Maximizing the impact of data analytics for bank marketers

Bank marketers discuss the importance of data analytics, as a recent ABA survey reveals how their work is evolving fast.

By Mark Gibson

ABA recently conducted a survey of its members regarding their use of data analytics. A previous article about the survey focused on important ways bank marketers are using data effectively.This article further explores survey results and will be expanded upon during a session this week at the ABA Bank Marketing Conference in Denver.

Bank marketers have come a long way, according to the ABA’s most recent survey, with the majority comfortable using data to make decisions. Furthermore, they have access to a wide array of customer data. Since most marketers have a multitude of competing priorities, a critical question is: “What are the top uses of data analytics that will have the biggest impact on our organization?” In addition to insight provided by nearly 150 marketers who participated in the survey, Capital Performance Group reached out to several successful bank CMOs to explore this question more deeply.

Interestingly, the strategic objective of ‘customer segmentation’ ranked as the highest priority by survey respondents, followed by four sales-related activities: tracking sales performance; insight into customer behavior; uncovering targeted sales opportunities; and identifying opportunities to increase wallet share (cross-selling).

Top data analytics priorities

Despite having stated these priorities, most respondents admitted that their institution is not very effective in actually using data to accomplish most of these objectives.

Effectiveness using data

Given the gap between the desire or vision and the practical realities and limited analytical resources available to most marketers, this article and the upcoming ABA conference session aim to help marketers prioritize where best to start in order to achieve the largest and most immediate impact.

Segmenting customers for fun and profit

While customer segmentation may initially sound like a fuzzy strategic activity, it allows marketers to add considerable value to their organizations. Maybe that’s why respondents ranked it as their top priority. But how can marketers translate the activity into meaningful results?

At the most pragmatic level, understanding customer segments allow marketing to acquire more new customers at a lower cost. That’s a result that any C-suite will pay attention to.

The first step is to analyze your own customers to understand, from at least an age and wealth standpoint, whom you have attracted.

“I have found there is a real hunger among bankers to see data on their customers,” says John Hanley, SVP and director of marketing at Equity Bank. “If you are able to show them who their customers are, where they are in the market, and how it compares to other markets. For instance, we were struggling to sell checking accounts in one specific branch, and when we analyzed the customer data, we found that a loan-based offer would be a much better fit in that market. The branch employees were able to subtly change their conversations, and marketing was able to modify its approach to social channels and Google locations pages. We found that all of our business categories grew in that market at a rate they hadn’t before.”

Next, ideally, you will obtain market data so you can compare customers with non-customers. This allows you to figure out where you are over–and under-penetrated, and where the biggest opportunity segments are. It begs some questions that you can discuss with your business partners: Why do we do so well with these segments? Are there one or two of the underpenetrated segments that we should be doing better with?

What kind of revenue or profit do we earn from each segment? Answering these questions with your lines of business allows marketing to have a clearer focus on who you should be purposefully going after in a targeted acquisition program.

Once you have established that focus, data and analytics can help you really understand that target customer segment. The more insight you have, the more relevant and motivating your message and offer can be, and the more effective you can target media to reach them.

For instance, where do they shop or look for information? The newspaper or Bankrate?

Whom do they trust? Their accountant or their friends on Facebook?

What financial product(s) are they willing to stray from their primary provider for? Checking? Savings? Mortgage?

How do they compare options for financial products? Visit the branch or various websites? Comparison websites?

And finally, how do they actually buy the financial product? Research shows that many segments prefer to buy online, but most institutions have an online application user experience that drives the customer into the branch. More on this in a minute.

The answers to these questions can often be provided by data analytics, and can make the difference between a mediocre or a wildly successful marketing program, driving your customer acquisition cost down in the process.

Ramping up digital channel sales

Many banks have prioritized driving many more prospects to open deposit and loan accounts through the online channel. This is a perfect ‘use case’ for marketing to use data analytics to help its institution achieve an important and visible goal.

Of course, the institution needs to have a user-friendly online application process before Marketing starts driving traffic. Otherwise, much of the advertising investment is wasted. But assuming a user-friendly online application process, data analytics has several important roles to play.

We’ve already spoken about targeting, but it’s even more important here, and data analytics can help you refine the target while the campaign is actually running. You and your digital media partner can see who is responding and actually opening an account, and refine your targeting to find more of those people.

Similarly, is Facebook, Google, or the website of your local newspaper driving more traffic, and at what cost? Data analytics can help you refine your media plan at least weekly and sometimes in real-time, improving response rates.

And finally, a close eye on your conversion funnel, driven by pretty basic analytics, can dramatically improve your sales results. “Our CEO challenged us to significantly increase the number of checking accounts opened through our digital channel,” says Kris Levan, SVP of marketing and communications at First Commonwealth Bank

“We found that by paying attention to each stage of the funnel our team was able to find many small actionable improvements that added up to an impactful sales increase. By asking questions like: How many landing page visits did our advertising generate? What percent of visits started and completed an application? Who was working on approved applications who didn’t fund an account?” Asked whether the bank has hit the CEO’s goal, Levan smiles and says, “Not yet, but we’ve learned a lot and are well on our way.”

Conversion funnel performance is critical because, as Kris says, a small improvement can make a BIG difference in sales and marketing ROI. For instance, if your checking landing page is receiving 3,500 visits per month and generating 60 accounts per month, a seemingly small 5 percent improvement in conversion of ‘landing page visits to application starts’, and a 10 percent improvement in ‘application starts to application completes’ can translate into sales of 113 accounts per month, an 88 percent increase in sales. Assuming your marketing spend remained the same, your cost of acquiring a new account fell nearly in half. That is the power of data analytics when applied to your conversion funnel.

Approaching personalized selling without automation

Not a day goes by that we don’t see a headline asking when we are going to start ‘personalizing our marketing messages.’ And usually the punchline is needing to buy some new piece of equipment or software. The good news is that your bank probably has most of what you need to start personalizing your marketing efforts without buying that new piece of technology.

Your existing customers’ product ownership data is the foundation for personalized selling, and 88 percent of the survey respondents said they had access to it. That information tells the marketer ‘What does your customer already have with you?’ Marrying that with segmentation data, which we discussed earlier, can suggest what products a customer is likely to own but at another institution. For instance, if 80 percent of a certain segment owns a savings account and they do not have it with you, chances are pretty high that the customer has one with the bank across the street (or on the internet!).

Percent of marketers having access to critical data

Most marketers also have access to product balance data. This provides a nuance that just looking at product ownership data does not permit. For instance, you can use your segmentation information to identify which of your customers are likely to have $100,000 or more in deposits somewhere. Then you can identify which of them have less than $10,000 with your institution, and make them a compelling offer to move the money to you.

To supercharge your product data, append it with your transaction data, which 50 percent of the respondents said they had access to. For instance, which of your checking customers are completing fewer than five transactions per month? We all know that primary customers are much more valuable than secondary users. What campaign can you run to convert those secondary users to primary customers? After all, we know it’s a lot cheaper and easier to convert an existing customer than it is to attract a total stranger.

A similar example relates to debit cards. As Hanley notes: “When you look at your debit card transaction data, you will see customers who either are not using their cards at all, or using the card for certain types of purchases but not others. It’s pretty straightforward to create buckets of these customers and develop campaigns to increase usage, which drives fee income.”

Get started because perfect never comes!

Whether it’s waiting for the right marketing automation to serve a ‘segment of one,’ or waiting for higher quality data or data all in one place, Hanley had some very relevant parting words for bank marketers: “Don’t wait for the perfect data or the perfect strategy, because perfect never arrives. It’s better to figure out how to get started on a few things and get some quick wins on the board.”

Mark Gibson is a senior consultant at Capital Performance Group, a strategic consulting firm that assists banks in making the most of their customer data. He can also be reached on LinkedIn.

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