Financial institutions are increasingly able to leverage a staggering amount of data about how their account holders behave online and off. In unprecedented detail, marketing teams can see what consumers browse, buy and pay, including channel preferences, web sites and pages visited, offers reviewed, preferred payment methods, and more, as well as a wide variety of transactional, personal and demographic information both provided by and collected from consumers themselves.
While the ubiquity of consumer data available has given rise to increasing privacy concerns, the proliferation of digital technology has ironically also fueled consumer preference for high-level engagement, timeliness and relevancy. This intersection of digital convenience, relevancy enabled by properly leveraged data and the quest for elevated consumer experience has necessitated a shift in the way marketing departments fulfill their role of enabling retention and acquisition on behalf of their organizations.
This digital and data revolution is affecting the marketing role in profound ways. Traditional, strictly creative-led marketing tactics are no longer effective in the face of increased consumer expectations for relevancy and a seamless experience.
Today’s marketers are increasingly expected to use data to predict needs and elevate engagement using more personalized, relevant messaging across all channels. Savvy marketers seeking to maximize acquisition and retention efforts must quickly learn how to access and analyze the vast amounts of data available to them to maximum benefit.
While marketing’s shift from creative-driven to data-driven tactics may threaten to leave marketers who are unable to adapt out in the cold, it actually represents a new era of opportunity for marketing departments to elevate their stature within the organization. The measurable nature of data-driven marketing means marketers are better able than ever to prove the results of their efforts — better engagement will lead to improved retention, cross-sell and, ultimately, revenue which will precipitate bigger budgets, more credibility and improved buy-in for future initiatives from executive management.
The Better Data Deficit
As previously mentioned, access to data is not the problem — the problem is more likely too much data spread across various disparate systems, not to mention the wealth of third-party data available. The challenge is how to aggregate the information in an easy-to-digest format and then effectively analyze it to mine valuable insights to drive informed business decisions.
The reality is that marketing departments use data to better understand account holders every day but most likely are not leveraging it to its full potential. In many cases, the data that marketers have isn’t the data they really need, and their data analysis isn’t telling them what they really need to know.
We’ll take a look at 3 ways marketers can use the data they have more effectively to provide enhanced marketing value to their organizations.
What You Know vs. What You Need to Know
Bridging the gap between what you know from the data you have to what you need to know is the first step in elevating marketing’s impact on organizational performance. Here are 3 examples:
What you know: You know the make-up of your account holders.
Of course you know a lot about your account holders. But chances are, you don’t know enough about how your account holders compare to the industry or market. For example, you have a branch in a college town, but you discover that the average age of account holders in that branch is 48 years old. Could your branch really flourish if you had the right products and services to serve the students nearby? Imagine the possibilities if you had a solid understanding of your account holders relative to the market.
What you need to know: What opportunities are you missing?
Your CEO wants numbers. With good data analytics, it’s easy to access the information you need to make the most of your marketing. Conducting an analysis of your portfolio will help you identify the opportunities you may be missing, identify at-risk account holder segments, find the most responsive account holder segments and more.
For example, a demographic analysis of your account holder base matched against industry benchmarks will identify the disparity between the people you’re attracting and serving and the market as a whole. Recognizing this gap gives your institution the opportunity to fill it with the right products and services to attract more of the market.
What you know: All account holders are valuable.
All of your account holders are indeed valuable. But it’s important for you to acknowledge that all of your account holders are not equal in value to your institution.
Most FIs don’t have a way to “value” their account holders and thus don’t know who’s a “high,” “medium” or “low”-value account holder. And these labels don’t depend solely on account balances. It’s all about potential.
For example, one of your high-value account holder groups may not be the oldest or wealthiest. It may be young people with relatively modest income, who are frequent users of online and mobile banking and debit cards and their long-term potential should not be overlooked.
What you need to know: Where you should be spending the most time and effort.
You need to be able to defend your spend. Using predictive modeling, you can get a 360-degree view of your current portfolio and what your account holder segments look like today in terms of accounts, balances, longevity, product and service mix, and so on. A value segmentation study can then help identify opportunities and risks across two key indicators: purchase propensity and attrition risk.
Using these indicators will help you better focus your marketing efforts on those with a greater propensity to buy the products and services that will help the FI meet its strategic objectives. For account holders highly likely to attrite, “up or out” relationship strategies can be designed and implemented to sort truly low-potential account holders from those who are the competition’s best account holders.
What you know: Attrition is bad.
On that note, while no one likes a breakup, sometimes it’s better that way. In other words, not all attrition is bad. In general, losing account holders who aren’t making you money actually helps the bottom line.
For example, if you have an account holder who’s had a basic checking account with a $25 balance for five years and no transactions and predictive modeling indicates little to no future potential, it’s costing you money to maintain the account and process statements. It would not be bad for the bottom line to see that account go by the wayside.
What you need to know: How to attract and retain the right account holders.
Using lifecycle marketing you can maximize the value of each account holder relationship to stay one step ahead of account holder value over the life of the relationship. With data-driven insight, you can develop customized strategies for acquisition, onboarding and cross-selling to reduce attrition and improve lifetime value.
In the acquisition phase, leveraging the right data helps you reach the right prospects and attract the right account holders at the right moment to set the foundation for a long-term relationship. Managing your branch and ATM details everywhere you can be found online at all times to avoid consumer confusion has never been more critical. Effective onboarding helps you mitigate attrition and create organic growth by transitioning your new account holders into satisfied, profitable and loyal relationships.
All along the lifecycle, data drives these initiatives, ensuring that you are investing your marketing dollars where they will have the most impact.
Using the data you have more effectively — as well as leveraging the many sophisticated analytical tools available to effect maximum organizational impact — is the key to ensuring long-term organizational growth and sustainability, as well as ensuring marketing’s value to the FI.
To learn more about how data-driven marketing can help you acquire and deepen relationships, check out our latest article: Four Questions for Getting the Most Out of Your Data.