Marketing Whims
Whim: 1. An idea, vision, passing thought, or fool notion. 2. What It Means.
Wednesday, April 26, 2006
Brokerages Have An Image Problem
I have not spoken to anyone lately who's had anything good to say about their travel experience -- particulary with the airlines.
But apparently, according to a study done by Harris Interactive, consumers feel that, in general, airlines are doing better job serving their customers than investment and brokerage firms.
Planes are crowded, always late, incredibly expensive, and it costs $4 to get a stupid little box of cheese and crackers. On the other hand, in the past year, the Dow is up 10% and the NASDAQ up 19%. Yet consumers feel the airlines are doing a better job than the brokerages.
It's not a service problem. According to research that Forrester Research conducted in Q4 2005, 69% of investors thought their primary brokerage provided good or excellent service.
Competing on investment performance isn't enough in the brokerage business -- firms have to differentiate themselves on the experience. Being transparent about fees will offer investors a differentiating customer experience.
What's your firm doing to be transparent about rates and fees?
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
But apparently, according to a study done by Harris Interactive, consumers feel that, in general, airlines are doing better job serving their customers than investment and brokerage firms.
Planes are crowded, always late, incredibly expensive, and it costs $4 to get a stupid little box of cheese and crackers. On the other hand, in the past year, the Dow is up 10% and the NASDAQ up 19%. Yet consumers feel the airlines are doing a better job than the brokerages.
It's not a service problem. According to research that Forrester Research conducted in Q4 2005, 69% of investors thought their primary brokerage provided good or excellent service.
Whim: It's a transparency problem. Just half of investors thought their primary brokerage made it easy to compare rates and fees.Comparing the top box scores on a number of dimensions helps to highlight the issue. Twenty-nine percent of respondents gave a top box rating to dimensions like "offers high quality investment advice" and "makes it easy to benchmark my investment performance". But just 21% gave a top box score to "makes it easy to compare rates and fees". And this is what investors think about their primary brokerage -- the scores can't be any better for the other brokerages they do business with (and they do do business with other firms).
Competing on investment performance isn't enough in the brokerage business -- firms have to differentiate themselves on the experience. Being transparent about fees will offer investors a differentiating customer experience.
What's your firm doing to be transparent about rates and fees?
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
Wednesday, April 19, 2006
The One Number Is The Wrong Number
In his Harvard Business Review article “The One Number You Need to Grow,” loyalty guru Fred Reichheld suggested that the best predictor of a firm’s top-line growth could be captured by the results of a single survey question: Would you recommend this company to a friend?
Statistically speaking, there may be a strong correlation between revenue growth and the percentage of a firm’s customers would recommend it to friends, but putting managerial focus and attention on this metric is a big mistake. Why?
First of all, because it doesn’t help explain WHY customers would recommend a firm. And second, because intention isn’t nearly as valuable as action (that is, how many customers actually DO refer the firm to friends and family).
An exec at one of the big banks told me about an interaction he had at his car dealer. He had taken his wife’s car in for repairs, and when he went to pick it up, the repair shop manager came out and said to him “if there’s any reason why you wouldn’t check off the ‘likely to recommend’ box on the customer satisfaction survey, please let me know before filling out the survey.”
Let’s say a bank changes its customer satisfaction measurement mechanisms to capture this “one number”, and learns that 10% of its branches score much higher than average and that 10% of branches score much lower than the average. What has it learned? Nothing. It isn’t actionable. And worse, instead of doing the things that earn a referral, its possible that branch managers are running around asking customers to say they’d refer the bank to friends and family.
Whim: Measuring likelihood of referral, without measuring the causes of referral intention, is a waste of time and money.
So what should financial firms measure? Customer advocacy. Not the likelihood that a customer will advocate for the firm, but the perception on the part of the customer that the firm is an advocate for the customer.
And while it’s certainly possible to boil that down to a single number, financial firms will find it a whole lot more valuable to ask customers to what extent do they believe that the firm:
- Lives up to the values it portrays in ads
- Has personnel that are friendly and helpful
- Listens to problems and concerns
- Provides unbiased guidance and advice
- Clearly explains its products and services
- Indicates when it’s a bad idea to buy their products
- Acknowledges the rates and promises of competitors
- Responds quickly to inquiries
- Alerts customers to account changes or issues
- Rarely or never make mistakes
With these metrics, execs can more clearly pinpoint improvement opportunities – for example, whether there are perceptions of service problems, sales issues, or operational improvement opportunities.
How is your firm measuring customer advocacy?
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
Monday, April 17, 2006
Fuzzy Math
The Charlotte Observer reports that, according to ComScore Networks, Bank of America serves 38% of all Americans who bank online.
So is ComScore trying to say that, between them, Chase, Citi, Wachovia, Washington Mutual, Wells Fargo, and the HUNDREDS of other banks offering online banking only serve 62% of US online bankers?
No way. ComScore better go back and re-calculate those numbers.
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
So is ComScore trying to say that, between them, Chase, Citi, Wachovia, Washington Mutual, Wells Fargo, and the HUNDREDS of other banks offering online banking only serve 62% of US online bankers?
No way. ComScore better go back and re-calculate those numbers.
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
Saturday, April 08, 2006
The Problem With Marketing Measurement (Part 1)
Problem #1: Marketers don't distinguish the point of influence from the point of sale.
Here's my point: Nearly four out of ten credit card applicants who researched their decision online went to a Web site as a result of a direct mail offer -- more than those who went to a particular site as a result of a banner ad or email offer (source: Forrester Research). And many of these online researchers went on to apply for a card online.
So who should get credit for the sale -- the direct mail channel or the online channel? In most financial firms, the online channel would get credit for the sale.
The problem here is that while the online channel took the order, it wasn't the channel responsible for creating awareness of the offer, and may or may not have been the channel that influenced preference.
This can lead firms to make some bad decisions. At one large brokerage, low response rates for direct mail offers is prompting execs to consider shutting down the direct mail channel for acquiring new customers. But what they don't know is whether or not new accounts opened online and over the phone are from customers who entered into conversations with the company as a result of a direct mail offer.
After all, for highly considered decisions like mutual fund decisions, IRAs, and 529 plans, should this brokerage really expect that new customers will open new accounts and send money in response to a piece of paper they get in the mail?
In the past, maybe this firm experienced 2% response rates for campaigns. But with increased product sophistication, more investors researching their decisions, and the greater availablity of information online to help investors validate their investment decisions and submit account applications, is it really any wonder that account opening forms submitted through the mail is slipping?
But the decline in order submitted through the mail does not diminish the channel's role in creating awareness of the offer.
Financial firms of all types should follow the example set by Capital One whose direct mail offers provide offer codes for prospects to enter online (which helps not only measure the effectiveness of the campaign, but offers prospects the added convenience many consumers look for in order to apply online).
What is your firm doing to determine the point of influence?
For more on this topic, please go to my active site, Marketing ROI: Whims From Ron Shevlin
Here's my point: Nearly four out of ten credit card applicants who researched their decision online went to a Web site as a result of a direct mail offer -- more than those who went to a particular site as a result of a banner ad or email offer (source: Forrester Research). And many of these online researchers went on to apply for a card online.
So who should get credit for the sale -- the direct mail channel or the online channel? In most financial firms, the online channel would get credit for the sale.
The problem here is that while the online channel took the order, it wasn't the channel responsible for creating awareness of the offer, and may or may not have been the channel that influenced preference.
This can lead firms to make some bad decisions. At one large brokerage, low response rates for direct mail offers is prompting execs to consider shutting down the direct mail channel for acquiring new customers. But what they don't know is whether or not new accounts opened online and over the phone are from customers who entered into conversations with the company as a result of a direct mail offer.
After all, for highly considered decisions like mutual fund decisions, IRAs, and 529 plans, should this brokerage really expect that new customers will open new accounts and send money in response to a piece of paper they get in the mail?
In the past, maybe this firm experienced 2% response rates for campaigns. But with increased product sophistication, more investors researching their decisions, and the greater availablity of information online to help investors validate their investment decisions and submit account applications, is it really any wonder that account opening forms submitted through the mail is slipping?
But the decline in order submitted through the mail does not diminish the channel's role in creating awareness of the offer.
Whim: Financial services firms need to track new accounts opened across channels and tie those account openings back to their direct mail (and email and banner ad) campaigns to measure the influence of direct mail.
Financial firms of all types should follow the example set by Capital One whose direct mail offers provide offer codes for prospects to enter online (which helps not only measure the effectiveness of the campaign, but offers prospects the added convenience many consumers look for in order to apply online).
What is your firm doing to determine the point of influence?
For more on this topic, please go to my active site, Marketing ROI: Whims From Ron Shevlin
Wednesday, April 05, 2006
DisEngaging From ARF’s Definition Of Engagement
At its Re-Think conference, ARF’s Research Officer defined engagement as “turning on a prospect to a brand idea enhanced by the surrounding context.” ClickZ quoted Nielsen BuzzMetrics' CMO as saying "the definition is a good first step .... many ARF attendees were relieved to see further definition and perspective put on the 'engagement' metric."
Turning on a prospect to a brand idea enhanced by the surrounding context? HUH? Financial services marketers would do well to ignore this definition –- it's NOT measurable, and its pretty much meaningless. But marketers should not ignore the idea of engagement.
Among consumers that bank online, what differentiates those who will consider their bank for future purchases from those who won’t? It’s not age, income, gender or any other demographic factor. It’s the number of times a customer interacts with the bank: Those who use their bank’s Web site to not just check account balances, but to pay bills, conduct service transactions, and research product needs are more likely to say they’ll turn to the bank when they’re in the market for their future deposit and credit product needs (source: Forrester Research).
Here's my definition of engagement:
“Repeated, satisfied interactions that strengthen the emotional connection a customer has with the brand.”
Transactions like account balance inquiries are low on the emotional scale -- a customer that checks his account balance 4 times a week isn't “engaging” with the bank. But a customer that walks into the branch to discuss investment needs or loan alternatives -- and walks away satisfied with that interaction -- is.
The challenge financial firms face: Moving customers up the engagement food chain. How can they do that?
Wells Fargo used an email newsletter. From consumer research, the bank learned that its customers would sign up for an email newsletter if it helped them manage the accounts they already owned (in contrast to containing articles -- or ads -- for products they didn’t already have). From an engagement measurement perspective, customers that enrolled in the newsletter demonstrated aninterest in increasing their engagement with Wells. But those that actively opened and read the newsletter -- and were satisfied with what they read -- actually increased their engagement with the bank.
By increasing customers’ engagement with the bank, Wells Fargo builds future purchase intention among its customers and earns the right to cross-sell additional products (see the April 1, 2006 posting “The Missing Leg Of The Marketing Stool”).
How is your firm measuring -- and building -- customer engagement?
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
Turning on a prospect to a brand idea enhanced by the surrounding context? HUH? Financial services marketers would do well to ignore this definition –- it's NOT measurable, and its pretty much meaningless. But marketers should not ignore the idea of engagement.
Among consumers that bank online, what differentiates those who will consider their bank for future purchases from those who won’t? It’s not age, income, gender or any other demographic factor. It’s the number of times a customer interacts with the bank: Those who use their bank’s Web site to not just check account balances, but to pay bills, conduct service transactions, and research product needs are more likely to say they’ll turn to the bank when they’re in the market for their future deposit and credit product needs (source: Forrester Research).
Here's my definition of engagement:
“Repeated, satisfied interactions that strengthen the emotional connection a customer has with the brand.”
Whim: To effectively measure engagement, firms must classify the types of interactions a customer has by emotional -- or engagement -- level (see the April 1, 2006 posting “The Stories That Loyal Customers Tell”).
Transactions like account balance inquiries are low on the emotional scale -- a customer that checks his account balance 4 times a week isn't “engaging” with the bank. But a customer that walks into the branch to discuss investment needs or loan alternatives -- and walks away satisfied with that interaction -- is.
The challenge financial firms face: Moving customers up the engagement food chain. How can they do that?
Wells Fargo used an email newsletter. From consumer research, the bank learned that its customers would sign up for an email newsletter if it helped them manage the accounts they already owned (in contrast to containing articles -- or ads -- for products they didn’t already have). From an engagement measurement perspective, customers that enrolled in the newsletter demonstrated aninterest in increasing their engagement with Wells. But those that actively opened and read the newsletter -- and were satisfied with what they read -- actually increased their engagement with the bank.
By increasing customers’ engagement with the bank, Wells Fargo builds future purchase intention among its customers and earns the right to cross-sell additional products (see the April 1, 2006 posting “The Missing Leg Of The Marketing Stool”).
How is your firm measuring -- and building -- customer engagement?
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
Saturday, April 01, 2006
The Missing Leg Of The Marketing Stool
In a March 2006 Harvard Business Review article titled “Knowing What to Sell, When, and to Whom, the authors state that direct marketers typically make two calculations: 1) the likelihood that a customer will choose a particular product, and 2) the probability that a customer will make a purchase at a given time.
Unfortunately for financial services marketers, this is one leg short of a stool. The third calculation they must make is the likelihood that their customer will purchase that particular product from their firm.
Forrester Research has documented the problem over the past few years: Few consumers will consider their primary bank for financial products beyond deposit products. Less than half of consumers will consider their current bank for a mortgage or home equity loan, one-quarter will consider that firm for a credit card, and less than one in ten will turn to their bank for a brokerage account or insurance policy.
It’s no wonder, then, that response rates on campaigns are so low. Marketers may actually be doing a good job of predicting product need and timing, but are pitching customers who aren’t inclined to buy from them.
Look at the math: If marketers predict both product need and timing correctly 60% of the time, they should expect a 36% response rate. But if only 25% of customers will consider that firm for the product, than the expected response rate is just 9% -- which is a whole lot closer to what firms actually experience.
Improving future purchase consideration should be a top priority for financial services -- in fact, it's more important than improving the accuracy of predicting product need and timing. Why? Let’s go back to the math: If the accuracy of predicting timing improves by 10 percentage points, to 70%, the expected response rate rises to 10.5% (.6*.7*.25=.105). But if that 10 percentage point gain comes in the form of future purchase consideration, then expected response rate goes up to 12.6% (.6*.6*.35=.126).
Consideration and preference campaigns should precede purchase-oriented campaigns. By how long, I don’t know -- marketers will need to test and learn. But building consideration first -- before prospects are in the market for products -- will improve campaign success. Why? Because it fits how consumers go through the decision making process for financial products, which increasingly involves a conscious research and evaluation phase.
What are you doing to improve purchase consideration among your customers and prospects?
For more on this topic, please go to my active site, Marketing ROI: Whims From Ron Shevlin
Unfortunately for financial services marketers, this is one leg short of a stool. The third calculation they must make is the likelihood that their customer will purchase that particular product from their firm.
Forrester Research has documented the problem over the past few years: Few consumers will consider their primary bank for financial products beyond deposit products. Less than half of consumers will consider their current bank for a mortgage or home equity loan, one-quarter will consider that firm for a credit card, and less than one in ten will turn to their bank for a brokerage account or insurance policy.
It’s no wonder, then, that response rates on campaigns are so low. Marketers may actually be doing a good job of predicting product need and timing, but are pitching customers who aren’t inclined to buy from them.
Look at the math: If marketers predict both product need and timing correctly 60% of the time, they should expect a 36% response rate. But if only 25% of customers will consider that firm for the product, than the expected response rate is just 9% -- which is a whole lot closer to what firms actually experience.
Improving future purchase consideration should be a top priority for financial services -- in fact, it's more important than improving the accuracy of predicting product need and timing. Why? Let’s go back to the math: If the accuracy of predicting timing improves by 10 percentage points, to 70%, the expected response rate rises to 10.5% (.6*.7*.25=.105). But if that 10 percentage point gain comes in the form of future purchase consideration, then expected response rate goes up to 12.6% (.6*.6*.35=.126).
Whim: Financial firms should alter the mix of their marketing campaigns from purchase-oriented messages to messages focused on influencing product purchase consideration and preference.
Consideration and preference campaigns should precede purchase-oriented campaigns. By how long, I don’t know -- marketers will need to test and learn. But building consideration first -- before prospects are in the market for products -- will improve campaign success. Why? Because it fits how consumers go through the decision making process for financial products, which increasingly involves a conscious research and evaluation phase.
What are you doing to improve purchase consideration among your customers and prospects?
For more on this topic, please go to my active site, Marketing ROI: Whims From Ron Shevlin
The Stories That Loyal Customers Tell
The following are true stories:
#1: A man in his mid-50s, when asked by his bank in a focus group interview why he was a loyal customer, said “it’s because of Jenny, the branch manager where I bank.” When asked what made Jenny so special, he replied, “I don’t know. But one time I came into the branch to make a deposit, and the pen at the counter was out of ink. Jenny’s office is around the corner from the counter, and although she had a customer in with her, she somehow knew that pen was out of ink, and came out with a batch of new pens. That’s Jenny for you.”
#2: A trade magazine reporter and her partner were trying to adopt a child, and they had received word from the adoption agency that a child was available for adoption, but that they needed a short term loan in order to make the trip to China to pick up the baby. According to the reporter, her bank “bent over backwards to approve the loan and get her the money in 24 hours” and for that she would “never leave them.”
#3: An IT executive at a large financial services firm (not USAA) traces his loyalty to USAA back to a single phone call. He called the firm to cancel a credit card and insurance policy. The rep said “I hope I’m not overstepping my boundaries, but may I ask you if you’re going through a divorce?” Surprised, he said he was. The rep replied “We have a department that can help you with this process, and if you’d like, I can transfer you to someone in that department now, and everything we’ve discussed so far will be passed on to them.”
There are three lessons marketers should learn from these stories. The first is that product quality is table stakes. No where in any of these stories did anyone mention whether or not they got better rates, fees, or investment performance from their providers.
The second lesson is that service quality only goes so far. The added convenience of late branch hours and faster call handling time are important, but they don’t produce the stories that customers tell. Instead, it’s the exceptional interactions -- often, the highly emotional ones -- that leave lasting impressions.
The third lesson is that while loyalty programs -- for example, rewarding customers who invest more assets with the bank with better rates or lower fees -- can buy a customer’s loyalty, forming an emotional bond with customers earns their loyalty.
High-emotion interactions are cues for special treatment. For example, processing a mortgage app through the standard process is fine, but a loan to be used for adopting a child should get higher priority -- and handled with extreme sensitivity.
Identifying these interactions -- and when they’ve been successfully handled -- won’t be easy, but it’s critical. Why? Because a successful high-emotion interaction -- one that produces a story that loyal customers tell -- is a signal that a firm has earned the right to cross-sell additional products and that a customer is open to broadening the relationship.
What stories do your customers tell about your firm?
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin
#1: A man in his mid-50s, when asked by his bank in a focus group interview why he was a loyal customer, said “it’s because of Jenny, the branch manager where I bank.” When asked what made Jenny so special, he replied, “I don’t know. But one time I came into the branch to make a deposit, and the pen at the counter was out of ink. Jenny’s office is around the corner from the counter, and although she had a customer in with her, she somehow knew that pen was out of ink, and came out with a batch of new pens. That’s Jenny for you.”
#2: A trade magazine reporter and her partner were trying to adopt a child, and they had received word from the adoption agency that a child was available for adoption, but that they needed a short term loan in order to make the trip to China to pick up the baby. According to the reporter, her bank “bent over backwards to approve the loan and get her the money in 24 hours” and for that she would “never leave them.”
#3: An IT executive at a large financial services firm (not USAA) traces his loyalty to USAA back to a single phone call. He called the firm to cancel a credit card and insurance policy. The rep said “I hope I’m not overstepping my boundaries, but may I ask you if you’re going through a divorce?” Surprised, he said he was. The rep replied “We have a department that can help you with this process, and if you’d like, I can transfer you to someone in that department now, and everything we’ve discussed so far will be passed on to them.”
There are three lessons marketers should learn from these stories. The first is that product quality is table stakes. No where in any of these stories did anyone mention whether or not they got better rates, fees, or investment performance from their providers.
The second lesson is that service quality only goes so far. The added convenience of late branch hours and faster call handling time are important, but they don’t produce the stories that customers tell. Instead, it’s the exceptional interactions -- often, the highly emotional ones -- that leave lasting impressions.
The third lesson is that while loyalty programs -- for example, rewarding customers who invest more assets with the bank with better rates or lower fees -- can buy a customer’s loyalty, forming an emotional bond with customers earns their loyalty.
Whim: Marketers must use CRM apps to identify high-emotion interactions, and gauge whether or not they’ve been successfully completed.
High-emotion interactions are cues for special treatment. For example, processing a mortgage app through the standard process is fine, but a loan to be used for adopting a child should get higher priority -- and handled with extreme sensitivity.
Identifying these interactions -- and when they’ve been successfully handled -- won’t be easy, but it’s critical. Why? Because a successful high-emotion interaction -- one that produces a story that loyal customers tell -- is a signal that a firm has earned the right to cross-sell additional products and that a customer is open to broadening the relationship.
What stories do your customers tell about your firm?
For more on this topic, please go to Marketing ROI: Whims From Ron Shevlin