Cass Knowledge

Transcription

1 Cass Knowledge How does marketing add value in financial services? Kendal Mott; Professor Vince Mitchell, Cass Business School October 2013

2 How does marketing add value to financial services? The financial services industry in the UK is still trying to recover from the crippling aftermath of the global financial crisis that resulted in consumers losing trust in financial services institutions and being wary of investing long-term as the economy struggles. Marketers in the industry are not only pressured to beat these challenges and provide increased value to their firms, but also prove the value of their marketing efforts to key stakeholders. Financial services marketers have a tremendous opportunity to help the financial services industry recover by creating tangible, long term value within their firms. The purpose of this paper is to analyse how financial services marketers in the UK have been creating and measuring value post-financial crisis and to offer recommendations on how financial services marketers can maximise value added to their firms.

3 The primary research centred on the nearly 400 campaigns submitted between 2010 and 2013 by UK marketers across the industry for the Financial Services Forum s Awards for Marketing Effectiveness. Each campaign s tactics and success metrics were coded to facilitate trend comparisons, both overall and year over year. Further, a pilot was conducted amongst twelve randomly selected applications for a deep-dive case analysis on the challenges financial services marketers are trying to solve for and the steps marketers have taken to add and prove value for their firms. The research aimed to answer three questions: 1. How are Financial Services Marketers Adding Value to Their Firms? How marketers are providing value to their firms is as unique as the challenges and issues that marketers are trying to solve for. The in-depth study of twelve cases revealed increases in sales interest and sales/revenue/new customers were the most commonly cited ways of adding value, while others included awareness, website traffic and engagement. Interestingly, most of the firms looked to outside sources, such as independent surveys and Experian market data, to devise campaigns suggesting that marketers need extra help when deciding and devising campaigns. There was not one single tactic used by a majority of firms in the larger study, though PR and online advertising came close, at 50% and 46% respectively. Social media however is becoming more commonly adopted, used by only 11% of the campaigns in 2010 and now used by 43% of the campaigns in The increased adoption suggests that each year more financial services marketers find value in social media as a way to cultivate relationships with their target market. Events usage increased as well from 16% in 2010 to 35% in 2013, further suggesting that marketers are increasingly finding value in one-on-one interactions with customers through events including customer networking conferences and sponsored thought leader panel debates. Corporate Social Responsibility (CSR) was the least used tactic, only cited in 2% of campaigns. Despite the consumer outcry for the industry to be more socially responsible, that financial services firms have not found that CSR is a useful component of their most successful marketing campaigns. Finally, direct MMS messages and mobile advertising are newer technologies that were cited in only 3% and 4% of campaigns respectively. This suggests either that financial services marketers are not at the cutting edge of successfully adopting new technology for marketing, or that they are simply are not finding value in implementing new technologies as part of their advertising campaigns. 2. How Much Value are Financial Services Marketers Adding to Their Firms? The amount of value financial services marketers added to their firms proved more difficult to measure. While 50% of firms listed response rates/sales interest as a metric of success, and 49% listed revenue/profit/share price/market share, it was unclear if the campaign contribution could be isolated as part of that metric.

4 In general, there was no drastic change in the reported metrics used as a measurement of success during the four year time period, suggesting that though tactics might have changed, the metrics used to determine campaign success is relatively unaffected by tactics used. The largest positive change in metrics was social media buzz, including likes and mentions in various social media platforms, used by 1.8% of campaigns in 2010 and 20% of campaigns in More than half of those companies also reported using finance metrics as well suggesting that social media metrics are becoming more correlated to financial metrics. The largest negative change in metrics was campaign awareness/consideration, which decreased from 30% in 2010 to 11% in This could show a trend toward tying marketing more closely to hard-line revenue/profit growth, a metric that has stayed consistent over the period measured. Similarly, only about one in four financial services companies have been using brand tracking consistently over the four year period measured. This statistic raises the question of whether or not branding in financial services is irrelevant in the eyes of financial services marketers or it is just too difficult to track. From the in-depth analysis of 12 cases, none of the financial results were isolated and related only to the marketing action. For example, when looking at the campaign impact on overall sales, it was unclear if there were other factors influencing the amount of sales overall, such as other sales and marketing initiatives or even external factors such as time of year. Lack of isolation in these very important campaign metrics dilutes the impact, making it difficult to measure the value added to the firm as a result. That, said, there were many metrics in the case analysis that were proven to be isolated, such as online ad click through rates, number of leads, number of campaign asset downloads and campaign awareness tracking. The actual amount of value added by financial services marketers to the firm is difficult to determine using the entire dataset as the results were presented quite differently from application to application. A sample of individual applications that won the award in their category gives examples of the amount of value added to financial services firms as the result of various marketing campaigns. A direct mail campaign to consumers saw: o A 250% increase in year over year product sales o 21% conversion rate of branch visitors that bought the product o 6% increase of customers in campaign target o 1% conversion rate of mailers sent to sales o 4,700 incremental sales o Cost per acquisition of 128 A PR campaign saw a GBP 51 million raised in equity at a 20% premium A campaign that included creation of a Facebook app and competition, Twitter activity, Facebook advertising and PR saw: o 2.98% conversion rate of quotes to sales o Press coverage value of GBP 1 million

5 A campaign targeted at current customers that included a mix of direct mail, personalised , telemarketing, preferences survey and creation of a customer-only website saw: o 20% increase in sales o 5% increase in customer product holdings o 30% increase in targeted cross-sells o 29.5% increase in outbound call to sale conversion rate o 36% increase in inbound calls to sales conversion rate 3. What Should Marketers Do to Add More Value to Their Firms? There are four recommendations for marketers in the financial services industry to increase and better prove value added. Within each recommendation are examples of campaigns in the dataset that got it right and campaigns that missed the mark. 1. Align campaign goals with company goals: Campaign goals should aim to solve a problem or challenge the firm is facing. a. Do this: One firm was experiencing a GBP 1 billion shortfall of sales in their savings division. To counter the shortfall, the marketing team set out to drive a savings balance of GBP billion through the creation of a new product and advertising campaign. b. Not that: Another firm was being challenged by the increase in investors turning to information online to educate themselves before making an investment decision. To help solve this challenge, the firm s marketing campaign goal was to engage with investors seeking information, a vague goal that could mean different things to different people. 2. Keep close to you customers: The financial services industry has made some sweeping changes over the last several years as a result of the financial crisis. a. Do this: The marketers at one firm researched the market and discovered that their customers were leery about long-term investing and sought peace of mind that their money was safe. They also found that consumers did not want to lock themselves into an interest rate. To meet these challenges, they created a product that offered the safety of a fixed-term investment but at a rate that moved with the Bank of England, capitalising on the new needs of the market. b. Not that: Another firm aimed to deepen relationships with high net worth clients by creating an online community that offered high-end experiences. Rather than surveying customers to gauge the type of events that customers would be interested in, they spent a large amount of time and money to put together a large number of events that may or may not be of interest to their clients. 3. Create an infrastructure to quantifiably measure added value: Accurately measuring the impact of campaigns will help marketers truly prove campaign value.

6 a. Do this: One firm had a sophisticated infrastructure to track campaign goals. Brand tracking was used so adjustments to the creative messaging could be made throughout the campaign. The firm also used a statistical econometric evaluation of the campaign s commercial impact. b. Not that: Another firm measured their value added by conducting online surveys. The surveys provided them with commitment, awareness and net promoter scores as well as qualitative feedback, but only a vague impact on financial metrics. 4. Be more accountable: With measurable campaign goals, it is up to financial services marketers to meet (and hopefully exceed) them. a. Do this: One marketing campaign had a very clear target that it needed to meet in terms of sales for a specific product. The campaign fell just short at 96% of goal. Despite not meeting its goal, the firm s marketers were able to prove the total sales impact of their campaign, more than making up for the 4% shortfall. The campaign generated a total ROI of 674%. b. Not that: Another marketing campaign had a goal to deliver increased response rates. They proved their value by looking at the gross response rates, comparing the month prior to the campaign, February, with the first two months of campaign run, March and April rates of 100, 153 and 133 respectively. Though it looks as if the response rates did increase, it is unclear if March and April response rates are usually higher than in February, which would mean the campaign was not necessarily the driver of the increase in response rates. Conclusion It is clear that marketers are adding value to their organisations, but often that value is not easily measured. The recommendations of this paper aim to help marketers gain more credibility in their organisations by not only driving more value, but proving the value added. How does an campaign create value for the business? This same kind of question is increasingly going to be asked across all types of campaigns and marketers need to be equipped to answer them. There are several resources listed below to help financial services marketers meet this challenge: Marketo s Definitive Guide to Marketing Metrics and Marketing Analytics Kristen Luke s article entitled Measuring Marketing ROI from the February 2013 edition of the Journal of Financial Planning Booz Allen Hamilton s 2007 report entitled Climbing the Learning Curve: Understanding Marketing ROI in Financial Services