Driving Depositor Growth With a Targeted Digital Marketing Strategy for Financial Services

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 Compound Interest, we’ll take a deeper look at what banks and credit unions might be missing out on if they don’t prioritize a targeted digital marketing strategy for financial services.

• The Real Drivers of Growth
• 3 Reasons to Implement Targeted Digital Marketing Strategy for Financial Services
  • 1. The target audience
  • 2. Addressing pain points
  • 3. To show value, promote function over form
• Get Expert Help With A Targeted Digital Marketing Strategy for Financial Services

The Real Drivers of Growth

It’s been over a decade since Byron Sharp’s book, How Brands Grow, was published. Yet 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 of this book (which is a great read for anyone who hasn’t already checked it out). Rather, it’s 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 availability theory

Marketers need to ensure physical availability to drive the desired action. Beyond that, brands should stay top of mind with as many potential users as possible. This contradicts the common marketing belief that the right message should reach the right person at the right time. Due to the popularity of Sharp’s theories, we will reference them as counterpoints throughout this article. We argue that a highly targeted digital marketing strategy is best for banks or credit unions seeking 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.

3 Reasons to Implement Targeted Digital Marketing Strategy for Financial Services

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

Your target audience 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.

Decision-making scenarios

However, if Example A knew there were three banks or credit unions near his apartment, he might choose to research all three. All three offer checking accounts and credit cards. Or, he may subjectively decide to only research two thinking that they’re probably all about the same.

But what if he recently saw an ad about one of the institutions having low fees and account options that help protect its customers/members against unwanted fees? He may decide to move forward with that provider immediately instead 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.

Financial marketers should prepare by mapping out personas for different segments of their target audience. Build a marketing campaign targeting these segments with relevant messaging about products, services, or benefits. Work with your business intelligence team to ensure these segments align with areas of potential future growth.

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 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. That is, 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. We may not be able to predict exactly when individual customers will experience a pain point that may drive them to switch banks. However, 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?

Highlight testimonials

One of the most effective ways to do this is by highlighting testimonials from real customers. Identify the main reasons different customer segments switch from your competitors. Find existing customers willing to share how switching to your organization solved these issues. These firsthand stories can profoundly impact others facing the same problems. 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 encounter this style of messaging more in the financial services space, traditional providers must highlight their own functional benefits through marketing. This is manageable for a financial institution specializing in one area, like wealth management. However, for a full-service bank or credit union, showcasing its many functions can become overwhelming. If they try to inform everyone about all their products, services, competitive rates, friendly service, and convenient access, they face a challenge. They either need a massive marketing campaign or a more focused approach.

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.

Get Expert Help With A Targeted Digital Marketing Strategy for Financial Services

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.