Discussions around digital marketing have left financial services marketers with a lot to keep up with as of late. While the robust landscape of tools that digital marketers have at their disposal is at an all-time high, the restrictions and policies affecting third-party data around online privacy have been evolving at an equally rapid rate. All this complexity and change may cause some financial institutions to ask if a highly targeted digital strategy is still necessary. The real question here might be whether niche digital targeting is simply a way to stretch your marketing budget or if it’s an impactful driver of customer growth?
Our answer? It’s both! In this issue of our financial marketing series, we will look at both sides of the coin and take a deeper look at what financial institutions might be missing out on if they aren’t prioritizing digital targeting tools within their marketing mix.
It’s been over a decade since Byron Sharp’s book, How Brands Grow, was published, but the theories explained in the book are still stirring up debates amongst marketers today. The point of this article isn’t to disagree with the premise in this book (which is a great read for anyone who hasn’t already checked it out) but rather to evaluate how it holds up within a particular industry given the current dynamics we’re seeing in the bank/credit union space. As a refresher, Sharp’s premise is that the only real drivers of growth are physical (distribution) and mental (brand saliency) availability. The idea is that most customers of your product or service will be light users. Therefore, they aren’t going to run out and engage with your brand each time you run an ad with a specific call to action.
The implication for marketers is that physical availability is a requirement to drive the desired action and that beyond that, brands should do everything they can to stay top of mind with as many potential users as possible. This goes against the way that we’re generally geared to think as marketers, which is that marketing should aim to serve the right message to the right person at the right time. Given the popularity and prevalence of Sharp’s theories, we will point to them throughout this article as counterpoints to our argument that a highly targeted digital strategy is the way to go for banks or credit unions looking to add new depositors.
One reason that the availability theory is particularly interesting for the financial services industry is its relationship to an industry-specific growth strategy that predates Sharp’s book by decades. We’re referring to the real estate strategy for growth which is for financial institutions to be highly strategic about growing their branch locations. This strategy doubles down on the importance of physical availability while hoping that branch signage delivers the brand saliency that would otherwise be left up to paid marketing. Given the history of this strategy within financial services, it means that some in the financial services industry were exposed to the availability theory long before Sharp’s book was published. Now that we’ve given you a reason why some in the industry might agree with the theory, let’s look at reasons why financial services marketers should deploy a highly targeted digital strategy as part of their growth plan.
1) The target audience – it might be broad, but it doesn’t mean it isn’t segmented or predictable. Sure, the universe of people who could use a bank or credit union might be about as large as those who might purchase a carbonated soft drink. But, the products and services that would be the impetus for a new account opening can vary dramatically from one user to another. Example A is a 22-year-old male who is interested in opening a checking account and credit card, with his main concerns being digital access and low fees. Example B is a 43-year-old mother who’s interested in high interest rates for a college savings account for her daughter and a competitive rate for a Home Equity Line of Credit (HELOC) that the family intends to use for renovations.
This dynamic agrees with Sharp’s theory that most potential customers will be low-frequency decision-makers. In neither example would the individual be looking to decide about a financial institution with any significant level of frequency. However, if example A knew that there were three banks or credit unions conveniently located near his apartment and that all three offered checking accounts and credit cards, then he might choose to research all three providers. Or, he may subjectively decide to only research two thinking that they’re probably all about the same. However, if he had recently seen an ad about one of the institutions having low fees as well as account options that help protect its customers/members against unwanted fees, then he may decide to move forward with that provider immediately in lieu of only seeing high-level branding messages or company signage from the other providers. Or, at the very least, the provider with the more tailored message has reserved their place in his consideration set of ones that he will research. In that example, his decision process just became about something greater than simple availability. A great way for financial marketers to prepare for this situation is to map out personas representing different segments of their target audience and build out a marketing campaign that targets these segments with relevant messaging about products, services or benefits that best resonate for each segment. It’s important to work with your business intelligence team to ensure that your target audience segments align with where you’re most likely to see new growth in the future.
2) Addressing pain points – In this industry, customer experience isn’t just a decision factor but a decision catalyst. In How Brands Grow, Sharp argues that marketing can’t impact customer experience. We won’t debate that point, but what we will do is look at it from a different perspective. Sharp’s point was related to existing customers and whether marketing could impact their perceived experience with a brand to the point of making them a more loyal or frequent user of the brand. Instead of looking at it from the standpoint of customer retention, let’s evaluate it from the perspective of new customer acquisition. Users switching banks or credit unions isn’t a frequent activity. According to a JD Power’s 2019 U.S. Retail Banking Satisfaction Study, only four percent of U.S. consumers switched banks in 2018. Doing so is a hassle, and customers generally don’t welcome this burden … unless they have a problem with their current bank or credit union.
We have all heard the old saying, “fool me once, shame on you – fool me twice, shame on me.” It’s part of human nature that we don’t like to make the same mistake more than once. While we may not be able to predict exactly when individual customers will experience a pain point that may drive them to switch banks, we can derive from the JD Power study that it’s imperative to make the most of every opportunity. So, what’s the best way to do that? After all, don’t all banks and credit unions claim that their customers/members have excellent experiences with them? One of the most effective ways to do this is by highlighting testimonials from real customers. If you can hone in on the most likely reasons different customer segments switch away from your competitors, and have existing customers who are willing to tell their story about how making the switch to your organization remedied this issue for them, then this firsthand story can be profoundly impactful upon someone else who’s experiencing the same issue. But matching the right story to the right potential new account requires a more targeted approach than general mass media blanketing. A targeted digital strategy is a great solution for this example.
3) To show value, promote function over form – As much as ever before, consumers are very perceptive to the functional value provided by different products and services. Within the financial industry specifically, this has been accelerated in recent years by the rise of fintech solutions. These tech-based companies focus their marketing efforts on functional benefits. Their customers aren’t frequently interacting with people at their company or being met by a smiling face after walking into the lobby of a branch. Because of this, their marketing doesn’t dwell on warm aesthetics but rather on tangible and functional benefits provided by their solution.
As consumers are exposed more and more to this style of messaging within the financial services space, it will become more important for traditional providers to match this by displaying their own functional benefits through marketing. This is one thing for a financial institution with one predominant specialty such as wealth management, but for a full-service bank or credit union, the plethora of functions they could show off can quickly become an unwieldy list. If they attempt to inform everyone of every product and service they offer along with information on how their rates and fees are highly competitive, their service is friendly and customer access is convenient, then they either need a massive marketing spend to do this or every message is so full of information that it’s white noise to the audience. It’s much more effective and efficient to focus on promoting specific products and services to the specific audience subsets most likely to need them. This not only helps to not waste marketing dollars, but it also helps ensure that you aren’t wasting the audience’s attention span. Today, consumers are inundated with competing messages and promotions, so getting to the point (and making sure it’s the right point) quickly is essential.
If you aren’t currently using a targeted digital strategy for your marketing efforts, or if you are, but you feel like the results aren’t what they could be, then it may be time to rethink your efforts. If you’d like an objective and informed analysis of your current marketing and how to optimize for growth, give us a call at 502-499-4209 or drop us a note here. We will be happy to help you find the right solution.