Despite 2004 marketing budgets estimated at US$9.45 billion by the American Bankers Association, 93 percent of banks do not treat inbound consumer inquiries as sales opportunities. They spend money on marketing, but for what?
Marketing’s purpose is to sell more, to more people, more often, at higher profit margins. But what Datamonitor, New York, uncovered in its “Customer Experience and Sales Effectiveness within the World’s Top 300 Retail Banks” study shows that most banks fall far short in this pursuit.
“We have a tendency, a strong tendency, to do something, but I guarantee if you don’t think it through at the beginning, you’ll go down the wrong track,” says Don Schultz, professor of integrated marketing communications at Northwestern University, Evanston, Ill. “That’s what I find in organizations around the world.”
It’s About Capacity, Not Regional Culture
According to the research, British banks capture basic customer information necessary for follow-up and CRM profiling toward appropriate cross-sale and upsell suggestions only 14 percent of the time. U.S. banks snag this information 41 percent of the time. Mexican banks are an anomaly, snaring customer identifiers 90 percent of the time.
Globally, however, Datamonitor found that 97 percent of banks could not recognize customers’ interactions across banking channels, and 65 percent made no attempt to understand customers’ next steps in deepening their financial relationships before making product recommendations. But perhaps even more shamefully, 32 percent failed to respond to customer e-mail inquiries.
“Correlate what you spend on marketing communications with your sales,” Schultz recommends to marketers who have lost the focus on their purpose. “You have to get some kind of customer information. That forces you to look at what you are doing and who are your best customers, who are your next customers.
“Start to look at what’s a customer worth today, how much should I invest in that customer so that I can measure their return and close the loop,” he continues. But that line of thinking often is lacking across industries. “We don’t think about how much we should invest. We think about marketing programs.”
Web Opens Potential Sales Opportunities
Opening an online channel and spending money on consistent branding across lines of business and marketing to drive traffic online should show returns in cost-efficiency and increased profits.
The Datamonitor research was sponsored by Siebel Systems, San Mateo, Calif. “At Siebel self-service we focus on providing all the features consumers want to use on a Web site,” says Doug Brown, director of self-service product marketing. Siebel encourages alert notifications for important customer relationship milestones, tight integration of customer service across channels and messaging that moves people online.
“When we look at online behavior, it is often more profitable because online customers call less frequently, have a 30 percent higher propensity to buy more products from the sponsor company, show better risk behavior (important for financial services providers), have lower chargeoff rates, are more likely to pay on time and show better, more profitable results,” Brown says.
Still, the commissioned research shows that retail banks need to improve response to customer inquiries, nurture value-driven sales discussions, identify consumer-initiated interactions as sales leads and follow up on them, leverage customer information throughout the sales process and work harder to deliver positive customer experiences. Only then will the greater revenues and customer intimacy follow.
The Customer Respect Group, Ipswich, Mass., found in a separate study that 65 of the 100 largest companies in the United States fail to communicate online as expected by Web-savvy consumers. Overall, 15 percent of all online inquiries sent were ignored.
The 2005 Online Customer Respect Study points to irresponsible marketing management in an era when marketers increasingly face CFOs clamoring for investment accountability.
The company analyzed and categorized more than 2,000 corporate Web sites across a spectrum of industries, and while responsiveness improved overall in 2005 over 2004, it remained the lowest scoring attribute among ease of navigation, customer-focus, respect for consumer privacy, clarity of policies (such as customer data-sharing and mailing list opt out), value placed on customer data and others.
Morgan Stanley, Viacom and Merck were among the companies rated as “very poor” in dealing with online inquiries. Hewlett-Packard, Medco Health Solutions, Sprint, Intel, American Express and UPS were the only companies to achieve “excellent” ratings.
“There’s only one source of income, and that is the customer,” says Schultz. “Did what you do influence an income flow from a group of customers is what counts, not how much exposure you got, not how much buzz you created. Did they give you more money? That’s the issue.”