Are you ready for a crisis of customer loyalty?
Thursday, December 4th, 2008
In the middle of a crisis, it’s human nature to deal with things day by day. But a
new report from Forrester Research analyst Bill Doyle asks bankers to look ahead and consider what impact the global financial crisis will have on customer loyalty.
The report reveals customer advocacy scores for US banks have fallen to their lowest levels ever – bad news for banks seeking to retain customers in turbulent times.
Closer to home, business banking research house East & Partners has found promoters and advocates are virtually non-existent in business banking in Australia. Less than 1 per cent of all businesses are willing to recommend their bank to a friend or colleague.
Retaining customers will be critical for banks in 2009, and this means bankers are going to have to get better at convincing customers they care.
The financial crisis has driven a larger number of bank mergers, which can be tough on customers. Forrester argues Washington Mutual, Wachovia and Merrill Lynch customers are all likely to experience service hiccups as they are absorbed by their suitors, something which is likely to keep customer advocacy scores low. Westpac and the Commonwealth Bank will also have to work hard to retain St George and BankWest customers.
Customer decisions to switch banks are typically driven by a desire for better pricing (interest rates), lower fees, or better customer service.
Google Insights reveals since the credit crunch there has been an upward trend in the number of searches for “cheap banking”.
Source: Google Insights for Search
The paid ads revealed alongside this search term are also revealing. Direct banking offerings from Macquarie Bank, UBank, and RaboPlus all feature, showing direct banks are ready and waiting to capture this growing group of less loyal and more price-sensitive customers.
Forrester’s Doyle rightly points out “The direct banks’ products are simple and transparent, unlike the synthetic products that got us into the current mess”.
So what are the attributes that drive loyalty?
Forrester’s research has found three attributes which drive loyalty to smaller institutions over larger ones. They are:
1) “My banking institution always honours its promises or guarantees.”
2) “My banking institution offers the best prices, rates or fees.”
3) “Even if not regulated, my banking institution would do what’s right for the customer.”
Perhaps the best thing bankers can do now is try and underpromise and overdeliver?
Tags: bank switching, Bankwest, Commonwealth Bank, customer loyalty
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Why do bankers persist in selling price online?
Wednesday, June 25th, 2008
Few bank marketers will tell you price is the most important selling point, yet that’s precisely what gets marketed online, says NAB chief marketing officer Howard Silby.
Speaking alongside a panel of his peers at last week’s CMO forum, Silby argued most financial services marketing is still “very Web 1.0”. “It’s department store type marketing – there’s a lot of display or banner advertising, and that actually reinforces the point that you can easily price shop online.”
Silby says: “What the industry hasn’t cracked is a genuinely interesting or differentiated brand experience online”.
He was responding to comments from Mark Buckman, the marketer behind the Commonwealth Bank’s controversial Goodby Silverstein-produced TV campaign.
Buckman argued industry thinking has gone beyond “Web point two” to what he labeled “Web point three”: “So using things like artificial intelligence and contextual searching to actually build a more dynamic experience for customers.”
Silby was not convinced, telling Buckman “I really have no idea what Web 3.0 or ‘point three’ is, so I’m looking forward to Mark telling me about that.”
I’m inclined to agree with Silby. There are very few examples of Australian banks embracing Web 2.0 tools for marketing purposes, and most that do exist are the work of institutions other than the Big Four.
The Commonwealth Bank’s local business banking community is a step in the right direction, but a far cry from what the bank could produce if it devoted more time and money to Web 2.0 initiatives.
ANZ’s head of cards marketing Paul Riley agrees bank marketers should be thinking about how to move away from discussing price online. “I think the ability to talk about your brand online, outside of price, will give some banks more of an advantage in the future.”
Silby says one way to do this is with more involvement in communities that are discussing financial services online. “There are not really any great examples here, but there are in the US. Wesabe is an interesting one.”
Wesabe is yet to determine whether it will offer contextual search alongside its discussion groups – to date it has avoided any form of advertising.
It seems just a matter of time before an Australian entrepreneur meets the challenge of combining product and price information with consumer generated content and discussion groups that banks can participate in.
What do you think?
Tags: ANZ, Commonwealth Bank, NAB, Web 2.0, Wesabe
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Is bank TV advertising a waste of time?
Thursday, June 12th, 2008
“Why is any bank these days spending millions of dollars on creating TV ads?” columnist Simon van Wyk controversially asks in tomorrow’s edition of Online Banking Review.
This is something the panelists on last night’s episode of The Gruen Transfer touched on when they analysed the latest set of bank advertisements. You can download the transcript here.
DDB creative director Matt Eastwood agreed advertising a bank is a challenge and that “The problem with a lot of them is that they try to make you love them and it’s never going to happen”.
Van Wyk argues banks should be taking a leaf from the books of the new crop of agile, web-based financial services companies like Wesabe, Mint, Prosper and Zopa – all of which make it easy for people to deal with them, and provide a valuable experience.
He says it’s time bank marketers concentrated on creating value by launching innovative products and services that can be spread via networks, rather than just delivering advertising messages.
Both van Wyk and the Gruen Transfer panelists use the Commonwealth Bank’s most recent “Determined to be Different” campaign as an example.
The question is: Did the campaign work?
CBA marketing director Mark Buckman certainly thinks it did, telling The Australian the campaign had contributed to the bank’s recent 0.34 per cent increase in market share in deposits.”We’ve had month after month of positive market share (growth) in all our key product lines that we haven’t had in years.”
What do you think?
Could the bank have achieved the same growth by launching an innovative new deposit product and releasing it on Facebook?
Should banks be redirecting the millions of dollars they spend on TV advertising to services that provide real value to customers?
Tags: bank advertising, Commonwealth Bank, social media
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Scrolling advertisements – do consumers want them?
Friday, April 18th, 2008
When ANZ launched its new look website last month we couldn’t help but notice the prominent rotating home page advertisements including a numbered interface.
Bank marketers often butt heads over real estate on the home page and which current promotion deserves prominence.
This is one way of making the peace, ensuring more campaigns get a run in a highly visible position on the website.
The Commonwealth Bank has also adopted this approach on its website, albeit in a less prominent position.
Even Google seems to have embraced it, launching scrolling advertisements for Adsense publishers earlier this year.
But are marketers guilty of being inward looking with this approach? Will consumers be more or less likely to click on display advertisements when they have more than one to choose from?
I’d like to see the metrics for site visitors actually clicking on the scrolling arrows to find out if this is about increasing relevance for consumers or just gambling on a slightly higher click-through rate.
Then again, when the outdoor advertisers launched scrolling bus stop ads in 2002 some said they would cause traffic accidents and result in death. Six years on we’re all used to rotating outdoor advertisements, so perhaps the scrolling online ad could be here to stay.
Tags: ANZ, bank advertising, Commonwealth Bank
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