very good” understanding of digital marketing. When asked how organized their companies were to plan and implement digital marketing strategies, more than half said they were “adequately” to “well organized.” Over 90% of the respondents said Marketing was the key influence in driving the Digital Strategy. Nearly two-thirds of the group said that a Centralized Marketing organization owned the strategy, and nearly that many said Marketing owned execution.
- But it’s using Web 1.0 tools and platforms… Half of the respondents said they spend 0-10% of their budget on digital. The majority of respondents (65%) are spending the most on what they are familiar with, mainly their own Web sites. Relatively few (15%) are spending toward “Web 2.0” vehicles like blogs, social networks, video, etc. The situation in the Insurance industry is even worse, with Insurance companies on average only spending 2% of their advertising budgets on the Internet.
- Why? It’s not the reg's or the legal department, only 35% cited regulatory issues as a top concern. The majority of respondents said their top concerns were lack of experience with new digital marketing platforms, and the inability to prove ROI.
- The Root Cause… They’re not investing enough time, money and resources to do the necessary piloting to learn how to use the platform and tools, develop processes or do reporting . It’s a chicken and egg thing. Spend on those things that have a proven result even though they are, for the most part, only measurable at the tactical level and not at the campaign or program level. Show short term results vs long term success.
- The Fix... Long term programs (…and I’m talking a year or more) aimed at key market segments with clear value props. By taking a long term approach marketers will be able to experiment with Web 2.0 tools because they work best over time, not in a short term campaign. Think I’m making that up? We’re working with a leading Insurance company now on a 3 year long program. It involves a dozen or so partners, aimed at Boomers for a product that they won’t be able to sell to some folks in the segment for another 2 years.
- Why? In the current environment, FS institutions have to be focused on creating deeper more meaniful relationships with customers. They need to be focused on creating customer “advocates.” Firms that take a “wait and see” approach to going Digital will see their customers disappear and their traditional marketing tactics become less and less effective as they sit on the sideline waiting for the perfect ROI. Creating Customer Advocates for the brand, products and services is the goal because it's all about…or soon to be all about Consumers selling Consumers.
Got to go, Betty’s on the line…
