Digital Dissonance

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;

• 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…

Fallout of Financial Services Mess

Wow, what a couple of weeks it's been for the Financial Services industry. Investment Banks have disappeared, the government owns the world's largest insurance company and Congress is debating whether taxpayers should foot the bill to get us out of the largest financial debacle since the great depression.

So what might all this mean to sales and marketing folks in the industry? Our Financial Services practice and I have spent the last week and a half looking at the changes and have come up with a list of potential areas that may be impacted...negatively or positively. I've even gotten feedback from a colleague in Europe on what this might mean internationally. Keep in mind that the crisis is shifting everyday, so this is like trying to look over the horizon while standing in quick sand.

Here we go:

1. Greater regulation across the industry will reduce the number of 'innovative" products making it more challenging to differentiate by product. As a result, companies will need to increase the importance on competing through superior distribution, and having an unique segment aligned value proposition.
2. A greater need for solution sellers vs product pushers – In this environment, sales channels with reps that can sell value will be essential. " Additionally, the need to sell new services “bundles” necessitates more sophisticated reps. Product Pushers" who sell on price will continue to erode already pressured margins. We may also see someone like Progressive use their direct model to commoditize more products/services perhaps some low end products in the Commercial Insurance market. If you are an agency or broker, move up the value chain to selling sophisticated service solutions. Wholesalers and/or Aggegrators may help facilitate that shift. Relationships are still key but "best price" will continue to be the key consideration driver.
3. A significant need to lower the cost to sell – Increased regulation most likely will add cost and/or impact margin. Companies will have to find a way to do more with less. They may also look to new lower cost channels to distribute products. Relationships + low cost, self service channels = success. Because solution sellers are hard to find and more expensive, there will be a focus on finding ways to create “leverage” for channels/reps.
4. Customers will have greater leverage – Good customers will be in the driver’s seat. They will be more cautious, demand greater value and lengthen sales cycles. Profitable customers will be highly valued and targeted, see bullets 6,7, and 8.
5. New risk models or new underwriters – There may be a need to rethink how companies evaluate, take on, sell and/or manage risk. This may also be impacted by new regulations.
6. Improved segmentation & predictive modeling – Cost pressure and increased competition will force the need to improve targeting, increase yield of programs and campaigns, and get the most out of existing customers (increasing cross sell and upsell opportunities).
7. Increase focus on retention and loyalty – Investment banks, now bank holding companies or a part of a Retail bank will now have to fund their activities on customer deposits rather than "funny money". Look for them to come after your best customers.
8. New competitors, "Super Banks' & consolidation – Look for the pace of consolidation to pick up with the recent changes. The banking landscape has changed with Goldman Sachs and Morgan Stanley becoming bank holding companies. This sets them up to either acquire banks themselves and/or merge or being acquired. Existing players, such as BofA and Barclays, are picking up the pieces that will help them expand services.

My colleague, Mathew Stewart in our London Office chimes in;

1. Safety in geographical diversification--Major international banks will seek a more geographically diversified portfolio. Being active in U.S. and Europe is not sufficiently diversified to protect against the crisis, as UBS discovered. Those who were strong in China, India, and Brazil have faired better. For example, HSBC’s huge U.S. write-offs were counterbalanced by spectacular gains in their Asian operations, so their shares have stayed stable. Santander, a European bank, has faired well due to its involvement in Brazil, and is now buying up businesses from cash-strapped competitors, e.g Royal Bank of Scotland. Some of the bigger banks will seek to copy HSBC and Santander – most do not have sufficient reach, and are more likely to merge with a domestic competitor.
2. Domestic mergers lead to channel rationalization headaches. More domestic banking mergers mean more headaches around how to combine two different sets of distribution channels. These are tough decisions. Huge investment has been sunk into branch networks, a regulated sales forces, broker networks and brands. Exit costs are very high. Banks need a rational basis on which to base their channel rationalization decisions.
3. You’ve killed your partner channel. What do you do now? Over the past 10 years many of the reputable agents and intermediaries have come to rely more and more on cheap credit deals for their income. When the banks stopped lending they were the first to go bust – not just the charlatans and quacks, but some good people who will not now come back to the market in a hurry. When the bank is ready to expand again, how do they rebuild the partner channel?
4. Look again at Buy vs. Build. Mergers also present dilemmas for product portfolio managers. There are make or buy decisions for different product categories-- e.g. should a bank sell its own general insurance? Difficult to know what will happen here. Will the drive for more transparency in investment products actually extend into all FS products?

The Customer Experience...and why your company can't deliver it

Let the bloggin resume, thought that you might enjoy hearing this story.

What your customers (and your sales force) are trying to tell you about the customer experience

Pick up any book on Customer Service and the first tip on how to improve or provide a good customer service experience is to “listen to the customer…” This advice is so incredibly obvious and intuitive that you shouldn’t need a book to tell you that! Yet putting it into practice is incredibly hard to deliver. Why? customers want...at least one company's customers

We recently completed a project for a Transportation Company on improving its customer service operation. Our task was to find out what their customer wanted in a good customer service experience. We surveyed over 500 customers, conducted multiple focus groups and held one-on-one interviews. And after all that data collection, what did the customers say they wanted?

They wanted the company to…get ready for this…”know them.” Know them and their business, and have an understanding of their business so that you can anticipate their needs and be a valuable partner. Doesn’t sound too difficult to deliver, right?

In this company’s case, it is difficult. They have no customer service standards and no rules to govern interactions. Oh, they also lack a centralized customer database or incentives to capture and archive customer conversation and data. To make matters worse they deliver customer service in a decentralize environment with over 100 centers, all operating independently.

Given that scenario you would think that this company could implement some simple fixes that would have a big impact—and there are some simple fixes. But what is interesting is why the company is in this state in the first place. When you get to the core issue you begin to understand the challenge.

At its core, this is an operations driven company, and customers can sometimes get in the way of efficiency. Their culture and core operating model is to move a box as quickly as possible from point A to B without damaging it. Customers who have special needs and/or require assistance slow the process down. In this company’s environment, delivering good customer service can sometimes be too costly and/or too inconvenient. The bottom line is that the process is more important than the customer.

So what does this tell us? Well, it may begin to explain why your company can’t deliver on customer expectations as well.

This is the introduction to a white paper on improving the customer experience that will be released soon. To receive a copy of the full story please click here.

Thank You Howard

This goes out to Howard Chen from Ritek USA who's inspired me to get back on the horse and start posting again. Howard sent me an email looking for some thoughts on entering new markets. I thought it was appropriate to share that question and my response as my first post in nearly a year.

Howard's questions was...

I am trying ot market our products into a few new markets. What will be the best way to do it?

My response was...

Entering into new markets is very difficult unless you have existing customers who have other divisions that are currently serve those industries. So I’d suggest that you first start looking at your existing customers that fit that profile…if, you haven’t already. Get introductions into those industry verticals from your existing customers.

Second, focus on those industries that have similar needs to the industries you are currently serving…we call it “adjacencies”. Remember “new” takes a long time and is costly. Try to find ways to eliminate “newness” …e.g. new customers, new needs, new applications, etc.

Thanks Howard and look for a new post next week. I'm back!

SEO ZOOM Owner

Randika Utama is owner this seo zoom blogspot, iam the specialist about seo wordpress, joomla seo, vbulletin seo and blogspot seo.

i learn more with regards to search engine optimization 2012 which is focus to how write good contents.

Well, I did say I would try to keep this section as brief as possible
 … so I guess the short answer is that I am equal parts creative and
logical.  My creative side has led me to music, graphic design, print
design and web design.  My logical side has led me to web development,
flash development, programming and IT Management.  The combination of
the two has lead me to Internet Marketing and Search Engine
Optimization. Of course what really matters to you is my skill, experience and past
 work.  I’ve worked as a web developer, designer and internet marketer
for over 12 years now.  I’ve worked for several high profile
international companies as well as smaller, locally run businesses. 
I’ve created web systems, graphic designs and countless web sites during
 this time.  The most notable company I’ve worked for has been adidas
(yes, the shoe and sports apparel company!) with whom I’m still employed
 with today and have been for the past 3 years.  My skill set is perhaps
 best observed by taking a look at my portfolio and the services I
offer.

expert with

wordpress seo , build backlinks , master traffic , learn search engine and more.