Customer Intelligence Blog

Do you notice that everywhere you go banks are just about everywhere? When you happen to be walking along the streets, you will notice that these establishments, big or small, are located on just about every corner. However, reality bites for some small banks because bigger and more popular banking groups can overshadow them. Luckily for these small players, keeping new clients and attracting more can be easily achieved through efficient bank marketing ideas that are excellent but not necessarily costly. Their effects extend beyond the long term, so here are 3 bank marketing ideas that are quite popular among banks nowadays.

Rewards Program

Who doesn’t love getting something for nothing? Many banks discover successful bank marketing by providing customers with free gear and merchandise as a reward for using their institution for their financial needs. Most bank marketing ideas will begin with a reward or gift when a new customer opens a checking and/or savings account. When trying to attract higher profile clients, banks will have to step it up a bit and offer some more extravagant bank marketing rewards.
A wealth management company in Kentucky recently rewarded some of their clients with deeper pockets with things like shopping sprees, hunting trips, fishing excursions and paintball outings. These types of bank marketing ideas have a two-fold benefit. They not only keep clients satisfied, but also provide bank management with an opportunity to get out and interact with their clients directly, establishing an interpersonal bond with them.

Free Stuff

Effective bank marketing can be as simple as it sounds. When you offersmall gifts to your clients every day, it can aid in making the environment trusting and kind. A lot of successful banks give away candies to their clients and their children. It is also a good bank marketing idea to be as creative as possible and provide pet treats for clients who arrive with their pets. This kind of bank marketing doesn’t convert to new business immediately, but it gives a sense of belonging and goodwill between the bank and its customers that can last for a very long time.

Signage

Bank marketing ideas begin and end with signage. In the world of business, out of sight really is out of mind, and although your bank may have your name and logo on the building, there are other ways ensure people know who you are and what you do. Simply having a temperature and time display along with your logo will draw attention. This can be a beneficial bank marketing tool, as customers will drive or walk by and glance at the time or temperature, subconsciously taking note of your logo and name.

Adding more information that is interesting like new products or deals can get much more attention. Displays of banking hours are very informative and a wise marketing move. Including a short message that is regularly updated will encourage clients to drive within the vicinity just to check out what’s new on your signage. This is essentially what bank marketing really does – ensuring that clients know and remember your bank name and logo, what you have to offer, and continuously seek you out.

It’s been said that the job of the strategist is to create little monopolies; to identify segments of the market where the company’s product/service package is so uniquely well positioned that the competition’s offering doesn’t get serious consideration. In effect, it doesn’t exist. From the customer’s perspective, the only real alternative to buying the company’s product or service is to do without.

When products or services are properly targeted, members of the segment are willing to pay significant premiums. For example, American Express has been able to position their platinum charge card as a high end, prestigious card with lots of perks. Platinum cardholders are willing to pay a $450 annual membership fees for the privilege of using this card when they could easily obtain a Master Card or a Visa for free. There can be real value associated with targeting a product/service package to the appropriate market segment.

But, market segmentation isn’t a magic wand that always delivers value. We worked with a manufacturer of electronic connectors that segmented their market by industry (e.g., chemical, machine tool, package goods, etc.). But, the segmentation failed to create additional value.

So, what makes a good market segmentation that will allow companies to profitably target their products and services to customers who will pay a premium for them? There are two criteria for developing a market segmentation that works. First, members of the segment must make the buying decision like each other and differently from those not in the segment. Second, members of the segment must be externally identifiable or they must be willing to self-identify. Each of these requirements will be discussed below.

The key to effectively segmenting a market is to understand how customers make the buying decision. What characteristics of the product/service package are most important to each group of customers? The problem with the market segmentation used by the manufacturer of electronic connectors described above is that the customers in each segment made the buying decision in the same way. The same characteristics were important to each customer. Therefore, there was no opportunity to differentiate the product/service package to specifically meet the needs of one subset of the market. As a consequence, segmenting the customer base by industry wasn’t helpful.

Conversely, market segmentation is often critical. For example, automobile manufacturers must target specific segments. Some people are looking for basic transportation with a low cost of operation (i.e., good gas mileage and low maintenance costs). Other car buyers are interested in a sporty looking, high performance automobile. Still others are interested in luxury and prestige. More recently, a segment has emerged that is primarily interested in a car that is environmentally friendly. One product cannot possibly satisfy all segments. Product design and advertising are specifically intended to position the manufacturer’s offerings closer to the wants and needs of a given segment than those of the competition.

Assuming that differences in the way customers make buying decisions exist, to be useful for market segmentation, the customers in each segment must be externally identifiable. Marketers need to know how to reach the specific segments. Should the company advertise in Sports Illustrated or Cosmopolitan? Alternatively, the members of a particular segment may be self-identifying. For example, if a man intends to buy a suit, those who walk into Sears, The Men’s Warehouse, Joseph Bank’s, or Franco’s are fairly clearly members of different market segments.

Effective market segmentation can be an incredibly valuable tool for increasing profits. However, to gain the benefit businesses must take the time to understand how the buying decision is made and how they will attract the potential customers in their target segment. Although this may sound straight forward, our experience is that sorting this out can be complex. But, the rewards are worth the effort.

Doug White is the author of Let Go to Grow – Why Some Businesses Thrive and Others Fail to Reach Their Potential. His new book discusses how the role of the principal must change as a business grows. He is also a Principal with Whitestone Partners, a firm focused on helping small businesses to succeed. He has twenty-five years of experience helping companies achieve their goals through improved performance.

He began his career at McKinsey & Company where he was a consultant for almost seven years. Subsequently, he held jobs as CEO or COO for several companies over fourteen years ranging in size from start-ups to large midsized companies. Additionally, Doug successfully managed divisions of a Fortune 200 company where he had P&L responsibility. He has successfully worked in fields ranging from heavy-duty manufacturing to sales and distribution to consumer lending to investment brokerage.
Doug holds a BS in Physics from Randolph-Macon College. He earned a BME with very high honors and an MSME from The Georgia Institute of Technology, and an MBA with distinction from Harvard Business School.
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Why is it hard to retain customers? Of course there’s the ongoing battle with competitors. They may make highly attractive offers to your customers that are hard for them to refuse, and their brand affinity may have strong appeal to your customers – brand affinity is positive association built through cause marketing, perceived social status and so forth.

Over-focus on customer acquisition teaches them to switch brands. For example, the brand switching rate, called customer churn, is 40% for the mobile phone industry, compared to a 7% churn rate for the insurance and financial services industries. As growth slows in acquiring new customers – either due to the economy or to shrinking technological gaps with competitors, more companies are pursuing customer retention as a vital corporate strategy.

Not Planning or Funding Retention
Most executives and marketers can quote the well-known universal statistics on retention – that a small improvement in the number of customers retained can have exponential improvements in profit – yet only 39% of companies say their marketing plans contain specific customer retention strategies, and only 28% of companies say they have funds set aside to specifically support those strategies.

In fact, 89% of firms view customer experience management as very important or critical to their firm’s strategy in 2009, according to a study by Forrester Research. In creating a marketing plan for retention, be sure to include the entire experience spectrum, which begins at the point when prospects are aware they have a need for a solution, through the point at which they perceive they no longer have that need.

Really Know Your Customers
In addition to customer involvement methods, do your marketing tools support retention as well as they support acquisition? Your databases should tap into all phases of the experience spectrum. Three-fourths of companies admit they have fair or little knowledge of their customers; the same number say customer experience is not well defined and communicated within their company. Three-fourths of firms say their employees are not well-versed in how to delight customers. For database use, it’s best to segment your customers by lifetime value, create customer experience personae and develop ways to predict behaviors. Best Buy is a great example of identifying customer personae and training their employees to cater their services to the specific needs and expectations of the personae.

Do What You Say
So we re-visit the question, why is it hard to retain customers? It goes back to the basics – doing what you say you’ll do – in product, service and value promises, and really knowing your customers. A recent quote I heard from Peppers and Rogers is that half of companies say they have fair or little knowledge of customers’ demographics, behaviors, psychographics and transactions. Two-thirds of companies say they have no processes in place for reactivating dormant or lost customers.

As the 2009 Edelman Trust Barometer emphasizes, customers view product and service quality by far as the most important components of trust. Way down on the list are state of the business, innovations, supporting the public good, and commitment to the environment. Since trust is the basis for long productive relationships, then your customer retention strategy must include oversight on product and service deliverables meeting or exceeding the brand promise featured in marketing communications.

A study by the London School of Economics examined the revenue gains by increasing positive word-of-mouth and by reducing negative word-of-mouth. They found that reducing negative buzz pays off 300% over improving positive buzz.

Customer retention may be best supported by operational integrity. After all, when you think about your personal relationships as well as your business relationships, you tend to stick with the folks that are really good at showing they sincerely care about you, and doing what they say they’re going to do. It boils down to trust. When you dig down to the reasons why people leave a brand for a competitor’s solution, it’s not so much about the competitors’ offers and brand affinity – but the reasons people switch brands is much more about product, service and value disappointments. Companies make huge investments in communicating their value proposition. Logic says a corresponding investment – at least in energy and scrutiny – should be made in making sure their value proposition is lived up to. Trust is the best way to retain customers.

Common Practices vs. Best Practices
To sum-up, you can retain customers by locking them into contracts. But a better way is to encourage customers to invest non-transferable equity in your brand – for example, customers might store their photos or contacts on your site, or they may have social connection perks through your brand that can’t be readily transferred to your competitor. This is better, because it’s the customer chooses his or her level of involvement and tie-in with your brand.

You can retain customers through unique technologies that competitors don’t offer, either due to patents or lack of common standards. But a better way is to develop customers’ passion for your brand. This is being done by many companies, as seen in the examples of customer involvement shown earlier in this presentation.

You can retain customers by resolving problems as they arise, escalating issues for high-value customers, and rewarding heroes who save the day with at-risk customers. But a better way is to prevent customer hassles in the first place, by creating customer experience personae that help your entire workforce really know the customers, using personae to guide business policies and processes, and being proactive in predicting at-risk customers, promptly reaching out to them, sharing your customer feedback summaries and achievements in response to customer feedback, and embracing customer complaints with solid problem resolution that prevents recurrence of customer hassles.

Culture & Prevention are Under-Managed
The building blocks of customer retention are culture, tools, prevention and passion. The more customer-centric and trust-building your culture is, the more likely you will be to retain customers at a higher rate than your competitors. The more you include customer retention in every marketing plan and budget, the more likely you are to retain customers. Hand-in-hand with customer-centric culture is prevention of customer issues, making the customer’s reality match or exceed your value proposition. And finally, build passion through customer involvement.

Marketing tends to do pretty well in the tools and passion area, but the culture and prevention areas tend to be neglected, relatively speaking. For more ideas on how to improve effectiveness in culture and prevention areas to maximize customer retention, see customer.ology.com.

Customer retention is smart business! In a study done last year, best-in-class customer experience practitioners were compared to industry average and laggard customer experience practitioners. The year-over-year gain in customer retention was 15% for best-in-class customer experience practitioners, compared to 1% industry average. Customer satisfaction and profit were markedly higher for best-in-class customer experience practitioners.

Lynn Hunsaker mentors executives in Customer Experience Optimization, to deliver brand promises, prevent customer hassles, minimize churn, & heighten sustained profit. Specialties include customer value guidance, touchpoints, loyalty behaviors, internal branding, experience innovation, experience panorama, survey ROI, marketing and customer relationship skill-building, predictive dashboards, team recognition. She is author of the handbooks Metrics You Can Manage For Success and Customer Experience Improvement Momentum.

Article Source: http://EzineArticles.com/2463934

It’s the time of year when every blogger seeks, Nostradamus-like, to pierce the veil and lay bare the secrets of the future. No different, I hereby offer my 5 predictions for CI in the New Year. Enjoy!

1. The biggest will get bigger – sort of. Scale begets scale, and the very largest companies will continue to pour massive amounts of moolah into databases, analytics, modelling, and all things Customer Intelligent in 2012. Results will continue to be mixed, however, as the largest companies will rely on the vendors that they trust – not surprisingly, other very large companies like IBM, ACXIOM, Experian, Dun & Bradstreet – and miss out on the agility and cutting-edge innovation that smaller, more nimble vendors can provide.

2.Innovation will come from the small. A corollary to my first prediction, while the largest companies work with other large vendors and do more of the same (i.e., spend lots of money for not very much benefit), smaller firms will drive innovation. An example is Palantir, a company named after the seeing stones in Tolkien’s Lord of the Rings trilogy, that specializes in understanding very large amounts of data very quickly and has been at the forefront of innovation in big data solutions. Sorry, IBM, but Palantir and others like them will continue to eat your lunch.

3. Continued consolidation will engulf the industry. OK, maybe “engulf” is kind of dramatic, but the point is that consolidation will continue and even increase in 2012 as larger players try to teach themselves to dance by acquiring smaller, more nimble competitors (see predictions one and two above). Consolidation won’t be limited to the large swallowing the small, however; smaller players realize they need scale or will become irrelevant, so they will merge and become engines for growth and change.

4. Big Data will get small. Innovations in storage, processing power, and analytics will wrestle the Big Data problem down to size so that even smaller companies can tackle the problems posed by Big Data. In fact, many companies will rely on ever-more-sophisticated 3rd party solutions, including cloud-based platforms, to solve their Big Data headaches so that they can stop worrying about the data and concentrate on the anaytics and execution – which is where the real Customer Intelligence occurs.

5. Customer Intelligence will go mobile. Innovations in data security, cloud computing, and mobile platforms and technologies will finally push Customer Intelligence out to where it’s really needed – where the sales teams and relationship managers, out on the front lines acquiring new customers and working to help expand and deepen existing customer relationships. Salesforce and other CRM vendors already offer mobile versions of their platforms for phones and tablets, but analytics and true Customer Intelligence applications will catch up in 2012.

Everybody knows that Facebook is eating the world (wide web, anyway): FB now has over 750 million users and reaches 43% of all Internet users. As more and more people spend more and more of their time on FB, however, it means they’re spending less and less time on your website – and that means you can’t track how they’re interacting with your brand.

Traditionally, marketers have used on-page analytics provided by, e.g., Google or Omniture to discover how potential customers were interacting with their sites and which narratives were most effective at increasing engagement and time-on-site. These tools, however, do not work on FB, so you’re blind when it comes to seeing how people are interacting with you on FB. A recent article in Forbes (“What’s a ‘Like’ Worth?”, http://www.forbes.com/forbes/2011/0808/technology-social-media-facebook-google-like-worth.html) shows how vexing this problem is becoming. FB is expanding metrics available to page owners, but only those that suit it’s own purposes. And some, like Hiten Shah of KISSmetrics, think that the old way of analyzing these interactions is dead: “Facebook is giving you data that are relevant to the Facebook model … the page-view game is done with anyway. We want to track people, not page views.”

It’s precisely that, tracking people, that is becoming harder as FB gobbles up interactions with web browsers and people stay longer on FB and less on your site. Are on-page analytics really dead, or do we just need to figure out a way to tease that data out of FB and marry it with what’s going on in the non-FB web? Stay tuned, it’s going to get interesting …

For IBM’s recent Global CMO Study (http://www-935.ibm.com/services/us/cmo/cmostudy2011/cmo-registration.html), 1,734 CMOs were interviewed and asked about their most pressing issues. Their biggest concern? The ever-larger amounts of data which they’re expected to understand and act on – a whopping 71% of CMOs interviewed said they felt unprepared to deal with the massive amounts of data now being captured by their organizations on customers and prospects.

As businesses become more sophisticated in capturing data on every facet of the customer interaction, they’ve accumulated an enormous treasure-trove of information. However, as this study reveals, in most cases they don’t know what to do with it! As we’ve long maintained, although all insight starts with data, it can’t stop there – gathering the data and even analyzing it aren’t enough. It has to be done with intelligence, it has to be done with the aim of generating actionable insight – and it has to be done quickly enough so that the insights are still relevant to the ever-changing market conditions that CMOs face today.

Last Wednesday at PNT’s 6th quarterly Customer Intelligence Gathering, Mary Beth Sullivan (Managing Partner of Capital Performance Group) spoke on making better use of customer insights to drive profitability in banks. Before the financial crisis of 2008, banks basically didn’t have to pay too much attention to customers – individual consumers were all too eager to load up on credit card and mortgage debt, and banks were all too willing to lend to them. It was a volume business with relatively thin margins, so the more the banks lent, the more money they made. We all know what happened after that: housing cratered, consumers walked away from mortgages in droves, net losses piled up on credit card debt, and households in general began a long and painful process of “deleveraging” – getting rid of debt, one way or another.

Now banks face a long, tough road ahead: rebuilding shredded balance sheets, lack of loan demand, increasingly stringent government regulations, reduced fee income, and a lack of customer trust and loyalty (especially among larger institutions), among other obstacles. So what observations and advice did Mary Beth offer to help navigate these untested waters?

1. Customers are redefining value – so customer engagement will become even more important

Customers want security, personalization, simplification, value, and are more comfortable with technology. They are also distrustful of “big brand” banks and want advice from their peers. Given this attitudinal shift, banks need to really engage their customers and differentiate themselves from their competition by listening and responding carefully to the new customer needs – customer intelligence will be key to this engagement.

2. Banks are also redefining value, and have a set of critical financial objectives

Just as customers are redefining value, so too are banks. They have to further diversify revenue streams (even today, fully 75% of bank profits come from lending activities), focus on customer relationships (see above!), create new sources of fee income, improve the efficiency of their operations, and compete on customer experience and not on price. Succeeding now means being responsive to each customer, being efficient, creating meaningful customer experiences, and doing it with a wide variety of services and solutions that address a multitude of customers’ financial concerns.

3. Success, therefore, means adopting a new set of strategic priorities

To succeed, banks must respond to the new competitive pressures in the marketplace (the recent financial crisis, new government rules and regulations, changing customer needs and attitudes, new technologies) and develop new strategies for success over the long term. They need to have more customer-centric (and less product-centric) business models, move away from product commoditization and towards product customization, integrate marketing and delivery, differentiate themselves further through branding, be ruthlessly efficient, and leverage information technology to deliver more process-driven, standardized, and effective sales and customer management activities.

4. Customer intelligence will be a key component of this success

To achieve these new strategic objectives, customer intelligence will be key. According to famed business guru Peter Drucker, a business really has only two basic functions that produce results: marketing and innovation. These both rely heavily on understanding the customer and developing an intimate relationship that drives the products that are developed, the brand, how messages are developed and communicated, and, ultimately, the revenue and profitability that are generated from each customer relationship.  Banks need to pay more attention to the kinds of things customers need to get done, and then develop products and services that will help them – rather than just sell more of the “same old” traditional banking products such as checking, savings, loans, and so on (no customer has ever said they really “need” a checking account, for instance; what they need is a way to keep money safe and to move it around whenever they need to, to and from whomever and whatever they need to). Notice that this implies getting and using customer feedback – a critical part of customer intelligence – to gauge whether the bank is moving along in the right direction in meeting customer needs; the new world is more than ever a two-way street between banks and their customers, as products and services are developed and delivered in a far more interactive and customized way than ever before.

To be sure, this is going to be a difficult transition. Many large institutions are saddled with legacy products, systems,  infrastructure, processes, and culture that are going to make it very difficult to change and adapt to the new environment. Those that succeed will create meaningful customer relationships through the development, delivery, and communication of services and products that are driven by an understanding of customer needs based on true, two-way customer intelligence.

For further information and to register to receive a copy of Mary Beth’s presentation, please visit our website on http://www.pntmarketingservices.com.

Some important and timely reminders on bank loyalty programs:

BAI | Banking Strategies | Marketing & Sales | Marketing and Promotion | Earning Rewards from Rewards Programs.

Another point to consider that we’ve been trying to impress upon bank marketers in our Offer Management practice:

Giving away non-banking merchandise is more like a bribe to stay than delivering on a financial value proposition.

Granted, there’s a lot of competitive pressure now to offer these points programs, it’s important nevertheless to distinguish between offers that are good for acquiring new customers and those that are good for retaining and building the loyalty of existing customers.

Therefore loyalty programs should be carefully crafted to encourage a wide range of use of bank products and services in an ongoing manner – especially “sticky” services that are correlated with retained customer satisfaction. Whereas acquisition offers will typically offer a higher up-front reward for switching. And onboarding offers will transition from that up-front reward to the pleasures of ongoing loyalty rewards.

In other words, customer offers should follow the life-cycle of your customers’ relationship with you, from acquisition to onboarding to nurture and long term loyalty that extends lifetime customer value (for the bank and the customer).