The Guardian has a blog asking for the best ads of the noughties - and an impressive number of financial services ads have made the cut. Lloyds TSB, NatWest, Go Compare, Swiftcover, Barclays and (but of course) Compare the Market have all been nominated. Traditionally, this type of contest is dominated by FMCG so it's lovely to see so much creativity and resonance coming from our sector.
Of course, the nominations are weighted to TV (proving that, measurability or otherwise, for lasting recall it can't be beaten) and it is really a measure of creativity and comedy rather than effectiveness. Saying that, the strongest showings are for webuyanycar.com and Cillitt Bang so far - both very much from the Alan Sugar show-it-to-the-camera-and-shout-the-product-name school.
Love him or hate him, IMO Aleksander has to take the FS award for ad of the decade - for redefining the category in an undifferentiated marketplaces and for generating a whole new revenue stream through toy sales.
What are your FS ads of the noughties? Do you think the winning ads win customers as well as plaudits? And - speaking as one who has struggled to get agencies to see beyond the savings piggy bank - what's the best way to get the creativity juices flowing to develop the kind of campaigns that get people talking?
Tuesday, 1 December 2009
Thursday, 12 November 2009
NatWest launches iPhone app
NatWest has launched the first iPhone banking app, which is great to see, even if it isn't really the full service app their customers have been waiting for. It's a shame demand sank the technology when it launched - but NatWest had undoubtedly prepared for strong interest before it ran such a major advertising push so really that tells its own story. Now that the iPhone isn't only available on the frankly rubbish O2 network, demand can only increase - 30,000 people bought an Orange iPhone the first day it was offered.
Most bank websites aren't optimised for mobiles - my own bank's online banking appears in a column one digit wide on my Windows Mobile, which is challenging to use, to say the least - so it's no wonder this app was snapped up as soon as it appeared.
For the moment, NatWest has an advantage - assuming its customers can download the app, of course. But I'd be very disappointed if all their competitors aren't hard on their heels. As marketers, we just need to make sure the project team have built in enough capacity to meet the initial demand. Feedback on the NatWest app also needs to be incorporated into the next apps to be launched - which means interactivity will be key.
Most bank websites aren't optimised for mobiles - my own bank's online banking appears in a column one digit wide on my Windows Mobile, which is challenging to use, to say the least - so it's no wonder this app was snapped up as soon as it appeared.
For the moment, NatWest has an advantage - assuming its customers can download the app, of course. But I'd be very disappointed if all their competitors aren't hard on their heels. As marketers, we just need to make sure the project team have built in enough capacity to meet the initial demand. Feedback on the NatWest app also needs to be incorporated into the next apps to be launched - which means interactivity will be key.
Friday, 6 November 2009
New look for Linked In
I am a huge fan of Linked In - it's a brilliant site with some great groups for financial services marketers to share ideas and network. They've just announced that it's getting a long-overdue makeover that will make it even better to use. This link takes you to Mashable.com's overview of the changes, which includes pics. Generally, the new look is cleaner, simpler, and puts content front and centre so it's easier to use.
There are lots of groups with interesting discussions and forums - I particularly like Financial Services Marketing, Stopgap's Marketing Professionals Network and the eMarketing Association. They are a really easy way to keep up to date with current thinking, bounce ideas off your peers and get advice about suppliers.
There are lots of groups with interesting discussions and forums - I particularly like Financial Services Marketing, Stopgap's Marketing Professionals Network and the eMarketing Association. They are a really easy way to keep up to date with current thinking, bounce ideas off your peers and get advice about suppliers.
Saturday, 31 October 2009
Let's make saving cool
Teamspirit have written a blogpost challenging the FSA to create an innovative campaign to make saving cool.
We keep hearing about the pensions time bomb that's about to go off - so I don't think we should leave this to the FSA. All savings marketers should be trying to find innovative ways to encourage people to save throughout the economic cycle. With the savings ratio as high as it is at the moment, now is the time for us to start creating some innovative campaigns to embed the habit so that people continue saving even when the recovery begins.
I'd love to see a bank or building society - maybe one of the smaller ones that is less tied up dealing with the fallout from the credit crisis - make a real play to own savings. There's a great opportunity to run a relatively inexpensive campaign using social media, YouTube and blogs that could increase the savings ratio for good. The organisation that sets the agenda will be the winner.
We keep hearing about the pensions time bomb that's about to go off - so I don't think we should leave this to the FSA. All savings marketers should be trying to find innovative ways to encourage people to save throughout the economic cycle. With the savings ratio as high as it is at the moment, now is the time for us to start creating some innovative campaigns to embed the habit so that people continue saving even when the recovery begins.
I'd love to see a bank or building society - maybe one of the smaller ones that is less tied up dealing with the fallout from the credit crisis - make a real play to own savings. There's a great opportunity to run a relatively inexpensive campaign using social media, YouTube and blogs that could increase the savings ratio for good. The organisation that sets the agenda will be the winner.
Vote in Mashable's Open Web Awards
Voting is now open in Mashable's Open Web Awards 2009. It would be great to see a financial services brand win in one of the categories - and it will be interesting to see what we can learn from the category winners.
http://mashable.com/owa/votes
http://mashable.com/owa/votes
Friday, 30 October 2009
HSBC uses Facebook to market new Financial Planning site
This week, ads for HSBC's Financial Planning site have been popping up on my Facebook pages fairly regularly - the first time I've noticed a financial services brand advertising there and great to see.
Although the site is content rich, well laid out and interesting, sadly it's not brought many of the characteristics of Facebook with it - characteristics that would have made it really stand out and help HSBC develop their relationship with customers and prospects.
The only options to actively engage with the site are to use a tool to create a personal plan, start a web chat (which didn't work when I tried it) or move offline and call their call centre or make an appointment with a branch-based adviser.
It would have been great to see HSBC set up some discussion forums or blogs on specific aspects of financial planning - they would have encouraged repeat visits too. There isn't even a link to share the page on Facebook - or Digg, Twitter or anything else.
Interestingly, when I did a Google search to find out when the site had launched and what other comments people had made about it, all I could find were pages about a Facebook campaign a couple of years ago about overdrafts on student accounts.
All in all, it feels like HSBC is dipping its toe in the water with Facebook but sees it as a source of audience for its content, rather than allowing users to engage with it on their own terms. It will be interesting to see how they develop the tool and if they bring in more interactivity over time.
Although the site is content rich, well laid out and interesting, sadly it's not brought many of the characteristics of Facebook with it - characteristics that would have made it really stand out and help HSBC develop their relationship with customers and prospects.
The only options to actively engage with the site are to use a tool to create a personal plan, start a web chat (which didn't work when I tried it) or move offline and call their call centre or make an appointment with a branch-based adviser.
It would have been great to see HSBC set up some discussion forums or blogs on specific aspects of financial planning - they would have encouraged repeat visits too. There isn't even a link to share the page on Facebook - or Digg, Twitter or anything else.
Interestingly, when I did a Google search to find out when the site had launched and what other comments people had made about it, all I could find were pages about a Facebook campaign a couple of years ago about overdrafts on student accounts.
All in all, it feels like HSBC is dipping its toe in the water with Facebook but sees it as a source of audience for its content, rather than allowing users to engage with it on their own terms. It will be interesting to see how they develop the tool and if they bring in more interactivity over time.
Wednesday, 28 October 2009
Paid-for PR - the future of newspapers?
The Guardian is today asking why marketers aren't following newspaper audiences online.
The problem is that newspapers have tried to translate the advertising model they use offline, online. As The New Rules of Marketing & PR points out, that just doesn't work. Interruptive, display-type advertising is just not relevant online. What marketers are looking for is what newspapers have always given away free: editorial content. That way, you get a relevant, engaged audience that is interested in your message.
As brands differentiate themselves through their values, it will make increasing sense for newspapers to look to generate an income from offering paid editorial content, tie-ins etc that are in keeping with their editorial guidelines. That will require newspapers to tread very carefully to bring their readership with them and not be seen as 'selling out' - but if managed well, could make it easier for consumers to find the brands that match their values and for brands to find genuinely engaged audiences.
The problem is that newspapers have tried to translate the advertising model they use offline, online. As The New Rules of Marketing & PR points out, that just doesn't work. Interruptive, display-type advertising is just not relevant online. What marketers are looking for is what newspapers have always given away free: editorial content. That way, you get a relevant, engaged audience that is interested in your message.
As brands differentiate themselves through their values, it will make increasing sense for newspapers to look to generate an income from offering paid editorial content, tie-ins etc that are in keeping with their editorial guidelines. That will require newspapers to tread very carefully to bring their readership with them and not be seen as 'selling out' - but if managed well, could make it easier for consumers to find the brands that match their values and for brands to find genuinely engaged audiences.
Monday, 19 October 2009
Where are you advertising today?
Once upon a time, marketers decided where to place their ads based solely on demographics. If it met the demographic requirements for a reasonable price, it was a good place to advertise.
Then, marketers started to demand measurability - was the cost of the advertising space reflected in the response rates and conversions?
Finally, the demographic bit back. In I'm With The Brand, Rob Walker writes that Timberland was forced to rethink its media strategy when it's demographic - hip hop fans - objected that it wasn't supporting their choice of media through its advertising expenditure.
Advertising is no longer simply about finding the kind of customers you are looking for - it's a statement of brand values by association. Waitrose has pulled its advertising from Fox News because a customer complained that their advertising was supporting the controversial presenter Glenn Beck's programme. The Daily Mail was forced to remove the advertising stream completely from Jan Moir's article about Stephen Gately after brands such as M&S asked to have their branding removed.
People expect brands to stand for something these days - and for that something to be carried across into all their activities throughout the value chain, including advertising. Yet advertising is often bought in bulk or, as with the Google ads on this blog page, selected thematically without advertiser input. It's the one area where our customers are demanding action, and which we are not properly in a position to control.
Now, looking at it cynically, all the advertisers (and in particular M&S and Waitrose) have benefited a lot more by publicly removing their advertising from places that don't fit the brand than if they had quietly chosen not to advertise there in the first place. But if we want our brands to have a moral core for our customers to identify with, we need to write an Advertising Standards Code of our own.
What do we want to support with our advertising spend?
What do we actively want to avoid?
How can we get our customers involved in shaping it?
How can we ensure our media buyers can and do implement it?
Then, marketers started to demand measurability - was the cost of the advertising space reflected in the response rates and conversions?
Finally, the demographic bit back. In I'm With The Brand, Rob Walker writes that Timberland was forced to rethink its media strategy when it's demographic - hip hop fans - objected that it wasn't supporting their choice of media through its advertising expenditure.
Advertising is no longer simply about finding the kind of customers you are looking for - it's a statement of brand values by association. Waitrose has pulled its advertising from Fox News because a customer complained that their advertising was supporting the controversial presenter Glenn Beck's programme. The Daily Mail was forced to remove the advertising stream completely from Jan Moir's article about Stephen Gately after brands such as M&S asked to have their branding removed.
People expect brands to stand for something these days - and for that something to be carried across into all their activities throughout the value chain, including advertising. Yet advertising is often bought in bulk or, as with the Google ads on this blog page, selected thematically without advertiser input. It's the one area where our customers are demanding action, and which we are not properly in a position to control.
Now, looking at it cynically, all the advertisers (and in particular M&S and Waitrose) have benefited a lot more by publicly removing their advertising from places that don't fit the brand than if they had quietly chosen not to advertise there in the first place. But if we want our brands to have a moral core for our customers to identify with, we need to write an Advertising Standards Code of our own.
What do we want to support with our advertising spend?
What do we actively want to avoid?
How can we get our customers involved in shaping it?
How can we ensure our media buyers can and do implement it?
Friday, 9 October 2009
Loyalty - it's in the game
Do you play games on Facebook? Mafia Wars apparently has over 6 million users, Farmville recently hit a million and new applications are appearing daily. These games, besides being fun, are really interesting because of the way they actively design in customer loyalty. Financial services marketers could usefully steal a lot of their ideas.
The first challenge for the gamers is to encourage people to sign up. Digital channels make it easy to run multiple iterations of ads - so they do.This way, they can run simple appeals based on different criteria at different times, the ads stay fresh and they have a better chance of presenting the viewer with a compelling ad at a receptive moment.
They then start to use each new gamer they recruit to recruit more, by inviting them to post a message to their Facebook page letting their network know they have just signed up.
The next challenge is to build loyalty. They do this by setting regular, visible, achievable goals that reward frequent visits and disincentivise infrequent visits. Rewards are most easily earned when the gamer has just been recruited and needs to be converted from trial to active engagement.
To reduce attrition, the developers are continually innovating to provide plenty of opportunities to reach out to gamers and stop them getting bored and moving elsewhere. These often encourage gamers to create a highly personalised experience.
Over time, viral recruitment continues as the gamer is actively incentivised to recruit their friends and expand their networks to include other players. Friends can be sent free gifts and receive special rewards for helping each other. As friends are recruited, their wall posts become a reminder to continue playing.
It works brilliantly because it incentivises the behaviours that the player wants to demonstrate in that environment: friendship, sharing, social interaction.
Some financial institutions do some of these things some of the time. I receive regular statements that remind me about my bank account. I have a savings account that rewards my behaviour as well as my balance by paying more interest in months when I don't make withdrawals. Private and corporate banks run networking events that encourage people to bring their friends and colleagues.
However, all too often banks do none of these things. I have a term savings account with a bank that has not contacted me once since I opened it. It would be all too easy to forget it even existed. Presumably they hope I will continue to invest with them once the term has ended - but they have wasted the opportunity to build a relationship with me and are relying solely on interest rates and apathy to achieve that.
5 ways financial services marketers could turn loyalty into a game
The first challenge for the gamers is to encourage people to sign up. Digital channels make it easy to run multiple iterations of ads - so they do.This way, they can run simple appeals based on different criteria at different times, the ads stay fresh and they have a better chance of presenting the viewer with a compelling ad at a receptive moment.
They then start to use each new gamer they recruit to recruit more, by inviting them to post a message to their Facebook page letting their network know they have just signed up.
The next challenge is to build loyalty. They do this by setting regular, visible, achievable goals that reward frequent visits and disincentivise infrequent visits. Rewards are most easily earned when the gamer has just been recruited and needs to be converted from trial to active engagement.
To reduce attrition, the developers are continually innovating to provide plenty of opportunities to reach out to gamers and stop them getting bored and moving elsewhere. These often encourage gamers to create a highly personalised experience.
Over time, viral recruitment continues as the gamer is actively incentivised to recruit their friends and expand their networks to include other players. Friends can be sent free gifts and receive special rewards for helping each other. As friends are recruited, their wall posts become a reminder to continue playing.
It works brilliantly because it incentivises the behaviours that the player wants to demonstrate in that environment: friendship, sharing, social interaction.
Some financial institutions do some of these things some of the time. I receive regular statements that remind me about my bank account. I have a savings account that rewards my behaviour as well as my balance by paying more interest in months when I don't make withdrawals. Private and corporate banks run networking events that encourage people to bring their friends and colleagues.
However, all too often banks do none of these things. I have a term savings account with a bank that has not contacted me once since I opened it. It would be all too easy to forget it even existed. Presumably they hope I will continue to invest with them once the term has ended - but they have wasted the opportunity to build a relationship with me and are relying solely on interest rates and apathy to achieve that.
5 ways financial services marketers could turn loyalty into a game
- Provide a welcome pack for new clients shortly after the account has been opened that includes something for the client to share with their network
- Communicate returns in the context of a goal - for example, allow customers to personalise their online environment by inputting a savings/loan reduction/loyalty points goal and track and reward progress towards it. Enable users to opt to share their progress with their network if they wish
- Actively market your social marketing offerings eg Facebook pages, blogs etc to encourage clients to engage with your brand and use the channel frequently to engage clients with eg advice, invitations to exclusive events, time limited promotions etc
- Do more split testing and don't automatically rule out the variants that have lower response rates - try mapping respondents against segments to see if you have captured a different audience
- Set up your own Facebook game, tied to your brand promise and offering, and send it viral
Saturday, 3 October 2009
Credit ratings go transparent
The president of Standard and Poor's has today outlined the changes S&P will be making to restore confidence in credit ratings.
Transparency will be a key theme for financial services for the foreseeable future and S&P are responding to this by providing much more detailed information about the assumptions, stress tests and scenario analysis underpinning their ratings.
About time too.
Fund managers will find it easier to understand the ratings in the light of their own assumptions, peer review will be richer and marketers will be able to better communicate the risks involved in complex products.
However, we must remember that a demand for transparency is just another way of saying that trust and confidence has disappeared. This additional data is a really way of meeting the first two of the conditions for trust I discussed in yesterday's post - keeping promises and acting competently.
Although institutional investors may find some of the information transparency demands useful, realistically much of it is already available to them in one form or another. As for retail clients - their classification means that we have to assume the data is of no practical value to them - after all, we have the same duty of care to explain the underlying risks and ensure suitability as we ever had.
The way this information is presented is therefore potentially as important as what it says. When we incorporate it into marketing collateral, we need to remember that a major role is to communicate the underlying competence and reliability of our institutions - to the people that can't critique it as much as to those who can. After all, that's one of the reasons S&P is providing it in the first place.
Transparency will be a key theme for financial services for the foreseeable future and S&P are responding to this by providing much more detailed information about the assumptions, stress tests and scenario analysis underpinning their ratings.
About time too.
Fund managers will find it easier to understand the ratings in the light of their own assumptions, peer review will be richer and marketers will be able to better communicate the risks involved in complex products.
However, we must remember that a demand for transparency is just another way of saying that trust and confidence has disappeared. This additional data is a really way of meeting the first two of the conditions for trust I discussed in yesterday's post - keeping promises and acting competently.
Although institutional investors may find some of the information transparency demands useful, realistically much of it is already available to them in one form or another. As for retail clients - their classification means that we have to assume the data is of no practical value to them - after all, we have the same duty of care to explain the underlying risks and ensure suitability as we ever had.
The way this information is presented is therefore potentially as important as what it says. When we incorporate it into marketing collateral, we need to remember that a major role is to communicate the underlying competence and reliability of our institutions - to the people that can't critique it as much as to those who can. After all, that's one of the reasons S&P is providing it in the first place.
Thursday, 1 October 2009
What kind of relationship do you have with your customers?
As marketers, we are always looking for ways to build the relationship between our brand and our customers. It's more profitable to maintain a relationship with an existing customer than to recruit a new one and our loyal customers are the ones that can tell us what we are doing well - and badly.
That's why it's important to understand what kind of relationship we have with our customers and segment our customer base accordingly.
According to Ehrenberg et al, most customers exhibit 'polygamous loyalty' - in other words, they have a shortlist of trusted brands they do business with. Donaldson and O'Toole have suggested that there are four types of relationship we can have with our customers:
Close relationships are most likely in corporate or private banking, where the proposition is bespoke to each individual customer and switching costs are high. These days, we should probably add those customers most keen to interact with our brand: the ones that write to us with suggestions, set up fan pages, blog and tweet about our brands. These customers can become 'lighthouse customers' (Prokesch 1993) who are willing to be actively involved in focus groups, new product development and so on.
Dominant partner relationships are those where one party has (or perhaps is perceived to have) all the power - these relationships have low levels of trust and the subordinate party is probably keen to find a better relationship with another partner.
Recurrent relationships are those where the customer tends to choose the same brand but would find it easy to change to another - for example instant access savings account customers.
Discrete relationships are those where the customer makes each purchase decision individually and won't favour the existing provider - for example 'rate tarts'.
We can move customers from one category to another and increase their loyalty by increasing their trust in our brand - according to Sako, we do this by keeping our promises, performing competently, and exceeding expectations through 'goodwill' actions - the warm and fuzzy stuff that makes customers likeand identify with your brand as opposed to seeing their product as a commodity.
I think it is this final element that is most important - keeping promises and being competent are, surely, hygiene factors - it's expected and therefore will go unnoticed and unrewarded.
However, demonstrating a willingness to treat our customers as people will encourage customers to invest in a relationship with us that moves beyond the products they hold now. The better we do this, the more likely we are to be prioritised among the brands to which our customers are 'polygamously loyal'.
That's why it's important to understand what kind of relationship we have with our customers and segment our customer base accordingly.
According to Ehrenberg et al, most customers exhibit 'polygamous loyalty' - in other words, they have a shortlist of trusted brands they do business with. Donaldson and O'Toole have suggested that there are four types of relationship we can have with our customers:
| ACTION COMPONENT | |||
| High | Low | ||
| BELIEF COMPONENT | High | Close | Recurrent |
| Low | Dominant partner (hierarchical) | Discrete | |
Close relationships are most likely in corporate or private banking, where the proposition is bespoke to each individual customer and switching costs are high. These days, we should probably add those customers most keen to interact with our brand: the ones that write to us with suggestions, set up fan pages, blog and tweet about our brands. These customers can become 'lighthouse customers' (Prokesch 1993) who are willing to be actively involved in focus groups, new product development and so on.
Dominant partner relationships are those where one party has (or perhaps is perceived to have) all the power - these relationships have low levels of trust and the subordinate party is probably keen to find a better relationship with another partner.
Recurrent relationships are those where the customer tends to choose the same brand but would find it easy to change to another - for example instant access savings account customers.
Discrete relationships are those where the customer makes each purchase decision individually and won't favour the existing provider - for example 'rate tarts'.
We can move customers from one category to another and increase their loyalty by increasing their trust in our brand - according to Sako, we do this by keeping our promises, performing competently, and exceeding expectations through 'goodwill' actions - the warm and fuzzy stuff that makes customers likeand identify with your brand as opposed to seeing their product as a commodity.
I think it is this final element that is most important - keeping promises and being competent are, surely, hygiene factors - it's expected and therefore will go unnoticed and unrewarded.
However, demonstrating a willingness to treat our customers as people will encourage customers to invest in a relationship with us that moves beyond the products they hold now. The better we do this, the more likely we are to be prioritised among the brands to which our customers are 'polygamously loyal'.
Savings ratio at 16 year high - but still way off funding pensions
According to The Guardian, the savings ratio has jumped from 3% in the first quarter to 5.6% in the second quarter of 2009 - the highest level for 16 years.
However, with building societies also reporting savings outflows, it looks like people are using their savings to pay down their debts rather than building up nest eggs - although personal borrowing has levelled off rather than fallen.This suggests that financial capability (see my previous post) is improving - spending less than you earn is a key criterion and those additional pounds are being channelled in the most logical and cost-effective direction.
Given low savings interest rates, that seems sensible - but I was interested to read David Smith's point in the Sunday Times this weekend that historically, even 3% is a good savings ratio - in the 1950s, for example, the savings ratio averaged 0%. I don't think it's unreasonable to suggest that marketers have had some influence on that, with a wide range of savings accounts tailored to different savings needs now available making saving easier, more convenient and often more rewarding than in the past.
At the height of the last recession, the savings ratio hit 12% - suggesting that there is potential for savings balances to rise yet. However, even that figure is some way off the recommended levels needed for people to fund their retirements. With final salary pension schemes closing, as marketers we should be considering what steps we can take to encourage people to continue to increase the percentage of their income they save - and to do so in good times as well as bad. Our old ages - and our economy - depends on it.
However, with building societies also reporting savings outflows, it looks like people are using their savings to pay down their debts rather than building up nest eggs - although personal borrowing has levelled off rather than fallen.This suggests that financial capability (see my previous post) is improving - spending less than you earn is a key criterion and those additional pounds are being channelled in the most logical and cost-effective direction.
Given low savings interest rates, that seems sensible - but I was interested to read David Smith's point in the Sunday Times this weekend that historically, even 3% is a good savings ratio - in the 1950s, for example, the savings ratio averaged 0%. I don't think it's unreasonable to suggest that marketers have had some influence on that, with a wide range of savings accounts tailored to different savings needs now available making saving easier, more convenient and often more rewarding than in the past.
At the height of the last recession, the savings ratio hit 12% - suggesting that there is potential for savings balances to rise yet. However, even that figure is some way off the recommended levels needed for people to fund their retirements. With final salary pension schemes closing, as marketers we should be considering what steps we can take to encourage people to continue to increase the percentage of their income they save - and to do so in good times as well as bad. Our old ages - and our economy - depends on it.
Tuesday, 29 September 2009
Sales v loyalty
The FSA today announced a range of measures to protect customers from PPI mis-selling.
Selling Payment Protection Insurance alongside loans sounds like a completely sensible thing to do - a low cost upsell that protects the institution and the customer simulaneously. How did it all go so wrong?
The first problem looks like a training issue - a combination of sales aids and targets seems to have led bank sales advisers to position the insurance as almost compulsory, or as a component of the cost of the loan. Which? found that 13% of people surveyed believed that PPI was a requirement for their credit card deal, for example. I have written before about the implications of agency theory on relationships - and this is the kind of 'mistake' that really erodes trust as it confirms people's worst suspicions.
The second problem is the lack of value people have received from the policies. According to the Competition Commission, only 11% of policies are successfully paid out. This figure may or may not be in line with other types of insurance - it doesn't matter. It's a low sounding number that has been widely reported alongside case studies of people who were never eligible for the policy in the first place - Which? claims that there are up to two million of them.
So here we are in a position where our customers tend to assume we're acting selfishly (agency theory) and where our sales practices seem to bear that out. Both the financial media and the regulators also behave as if the role of financial institutions is to swindle as much of people's money out of them as possible. It's in their best interests to peddle that line - it sells newspapers, encourages switching and adds to the perceived value of the regulator. But it's overwhelmingly in our best interests to clearly demonstrate the reverse - at every customer touchpoint and with every product.
Ranchhod and Gurau define marketing as 'the process of planning and executing activities that satisfy individual, ecological and social needs ethically and sincerely, while also satifying organisational objectives'.
Could the marketers responsible for PPI really say that their PPI product development and sales processes really met this challenge?
Selling Payment Protection Insurance alongside loans sounds like a completely sensible thing to do - a low cost upsell that protects the institution and the customer simulaneously. How did it all go so wrong?
The first problem looks like a training issue - a combination of sales aids and targets seems to have led bank sales advisers to position the insurance as almost compulsory, or as a component of the cost of the loan. Which? found that 13% of people surveyed believed that PPI was a requirement for their credit card deal, for example. I have written before about the implications of agency theory on relationships - and this is the kind of 'mistake' that really erodes trust as it confirms people's worst suspicions.
The second problem is the lack of value people have received from the policies. According to the Competition Commission, only 11% of policies are successfully paid out. This figure may or may not be in line with other types of insurance - it doesn't matter. It's a low sounding number that has been widely reported alongside case studies of people who were never eligible for the policy in the first place - Which? claims that there are up to two million of them.
So here we are in a position where our customers tend to assume we're acting selfishly (agency theory) and where our sales practices seem to bear that out. Both the financial media and the regulators also behave as if the role of financial institutions is to swindle as much of people's money out of them as possible. It's in their best interests to peddle that line - it sells newspapers, encourages switching and adds to the perceived value of the regulator. But it's overwhelmingly in our best interests to clearly demonstrate the reverse - at every customer touchpoint and with every product.
Ranchhod and Gurau define marketing as 'the process of planning and executing activities that satisfy individual, ecological and social needs ethically and sincerely, while also satifying organisational objectives'.
Could the marketers responsible for PPI really say that their PPI product development and sales processes really met this challenge?
Saturday, 26 September 2009
When sponsorships attack
After the Renault F1 cheating scandal, ING has had no choice but to end its association with the team, which it has managed to do commendably quickly.
There is always a question mark over the value brands actually get from sponsorships and similar partnerships - a lot of marketing managers see it as an opportunity to get 'money can't buy' tickets to keep key clients sweet, but too often they are just handed out to anyone who wants to go with no thought to long term relationship building. My fiance has a story of working for a bank a couple of decades ago, where the company had sponsored some terribly high brow acting troupe - he had to bribe clients to come with cheaper loan deals. Hardly value for money.
But ING has bigger problems than making the sponsorship deliver measurable benefits, as big a challenge as that always is. It has probably had more publicity from withdrawing from the deal than it would have had had the relationship continue. What is the impact of that publicity?
At a time when bank expenditure is being scrutinised and bankers' ability to make good decisions is being questioned, people will be looking at the due diligence aroundinto the type of people banks jump into bed with. Also, unless ING had negotiated a watertight integrity clause into the contract, they will have had to write off a chunk of sponsorship money - but will have lost the benefits they were expecting. They may also now have disappointed clients with F1 tickets they can no longer use.
As financial services marketers we need to ask harder questions of the companies we allow to share our brands. Now more than ever, our customers are looking for transparency, for reassurance that we are looking beyond the brand to the detail and the personalities underneath when assessing the risk of the partnerships we choose. That goes as much for sponsorship contracts as for third party product offers such as the Lehman, AIG, Kaupthing etc deals that rattled our customers' confidence in us a year ago.
We can't just rely on the legal and compliance departments to check the contracts we sign. Ultimately, the integrity of our brands is our responsibility. ING has done the hard job of breaking the contract - now it needs to examine the lessons it has learned from this to work out what it could have done to avoid the situation arising in the first place.
Had it done enough to impress on Renault the need to protect the integrity of both brands? Were the consequences of a reputational scandal sufficiently onerous? What did they do to examine the moral compass of the team bosses?
There is always a question mark over the value brands actually get from sponsorships and similar partnerships - a lot of marketing managers see it as an opportunity to get 'money can't buy' tickets to keep key clients sweet, but too often they are just handed out to anyone who wants to go with no thought to long term relationship building. My fiance has a story of working for a bank a couple of decades ago, where the company had sponsored some terribly high brow acting troupe - he had to bribe clients to come with cheaper loan deals. Hardly value for money.
But ING has bigger problems than making the sponsorship deliver measurable benefits, as big a challenge as that always is. It has probably had more publicity from withdrawing from the deal than it would have had had the relationship continue. What is the impact of that publicity?
At a time when bank expenditure is being scrutinised and bankers' ability to make good decisions is being questioned, people will be looking at the due diligence aroundinto the type of people banks jump into bed with. Also, unless ING had negotiated a watertight integrity clause into the contract, they will have had to write off a chunk of sponsorship money - but will have lost the benefits they were expecting. They may also now have disappointed clients with F1 tickets they can no longer use.
As financial services marketers we need to ask harder questions of the companies we allow to share our brands. Now more than ever, our customers are looking for transparency, for reassurance that we are looking beyond the brand to the detail and the personalities underneath when assessing the risk of the partnerships we choose. That goes as much for sponsorship contracts as for third party product offers such as the Lehman, AIG, Kaupthing etc deals that rattled our customers' confidence in us a year ago.
We can't just rely on the legal and compliance departments to check the contracts we sign. Ultimately, the integrity of our brands is our responsibility. ING has done the hard job of breaking the contract - now it needs to examine the lessons it has learned from this to work out what it could have done to avoid the situation arising in the first place.
Had it done enough to impress on Renault the need to protect the integrity of both brands? Were the consequences of a reputational scandal sufficiently onerous? What did they do to examine the moral compass of the team bosses?
Wednesday, 23 September 2009
What banks can learn from booze
Lots of financial services adverts look the same. It's really easy to take the easy route, lead on the headline rate and stick another picture of a piggy bank on the top. But advertising needs to stand out to work.
Utalkmarketing.com has a great case study from ENS Brann, looking at a campaign for Fosters. The alcohol industry has some similar issues to financial services - it's heavily regulated, a very mature, saturated market and the products aren't massively differentiated within each category.
Fosters did a highly targeted DM campaign that aimed to show solidarity with their target audience - and the research they did after the campaign proves that even without a direct call to action, there was a big uplift in sales and share of market.
This is a great idea and definitely one we financial services marketers should look at spinning for our own brands. The better we can demonstrate that we are *like* our customers, the better reason they have to choose our products and seek out advice from us.
Utalkmarketing.com has a great case study from ENS Brann, looking at a campaign for Fosters. The alcohol industry has some similar issues to financial services - it's heavily regulated, a very mature, saturated market and the products aren't massively differentiated within each category.
Fosters did a highly targeted DM campaign that aimed to show solidarity with their target audience - and the research they did after the campaign proves that even without a direct call to action, there was a big uplift in sales and share of market.
This is a great idea and definitely one we financial services marketers should look at spinning for our own brands. The better we can demonstrate that we are *like* our customers, the better reason they have to choose our products and seek out advice from us.
Wednesday, 16 September 2009
EU commission may force Lloyds Banking Group to sell Halifax
It's a bad week for the black horse all right. After we discovered yesterday that Lloyds TSB's acquisition of Halifax had earned it the 'accolade' of most complained about bank with the Financial Ombudsman Service, today we find out that the EU might force it to sell Halifax as retribution for requiring state aid following it's acquisition of, er, HBOS.
Now I'm in no position to know but it seemed at the time, and still does, that there may have been a quite chat between gentlemen before that deal went through so it seems a shame that Lloyds might be forced to lose the Halifax brand, the only thing that may have sweetened what has turned out to be a quite disastrous deal for them.
The article suggests that Halifax would be a good acquisition target for either one of the companies looking at winning a UK banking licence or even Tesco - a strange choice if one of the reasons for ordering the divestment is to increase competition, given that Tesco already accounts for a huge proportion of consumer spending.
However, with 30 million customers Lloyds Banking Group accounts for almost half the UK population and very much fits the criteria for a bank that is too big to fail - or save - and so it's probably the right decision to break the group up. I suspect we'll see a lot more 'right-sizing' to come. Good news for marketers - more brands = more marketers - and hopefully also a new era of creativity as each seeks to carve out a distinctive niche.
Now I'm in no position to know but it seemed at the time, and still does, that there may have been a quite chat between gentlemen before that deal went through so it seems a shame that Lloyds might be forced to lose the Halifax brand, the only thing that may have sweetened what has turned out to be a quite disastrous deal for them.
The article suggests that Halifax would be a good acquisition target for either one of the companies looking at winning a UK banking licence or even Tesco - a strange choice if one of the reasons for ordering the divestment is to increase competition, given that Tesco already accounts for a huge proportion of consumer spending.
However, with 30 million customers Lloyds Banking Group accounts for almost half the UK population and very much fits the criteria for a bank that is too big to fail - or save - and so it's probably the right decision to break the group up. I suspect we'll see a lot more 'right-sizing' to come. Good news for marketers - more brands = more marketers - and hopefully also a new era of creativity as each seeks to carve out a distinctive niche.
Tuesday, 15 September 2009
Managing customer complaints
The Financial Services Ombudsman service has announced today that Lloyds Banking Group has received the most complaints this year, with a collossal 15,233 complaints of which 82% were upheld. That's pushing half of the 38,286 complaints the five biggest banking groups received between them.
Behind Lloyds, Barclays received 9,056 complaints; Royal Bank of Scotland 5,883; Abbey - which includes Abbey National and Alliance & Leicester - 4,279 and HSBC 2,969.
Barclays Bank and Royal Bank of Scotland both had 71 per cent of customer complaints upheld, while Abbey National had 67 per cent and Bank of Scotland 52 per cent.
Sir Christopher Kelly, chairman of the Financial Ombudsman Service, said: “I will now be writing to the chairmen of the financial businesses that generate the largest proportion of our complaints workload, to ask them to consider very carefully both their own complaints performance – and the complaints performance of their competitors.”
Complaints have to have failed to reach resolution before they can be referred to the FOS so the true numbers of complaints will be much higher in each instance.
Financial services marketers don't always have access to information about complaints, but we should - this kind of publicity is likely to influence prospective customers. As I wrote in my previous post, since the advent of social networking, each disgruntled customer could easily be telling 120 people of their bad experience. You only have to read the comments on the article to see how keen people are to share problems.
As marketers, we should be ensuring we are aware of our organisations' complaint levels and ensuring that any patterns are identified and rectified quickly. We have to know that our marketing campaigns aren't going to be putting more pressure onto lower performing areas of the business and that customers are getting the experience we promise them.
Behind Lloyds, Barclays received 9,056 complaints; Royal Bank of Scotland 5,883; Abbey - which includes Abbey National and Alliance & Leicester - 4,279 and HSBC 2,969.
Barclays Bank and Royal Bank of Scotland both had 71 per cent of customer complaints upheld, while Abbey National had 67 per cent and Bank of Scotland 52 per cent.
Sir Christopher Kelly, chairman of the Financial Ombudsman Service, said: “I will now be writing to the chairmen of the financial businesses that generate the largest proportion of our complaints workload, to ask them to consider very carefully both their own complaints performance – and the complaints performance of their competitors.”
Complaints have to have failed to reach resolution before they can be referred to the FOS so the true numbers of complaints will be much higher in each instance.
Financial services marketers don't always have access to information about complaints, but we should - this kind of publicity is likely to influence prospective customers. As I wrote in my previous post, since the advent of social networking, each disgruntled customer could easily be telling 120 people of their bad experience. You only have to read the comments on the article to see how keen people are to share problems.
As marketers, we should be ensuring we are aware of our organisations' complaint levels and ensuring that any patterns are identified and rectified quickly. We have to know that our marketing campaigns aren't going to be putting more pressure onto lower performing areas of the business and that customers are getting the experience we promise them.
Co-operative Bank says thank you
It's a little bit cheesy but I rather like the way Co-operative Bank has chosen to say thank you to customers for awarding them Best Financial Services Provider at the Which? awards.
You can't beat giving people a smile for generating the halo effect.
You can't beat giving people a smile for generating the halo effect.
Abbey's integrated marketing campaign increases website traffic by 51%
Abbey used print and TV advertising to drive website traffic and encourage consideration of its new Super Saver account.
You can read about the results of this integrated marketing campaign to launch Super Saver at Utalkmarketing.com.
Monday, 14 September 2009
More competition on the horizon?
According to the FT, 30 companies are in talks about gaining UK banking licences, mainly because they see deposit taking as a potential source of cheap finance. Although they haven't filed applications yet, it seems that they may be more likely to do so in a year's time.
This means that competition for savings deposits may be about to hot up - at a time when fewer people are saving less (the FSA has seen a reduction in the number of people saving, particularly since 1997 and the savings ratio is reducing).
It is likely that these new entrants will look to win investors by offering high initial savings deposit rates, as ING, ICICI etc all did. Yet yesterday we saw that most savings ads in this weekend's Sunday Times Money section are selling on the basis of headline interest rate.
We marketers need to be developing strategies to create sustainable competitive advantages for our institutions now, or we might find the new entrants will have things all their own way.
This means that competition for savings deposits may be about to hot up - at a time when fewer people are saving less (the FSA has seen a reduction in the number of people saving, particularly since 1997 and the savings ratio is reducing).
It is likely that these new entrants will look to win investors by offering high initial savings deposit rates, as ING, ICICI etc all did. Yet yesterday we saw that most savings ads in this weekend's Sunday Times Money section are selling on the basis of headline interest rate.
We marketers need to be developing strategies to create sustainable competitive advantages for our institutions now, or we might find the new entrants will have things all their own way.
Sunday, 13 September 2009
Does your print advertising stand out in the crowd?
Financial Marketing News recently published an editorial piece by Simon Phillips of Structured Marketing Solutions* that says this:
Research has shown that clients tend to position several firms within clusters but within each cluster, one firm is almost indistinguishable from another. All the more important, therefore, to invest time in developing a clear identity within the cluster and actively managing clients’ perceptions.
This got me wondering - if I took the logos off the adverts in today's Sunday Times Money section, would I be able to guess who's ads I was looking at? And how well do those ads communicate the brand values and identity?
Out of 18 ads**, only 2 describe clearly differentiated benefits, 11 just list product features and 10 lead on a headline savings rate that varies between 2.4% and 5.3%.
Yet let's face it, with base rate as low as it is, how eye catching can headline savings interest rates be right now?
Let's look at the difference a savings rate actually makes. The average UK savings balance is about £7,500. Completely ignoring the differences in terms and conditions, over a year, the average UK saver will earn an extra £217.50, or just over £18 a month, by choosing the highest of the advertised rates over the lowest. Not actually all that much when you think about it.
Given the likelihood that the reason you currently have a big fat juicy worm rate to advertise in the first place is that you are hoping to start a profitable long term relationship with plenty of cross sales, why do none of these adverts do anything to encourage readers to consider choosing the brand for the relationship?
First Direct is in pretty much every marketing textbook as a classic example of a brand that grew from nothing through word of mouth generated by really excellent customer service - yet even it has fallen into the trap of pandering to the rate tarts.
Ask any of your sales teams and they'll tell you the first thing that your company teaches them in sales training is that customers buy benefits not features - yet all these ads are selling undifferentiated, easily replicable features.
Can it be that ads in these money supplements only really work when they offer high headline rates? If so, what increased response do you get from a quarter page ad as opposed to a placing in the best buy tables at the back?
*You'll have to register, then log in, then navigate to the Editorials tab and choose 'Positioning - The invisible foundation' - fortunately the article is better than the user interface.
** The ads belong to Fidelity, HSBC, NFU Mutual, Coventry, Chelsea, RBS, Nationwide, Chelsea, Post Office, Halifax, Alliance and Leicester, First Direct, Birmingham Midshires, thesharecentre, Alliance and Leicester, Halifax, Lloyds TSB and Prudential.
Research has shown that clients tend to position several firms within clusters but within each cluster, one firm is almost indistinguishable from another. All the more important, therefore, to invest time in developing a clear identity within the cluster and actively managing clients’ perceptions.
This got me wondering - if I took the logos off the adverts in today's Sunday Times Money section, would I be able to guess who's ads I was looking at? And how well do those ads communicate the brand values and identity?
Out of 18 ads**, only 2 describe clearly differentiated benefits, 11 just list product features and 10 lead on a headline savings rate that varies between 2.4% and 5.3%.
Yet let's face it, with base rate as low as it is, how eye catching can headline savings interest rates be right now?
Let's look at the difference a savings rate actually makes. The average UK savings balance is about £7,500. Completely ignoring the differences in terms and conditions, over a year, the average UK saver will earn an extra £217.50, or just over £18 a month, by choosing the highest of the advertised rates over the lowest. Not actually all that much when you think about it.
Given the likelihood that the reason you currently have a big fat juicy worm rate to advertise in the first place is that you are hoping to start a profitable long term relationship with plenty of cross sales, why do none of these adverts do anything to encourage readers to consider choosing the brand for the relationship?
First Direct is in pretty much every marketing textbook as a classic example of a brand that grew from nothing through word of mouth generated by really excellent customer service - yet even it has fallen into the trap of pandering to the rate tarts.
Ask any of your sales teams and they'll tell you the first thing that your company teaches them in sales training is that customers buy benefits not features - yet all these ads are selling undifferentiated, easily replicable features.
Can it be that ads in these money supplements only really work when they offer high headline rates? If so, what increased response do you get from a quarter page ad as opposed to a placing in the best buy tables at the back?
*You'll have to register, then log in, then navigate to the Editorials tab and choose 'Positioning - The invisible foundation' - fortunately the article is better than the user interface.
** The ads belong to Fidelity, HSBC, NFU Mutual, Coventry, Chelsea, RBS, Nationwide, Chelsea, Post Office, Halifax, Alliance and Leicester, First Direct, Birmingham Midshires, thesharecentre, Alliance and Leicester, Halifax, Lloyds TSB and Prudential.
Friday, 11 September 2009
Measuring reputation
Following yesterday's post on the importance of a strong brand and trusted corporate reputation to help customers feel comfortable developing a relationship with your brand, I thought a post on measuring reputation would be helpful.
This article from the Reputation Institute (a slightly dodgy scanned pdf) looks at the dimensions of corporate reputation and describes a method for measuring the Reputation Quotient (SM) for your brand. It suggests that the main elements of brand reputation are: emotional appeal; products and services; vision and leadership; workplace environment; social and environmental responsibility; and financial performance.
It then recommends surveying the widest possible cohort to gain a balanced view of your corporate reputation across all socio-economic groups, geographies etc.
While this is demonstrably statistically sound, this is a rather static measure and will only enable you to measure your reputation at a point in time and not, for example, measure the impact of a particular product launch or news story.
This post covers the ten most useful tools to measure your online reputation. These allow you to measure the visibility and buzz about your brand in real time - although the nature of the tools skews the results towards those cohorts that are actively engaged with Web 2.0 and the internet:
1) Addict-O-Matic - instantly create a custom page with the latest buzz on any topic
2) Boardtracker - track the buzz on any keywords within popular forums
3) Google Alerts - daily or real-time alerts delivered via email for your chosen keywords
4) HowSociable? - measure your brand's visability across the main social platforms
5) Social Mention - another multi-platform visability checker, including alerts
6) Twitter Search - Twitter's only search is great for tracking real-time conversations
7) Wiki Alarm - monitors Wikipedia and notifies when pages are edited
8) Yahoo! Sideline - A desktop application that monitors Twitter in real-time for your brand/keywords (Mark: I personally use this app and highly recommend it)
If we have learned anything from the financial crisis, it must be that the single biggest risk to a bank is a loss of reputation - and that reputation is alive and constantly shifting.
This article from the Reputation Institute (a slightly dodgy scanned pdf) looks at the dimensions of corporate reputation and describes a method for measuring the Reputation Quotient (SM) for your brand. It suggests that the main elements of brand reputation are: emotional appeal; products and services; vision and leadership; workplace environment; social and environmental responsibility; and financial performance.
It then recommends surveying the widest possible cohort to gain a balanced view of your corporate reputation across all socio-economic groups, geographies etc.
While this is demonstrably statistically sound, this is a rather static measure and will only enable you to measure your reputation at a point in time and not, for example, measure the impact of a particular product launch or news story.
This post covers the ten most useful tools to measure your online reputation. These allow you to measure the visibility and buzz about your brand in real time - although the nature of the tools skews the results towards those cohorts that are actively engaged with Web 2.0 and the internet:
1) Addict-O-Matic - instantly create a custom page with the latest buzz on any topic
2) Boardtracker - track the buzz on any keywords within popular forums
3) Google Alerts - daily or real-time alerts delivered via email for your chosen keywords
4) HowSociable? - measure your brand's visability across the main social platforms
5) Social Mention - another multi-platform visability checker, including alerts
6) Twitter Search - Twitter's only search is great for tracking real-time conversations
7) Wiki Alarm - monitors Wikipedia and notifies when pages are edited
8) Yahoo! Sideline - A desktop application that monitors Twitter in real-time for your brand/keywords (Mark: I personally use this app and highly recommend it)
If we have learned anything from the financial crisis, it must be that the single biggest risk to a bank is a loss of reputation - and that reputation is alive and constantly shifting.
Thursday, 10 September 2009
Marketing after Lehmans
One year on from the collapse of Lehmans, what should marketers have learned?
We have a difficult job to manage the reputations of our brands when the C-suite could be gearing the business by up to 44 times the total value of assets, as Lehmans did. And don't our customers know it.
Historically, savers have always been prepared to accept lower savings rates in exchange for retail deposit accounts being effectively risk free. Now, savings marketers are being hit by a triple whammy: the savings ratio is going down (hence banks started looking to the interbank markets in such volume in the first place), base rate is still at an historic low of just 0.5% and customers are now less prepared to accept low savings interest rates as they no longer perceive savings accounts as risk free.Indeed, some very senior people are speaking loudly about the need for banks to be allowed to fail 'for the greater good' - not much help if it's your life savings they fail with.
The Financial Services Compensation Scheme has had to increase its limit to £50,000 to maintain confidence. Liquidity markets are still not flowing as freely as before the crisis, capital adequacy requirements have increased and banks are having to implement huge amounts of complex regulations - causing great pressure on funds.
Lending criteria have been tightened due to the increased likelihood of default and insurance companies are experiencing higher levels of suspected frauds, with correspondingly higher administration costs.
However, the pressure on margins is not the biggest problem marketers have. Financial services has always been a prestige industry that has been hugely trusted by customers. Now, that view has changed and bankers are often seen as money grabbers, dishonest and incompetent.
This is where transaction cost economics (Williamson 1985) and resource dependency theories (Pfeffer & Salanik 1978, Heide 1994) come in. These theories cover long term buyer/seller relationships where the relationshipis perceived to involve risk - the position banks now find themselves in. Both parties seek to mitigate their risk by building in safeguards - Heide and John 1988 - (such as tightening lending criteria), to exert control over the relationship (such as offering higher rates of interest in return for locking funds away for long periods) and looking for incentives for risk taking behaviour (such as increasing interest rates on loans).
Banks have done a great job of managing the risk on their side of the equation. But as marketers, we should be asking ourselves: what will our customers be looking for to minimise their risks? They too will want to build in safeguards (by choosing strong brands with stable, conservative reputations), exert control (by demanding higher service standards and more convenient, easy access to their funds) and incentives to take risks (better rates of interest.
These points should be key marketing messages at the moment. And, because of the general cynicism and lack of trust around at the moment, they should be demonstrably true - backed by real evidence at every customer touchpoint and level of the business. The banks that manage to convince customers that they are able to offer them the most control will be the ones that succeed.
We have a difficult job to manage the reputations of our brands when the C-suite could be gearing the business by up to 44 times the total value of assets, as Lehmans did. And don't our customers know it.
Historically, savers have always been prepared to accept lower savings rates in exchange for retail deposit accounts being effectively risk free. Now, savings marketers are being hit by a triple whammy: the savings ratio is going down (hence banks started looking to the interbank markets in such volume in the first place), base rate is still at an historic low of just 0.5% and customers are now less prepared to accept low savings interest rates as they no longer perceive savings accounts as risk free.Indeed, some very senior people are speaking loudly about the need for banks to be allowed to fail 'for the greater good' - not much help if it's your life savings they fail with.
The Financial Services Compensation Scheme has had to increase its limit to £50,000 to maintain confidence. Liquidity markets are still not flowing as freely as before the crisis, capital adequacy requirements have increased and banks are having to implement huge amounts of complex regulations - causing great pressure on funds.
Lending criteria have been tightened due to the increased likelihood of default and insurance companies are experiencing higher levels of suspected frauds, with correspondingly higher administration costs.
However, the pressure on margins is not the biggest problem marketers have. Financial services has always been a prestige industry that has been hugely trusted by customers. Now, that view has changed and bankers are often seen as money grabbers, dishonest and incompetent.
This is where transaction cost economics (Williamson 1985) and resource dependency theories (Pfeffer & Salanik 1978, Heide 1994) come in. These theories cover long term buyer/seller relationships where the relationshipis perceived to involve risk - the position banks now find themselves in. Both parties seek to mitigate their risk by building in safeguards - Heide and John 1988 - (such as tightening lending criteria), to exert control over the relationship (such as offering higher rates of interest in return for locking funds away for long periods) and looking for incentives for risk taking behaviour (such as increasing interest rates on loans).
Banks have done a great job of managing the risk on their side of the equation. But as marketers, we should be asking ourselves: what will our customers be looking for to minimise their risks? They too will want to build in safeguards (by choosing strong brands with stable, conservative reputations), exert control (by demanding higher service standards and more convenient, easy access to their funds) and incentives to take risks (better rates of interest.
These points should be key marketing messages at the moment. And, because of the general cynicism and lack of trust around at the moment, they should be demonstrably true - backed by real evidence at every customer touchpoint and level of the business. The banks that manage to convince customers that they are able to offer them the most control will be the ones that succeed.
When should you post on Facebook?
Social marketing is a great way to get your messages out to a receptive, opted in audience. But when's the best day to post to get the best results? This blog has data to show that posts are read more if shared early in the week - helpfully also giving you the rest of the week to deal with the traffic they generate.
Tuesday, 8 September 2009
The impact of life events on financial capability
The FSA has just published a new study showing that, not only do life events such as redundancy, bereavement and child birth change people's ability to make good financial decisions, but that those decisions can be particularly far-reaching.
These are also points at which people are likely to need to make fundamental changes to their finances, and they are points at which they are particularly in need of understanding, support and good advice.
According to the report:
• Having a baby is associated with a reduction in financial capability and a 19% increase in financial problems for an average individual, even when income is accounted for.
• Becoming unemployed decreases financial capability and increases financial problems by 63%, controlling for income changes. If an individual receives Jobseeker’s Allowance, financial problems are increased by 88%.
• Divorcing or separating increases financial problems by 17% on average and causes a decrease in financial capability, even when controlling for income. This impact is stronger for women.
• Retirement increases financial problems by 31%, accounting for income changes.
Some life events have a positive impact on financial capability:
• Those entering work experience a 27% decrease in financial problems and an increase in financial capability, even accounting for the extra income.
• Having an employed partner leads to a 15% decrease in financial problems and an increase in financial capability, with income controlled for.
• Getting married leads to double the improvement in financial capability to that which is experienced annually in the sample as a whole, accounting for the possible increase in income.
• Those above 55 tend to have higher than average financial capability.
Interestingly, being good with money improves your psychological wellbeing.
All this suggests is that retail and private banks with really well thought through life event programmes, with trained sales staff who understand the effects of these events on people's ability to make good financial decisions, will have a real sustainable competitive advantage.
These are also points at which people are likely to need to make fundamental changes to their finances, and they are points at which they are particularly in need of understanding, support and good advice.
According to the report:
• Having a baby is associated with a reduction in financial capability and a 19% increase in financial problems for an average individual, even when income is accounted for.
• Becoming unemployed decreases financial capability and increases financial problems by 63%, controlling for income changes. If an individual receives Jobseeker’s Allowance, financial problems are increased by 88%.
• Divorcing or separating increases financial problems by 17% on average and causes a decrease in financial capability, even when controlling for income. This impact is stronger for women.
• Retirement increases financial problems by 31%, accounting for income changes.
Some life events have a positive impact on financial capability:
• Those entering work experience a 27% decrease in financial problems and an increase in financial capability, even accounting for the extra income.
• Having an employed partner leads to a 15% decrease in financial problems and an increase in financial capability, with income controlled for.
• Getting married leads to double the improvement in financial capability to that which is experienced annually in the sample as a whole, accounting for the possible increase in income.
• Those above 55 tend to have higher than average financial capability.
Interestingly, being good with money improves your psychological wellbeing.
All this suggests is that retail and private banks with really well thought through life event programmes, with trained sales staff who understand the effects of these events on people's ability to make good financial decisions, will have a real sustainable competitive advantage.
Challenges for financial services marketers
This post may be a year old but it's still got plenty for financial services marketers to think about.
It's an American interview with Bryan Stapp, former CMO of Quicken Loans and current Chief Marketer of Loud Amplifier Marketing, talking about the need for marketers to concentrate on building trust - and challenging us to think harder about how we build relationships with our clients.
It's an American interview with Bryan Stapp, former CMO of Quicken Loans and current Chief Marketer of Loud Amplifier Marketing, talking about the need for marketers to concentrate on building trust - and challenging us to think harder about how we build relationships with our clients.
Are you experienced?
There might not be many vacancies for financial services marketers available through recruitment consultancies at the moment, but Marketing Week still has plenty. But how many of them are looking for marketers with financial services qualifications? None.
Does it matter? I think so. Financial services marketers are asked to create clear, fair and not misleading collateral pitched at the right level for the target audience. If you aren't qualified in financial services, are you really confident you can do that?
A case in point is an advert in this weekend's press, for the RBS Royal Bond. The bond offers 5.3% per year 'without locking away your capital' and is available for investors with as little at £100. Sounds almost like a fixed rate, instant access savings account, doesn't it? Except that buried in the information paragraph it mentions a bid/offer spread, so it can't be one.
So what actually is it? A savings account? A corporate bond fund? An equity fund? An OEIC? The advert is anything but clear - yet clearly pitched at a mass market investor with very little capital to invest. The kind of audience this is really suitable for would know they needed to know this.
In mis-selling cases, the burden of proof of whether a product was properly sold or not often comes down to the collateral the customer took away. It's imperative that, as marketers, we make absolutely certain we understand the suitability and risks of all the products we sell. It's not compliance's job to check that for us.,
And I don't see how we can be expected to do that while recruiters are only looking for marketing experience.
Does it matter? I think so. Financial services marketers are asked to create clear, fair and not misleading collateral pitched at the right level for the target audience. If you aren't qualified in financial services, are you really confident you can do that?
A case in point is an advert in this weekend's press, for the RBS Royal Bond. The bond offers 5.3% per year 'without locking away your capital' and is available for investors with as little at £100. Sounds almost like a fixed rate, instant access savings account, doesn't it? Except that buried in the information paragraph it mentions a bid/offer spread, so it can't be one.
So what actually is it? A savings account? A corporate bond fund? An equity fund? An OEIC? The advert is anything but clear - yet clearly pitched at a mass market investor with very little capital to invest. The kind of audience this is really suitable for would know they needed to know this.
In mis-selling cases, the burden of proof of whether a product was properly sold or not often comes down to the collateral the customer took away. It's imperative that, as marketers, we make absolutely certain we understand the suitability and risks of all the products we sell. It's not compliance's job to check that for us.,
And I don't see how we can be expected to do that while recruiters are only looking for marketing experience.
Sunday, 6 September 2009
What happens when your customer asks their satnav where you are?
New sat nav systems now enable banks to add their logos and locations, so motorists can easily find their nearest branch and associated information such as phone numbers, opening hours and services.
This would be a great tool for people to download from your contacts page. And it would reduce transaction costs by encouraging people to use your own cash machines rather than networked ones.
This would be a great tool for people to download from your contacts page. And it would reduce transaction costs by encouraging people to use your own cash machines rather than networked ones.
Saturday, 5 September 2009
Marketing to young people
This article from Financial Services Technology magazine is a great distillation of some interesting research from Forrester.
However, the conclusions shouldn't come as too much of a surprise.
Apparently young people are techno-savvy and expect to be able to manage their finances conveniently through the channel of their choice. They are also more interested in product benefits than features and buy fewer financial services products than older people. Really? Whodathunkit?
More interestingly, the research suggests that only around half of young people choose the same bank as their parents. Inheritance is a major cause of outflows for private banks so we can't be surprised that the same effectively holds true in the retail banking sector - yet it's interesting to note that, as well growing up with technology, young people are now also growing up with switching services and advertising campaigns designed to discourage loyalty.
Historically, financial services customers have had to be made pretty annoyed - and given a fairly big carrot - before they'll go through the bother of changing providers. Is this the same for young people? It seems we marketers aren't tracking that yet - but I'd suggest it's time we start. Otherwise, can you be sure you'll recoup the costs of that expensive student account incentive?
However, the conclusions shouldn't come as too much of a surprise.
Apparently young people are techno-savvy and expect to be able to manage their finances conveniently through the channel of their choice. They are also more interested in product benefits than features and buy fewer financial services products than older people. Really? Whodathunkit?
More interestingly, the research suggests that only around half of young people choose the same bank as their parents. Inheritance is a major cause of outflows for private banks so we can't be surprised that the same effectively holds true in the retail banking sector - yet it's interesting to note that, as well growing up with technology, young people are now also growing up with switching services and advertising campaigns designed to discourage loyalty.
Historically, financial services customers have had to be made pretty annoyed - and given a fairly big carrot - before they'll go through the bother of changing providers. Is this the same for young people? It seems we marketers aren't tracking that yet - but I'd suggest it's time we start. Otherwise, can you be sure you'll recoup the costs of that expensive student account incentive?
How a meerkat became a social media hero
Whatever you think of the new puppet adverts, Compare the Meerkat has certainly been a category-busting campaign that has succeeded in taking a frankly dull subject and creating an instantly recognisable brand identity.
You can read more about how they did it 'How a meerkat became a social media hero, creating a cult brand' in the World Advertising Research Council's Admap magazine this month.
You can read more about how they did it 'How a meerkat became a social media hero, creating a cult brand' in the World Advertising Research Council's Admap magazine this month.
Not using social media? Don't think you have no brand presence
It is a truth universally acknowledged that a happy customer tells one friend and an unhappy customer tells 10. Social networking sites make that disparity even more acute as every posting is instantly visible throughout the poster's whole network - which averages 120 people.
So what are financial services marketers currently doing to manage their brand reputations on social networking sites? A quick check of Facebook found the following:
HSBC
Lloyds TSB
Social networks are a highly targeted way for engaged people to share trusted information, as this article from the FT shows. More and more people are spending more and more time on Facebook - and that's time they aren't spending watching your TV ads, looking at your posters and print ads and reading your marcomms.
So - just exactly what messages are your customers and prospects sharing about you?
So what are financial services marketers currently doing to manage their brand reputations on social networking sites? A quick check of Facebook found the following:
HSBC
- 4 pages, the most popular of which has over 6,000 fans
- 2,000 groups.
Lloyds TSB
- No pages
- 277 groups
- 37 pages, the most popular of which has 261 fans
- 1900 groups
- 1 page with 123 fans
- 351 groups
- 0 pages
- 157 groups
Social networks are a highly targeted way for engaged people to share trusted information, as this article from the FT shows. More and more people are spending more and more time on Facebook - and that's time they aren't spending watching your TV ads, looking at your posters and print ads and reading your marcomms.
So - just exactly what messages are your customers and prospects sharing about you?
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