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?
Tuesday, 29 September 2009
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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