October 23, 2019
Large multinational banks and regional retail banks are assessing how they engage customers. Banks used to focus their marketing efforts and dollars on promoting products (interest rates for mortgages, credit card rewards, free checking and savings accounts, etc.). Relationships with customers were very transactional. Here’s our product. Here’s an application. Here are more products. Consumers are looking for partners that can provide guidance first not products. Today’s retail banking environment is evolving out of necessity. Simply put: the needs of consumers have changed. John J. Maxfield, executive editor for Bank Director magazine recently spoke with several retail bank CMOs as well as Finn Partners Wendy Lane to gain insights into this new retail banking paradigm.
The Rise of Left-Brained Marketing
By: John J. Maxfield, executive editor for Bank Director magazine
OCTOBER 17TH, 2019
Starting about a year ago, the folks in the marketing department at U.S. Bancorp noticed a shift in the sentiment of its customers. The shift was captured in the results of the bank’s periodic surveys. On the surface, everything seemed to be going great. Businesses were earning more money than ever, courtesy of the corporate tax cut passed by Congress in the waning days of 2017. Unemployment was nearing record lows. And economic growth was respectable, if not robust — the U.S. economy expanded by just under 3% in 2018. Indeed, everything seemed to suggest that consumers must be happy. But that’s not what U.S. Bancorp found.
“In the last few years we’ve seen people go from, ‘My life is wonderful, and I’m planning for the future,’ to, ‘My life is fine, everything’s fine. It’s not good, it’s not bad, it’s fine,’” says Beth McDonnell, chief marketing officer of the $482 billion asset bank based in Minneapolis.
McDonnell doesn’t know what caused this shift — the bank didn’t ask in its surveys — but it was her job to respond to it. Three years ago, U.S. Bancorp’s messaging was all about helping customers achieve their dreams. People wanted to retire. They wanted to buy a big house. They wanted to send their kids to college. They wanted to pay for that lavish wedding. U.S. Bancorp’s message was about letting people know it was there to make these dreams a reality.
Nowadays, by contrast, the bank’s messaging is more about helping people tackle immediate issues. People are no longer focused on big goals at the end of the rainbow, says McDonnell. They need help making ends meet. They need help getting through the week. They need help with all the little things along the way.
Navigating this shift is just one of many challenges facing bank marketing departments today. There’s the residual cynicism toward banks from the financial crisis. There’s social media. There’s the rapid adoption of digital banking — at big banks, a majority of consumer transactions now happen online rather than in person. Yet, while every bank is searching independently for solutions to these challenges, interviews with the chief marketing officers of multiple regional banks show that those solutions are coalescing around a small handful of responses, from a focus on content creation to a growing embrace of digital marketing channels to nascent attempts at leveraging so-called social media influencers. And underlying all of these responses is an evolution in the role, philosophy and skillset of marketers within banks today.
“The financial crisis dictated a change in how you had to approach the consumer,” says Michele Elrod, chief marketing officer at Birmingham, Alabama-based Regions Financial Corp., with $128 billion in assets. “The consumer was raising their hand and saying, ‘I’m upset. I don’t trust you. I’m angry.’ And if we were going to have conversations with them, we had to take a different point of view. We needed to move our chair. If you’re going to have a conversation, then you’re going to give them things that help them make choices themselves.”
The answer was to start creating content aimed at educating customers, says Elrod. Regions started down this path a decade ago and has intensified its efforts in recent years. It has developed articles, tips, calculators and financial education seminars. It has produced podcasts, a magazine and webinars. Now, the bank is exploring how to become nimbler with its content, as well as how to produce it in an automated fashion that’s nevertheless customized to the different people who may come across it.
Fueling Regions’ embrace of content is the way consumers now learn about products. “The majority of consumers want to learn about products through content, rather than traditional advertising,” says Wendy Lane, managing partner of LANE PR, a Finn Partners company. “They believe their friends, and they believe what they read. The average consumer, according to a 2014 Nielsen report, spends 60 hours a week consuming content across devices. Younger generations of consumers don’t care if it’s paid or editorial. That’s really different. It used to be in the past that an article in a newspaper was read three times more than an ad, which was paid for. Well, now paid content looks like articles, right?”
The proliferation of digital banking and e-commerce plays into this. “Content is important for a number of reasons,” says Jeff Lee, chief marketing officer at Stuart, Florida-based Seacoast Banking Corp. of Florida, with $6.8 billion in assets. “No. 1, for pure search engine optimization purposes — for attracting qualified traffic to the website. If your website is light on content, or it doesn’t have any content, then it’s going to be hard to bring in traffic organically.”
The principal forum of opportunity is, to Lee’s point, search engine optimization, or SEO. This is the art and science of creating articles, videos and webpages that rank high in the results of online search engines, primarily Google. If a prospective customer is shopping online for a small business loan, and they use Google to do so, the bank that ranks at the top of the search results page will generate a lot more leads than a bank that ranks further down. How big of a difference? As a general rule, the top result from a Google search will garner 33% of the clicks. The second position gets 15%, the third position 9% and so on. By the time you get down to the 10th position, the so-called click-through rate drops to just 1%.
Banks need to position themselves as thought leaders by creating content that is compelling enough for people to read, share and revisit, all of which influence Google’s ranking algorithm. This isn’t just true when it comes to reaching retail customers — it’s also true of commercial customers. “A bank has to be able to demonstrate some type of thought leadership about a customer’s industry, about how it understands the pain points of that industry and about how it has solutions to help a customer grow their business within that industry,” Lee says. “It’s not about making a hard sale. The modern buyer is not just assessing the offer; they’re assessing the bank and if the bank truly can help them grow their business.”
Unique and compelling content also comes in handy on social media — digital platforms like Facebook, Twitter and LinkedIn. “Consumers are increasingly inundated with information, and they’re skeptical, so word of mouth is now the primary motivator for 20% to 50% of purchase decisions,” Lane says. “Consumers turn to their circle of family, friends and influencers when they’re making decisions. They look for social validation in the form of customer reviews and the opinions of friends and families. Social media channels have started to prioritize content from users’ family and friends. Banks need to understand this when they’re developing their digital strategies.”
No bank admits to having completely cracked the code of social media. “We use social media to talk about what we’re doing in the communities and to talk about what we’re doing with our different foundations’ activities,” McDonnell says. “That is what we have found our customers want to hear about. And they want to know what we’re doing, what activities we’re doing in their local community. We do a bit of selling through social media, but we primarily use it to engage our customers in all the different community activities we’re participating in.”
To be effective, a social media strategy must be tailored to the audiences of the different platforms. “From a pure-play sales standpoint, I’m not overly sold on social media,” Lee says. “On the business side, I think LinkedIn is enormously powerful as a way to network, as a way to connect and get a message in front of targeted individuals. Facebook and others, it just depends on the angle of your bank. If you’re a commercially oriented bank, to be posting content on Instagram, it probably doesn’t make a heck of a lot of sense, because you’re probably not going to find the chief financial officer of the organization you’re trying to get in front of on Instagram.”
Given these challenges, Regions is in the process of stepping back and reevaluating its social media strategy in light of the Gen Z cohort. “The way we use social media right now is to engage our customers and create communities,” Elrod says. “Then we use social media as part of the marketing mix. When we go out, we use it as a medium to promote as well. That is something that is on our radar screen to improve, because I think it’s going to come up in the hierarchy of marketing as we see the next generational shift. They’re a very social generation.”
One tool that bank marketers agree is a key to leveraging social media effectively is the use of influencers — athletes, celebrities, thought leaders and other well-known people with large followings that can influence the purchase decisions of their followers. “Using influencers is one thing we’re working on, though we have not fully put it into play,” Elrod says. “What we have put into play is when we, for example, go into new markets and open branches, we work with influencers in those markets — people who have successful blogs, people who other people follow. We work with them to let them understand what we’re doing and what we’re doing differently. When they decide that they want to blog about that, and they write about it or come to one of our grand openings, that’s very successful at influencing their community.”
Others agree. “I absolutely think influencer marketing is legit,” Lee says. “That’s where Twitter, particularly if you’re a commercially oriented bank, could make a lot of sense. The people you follow, especially the ones that you think are really impressive, I mean, if they’re touting something, or talking about something, not ‘salesy,’ but you put the halo around them … I think it’s powerful.”
Seacoast, like other banks, is still working to figure out how to use influencers. “We’re just not there yet,” Lee says. “We’re still in that phase of working on continuing to methodically produce content. We’re not going crazy with it, but having our bankers share it across their networks is powerful. That’s very powerful. If you’ve got 100 bankers, and they’re all sharing a thought leadership piece across their networks, you can reach thousands and thousands of people. And the cost to deploy that is really just the cost of the content.”
The key is to make it authentic, says Lane. “You’ll see a lot of influencers where this week they’re hocking such-and-such tequila, and the next week they’re hocking someone else’s brand,” she explains. “Consumers see right past that. If every week they’re saying their favorite tequila is a different brand, consumers aren’t going to listen to that person. So you have to be really careful, and make sure it’s somebody that’s going to come across as authentic.”
In addition to the evolution of specific marketing tactics, another vector of ongoing change involves the makeup and skill set of marketers themselves. What was once a largely right-brained, creative endeavor has become much more analytical and objective.
“When I first started my career in marketing, people would come up to me and say, ‘What do you think about this ad, or what do you think about that one?’” says Arthur Krzycki, vice president of marketing at DUCA Financial Services Credit Union, with roughly $2.5 billion assets in Toronto. “These days I tell them, ‘I don’t know. How is it working? Is it performing? Are you getting a lift? And if you are, then it’s good.’ Even if it’s the ugliest thing you’ve ever seen, if it’s working then, by definition, that’s what it’s supposed to do. You can have the most beautiful imagery, you can have the most beautiful TV ad, you can have the most memorable radio ad, but if they’re not driving you toward the objectives that you’ve set for it, then it’s not good.”
Being a successful marketer today requires a comfort with both the analytical and creative aspects of the job. “Modern marketers have to be comfortable using a whole bunch of new tools that have entered into the mix,” says Chris Kay, head of consumer banking, business banking and marketing at $122 billion asset M&T Bank Corp. in Buffalo, New York. “When you think about the acquisition and retention of customers today, you think about the analytics and customer intelligence you need in order to ensure that you’re doing that appropriately. You think about the role that marketers play in product innovation and development, which is when the digital experience becomes integrated into the value proposition. All of that has, I think, led to a new definition of what a marketer is. The marketer 2.0 has to be balanced and have skills across the spectrum. You still have to be good on brand strategy and good on the creative side, but we are also focused on building talent in the organization that helps us think about the underlying capabilities you need around analytics and intelligence.”
The path Kay took to M&T, which he joined at the end of 2018, offers a case in point. He didn’t come from a traditional banking background. He most recently served as chief innovation officer at Humana, a health insurance company. Prior to that, he was a managing director of Citi Ventures, a division within Citigroup tasked with innovation. Before that, he served in senior operating roles at the retail giant Target Corp. This background, particularly his time helping Target rethink the consumer shopping experience, has proved to be a huge asset.
“Some of the work we were doing at Target in analytics and understanding how to deepen and build loyalty with our guests was leading edge,” Kay says. “And that was all reinforced by a very specific brand strategy — essentially making a brand promise that you can cash in the retail experience. Marketers need to think about that, aligning the message with the experience a customer has. Absent that, you got a problem. I think banks are starting to increasingly understand that.”
All of these changes aside, there are some things about marketing that haven’t changed. In the case of Seacoast, the greatest bang for its marketing buck still comes from direct mail campaigns — though, those campaigns now include content that directs recipients to the bank’s website. “At the end of the day, a CMO has to be able to quantify the return on marketing investment, and the only way to get a return is to acquire new customers who bring with them deposits and loans, and then deepen the relationship,” Lee says. “Where we are right now is that direct mail is still a very important part of what we do. It’s odd for me to say that, given the digital investments we’ve made here, but the quantifiable evidence is irrefutable.”
The point being, it’s not that the old rules of marketing are obsolete. It’s rather that they’ve been supplemented by new rules and processes. Both are important. Neither should be ignored.
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