Cyber Marketer

Adapt – Why success always starts with failure By Tim Harford

2012-01-25T07:17:00.004-05:00

This post is entirely not mine but I thought I would share it since I found it quite useful. As a marketer myself I have lived this . . . success always seem to certainly start with failure. Enjoy the post by Tim Hardford.

Adapt – Why success always starts with failure By Tim Harford

What do customers want from their bank or FI? Do you really know?

2010-07-23T07:34:00.006-06:00

The problem of attrition is becoming more challenging for banks and credit unions. An even greater challenge seems to be acquiring new customers/members. The dramatic increase in competition among banks and financial services companies has generated the need for financial institutions to place increased emphasis on customer retention and acquisition.

Banks and other financial institutions face competition from both bank and non-bank entities. For example, in the late 1990’s, there was rapid growth in the housing marketing in Florida. Consequently, the increase in demands for loans attracted high levels competition within the financial services industry.
In the past, banks competed with banks and other financial intuitions for lending business. Now, all that is changing. Many “non-bank” organizations are providing lending services to small and mid-sized companies and individuals.

As a result of increase competition from banks and non-bank financial institutions, many credit unions have become aggressive in their approach to marketing and acquisition of new customers.

The trend these days are for companies to aggressively offer discounts, introductory coupons, and other incentives to lure new customers. However, research in the financial services and other service industries show that these tactics can backfire. There is something to be said about segmentation and a very target approach.

By: Karlene Facey C.E.O. Clarocision Research & Marketing- www.crmfirm.com

Economic Quake Means Opportunities for Credit Unions

2009-09-28T21:42:00.006-06:00

The economic tsunami that has affect businesses over the last two years has created both opportunities and challenges for Credit Unions. On the one hand Credit Unions faired better than banks in terms of stability. Callahan reports that Credit Unions experienced “accelerated member growth and an increased presence in key business segments, with national market share in mortgage and auto lending reaching new highs in 2009.” In a 12-month report recorded on June 30, 2009, U.S. Credit Unions reported a 8.4% growth in shares account balance. But on the other hand some glaring cracks have opened up. These cracks have revealed some incredible opportunities and challenges for Credit Unions.
Clarocision Research & Marketing did a comprehensive consumer perception study featuring Credit Unions in Broward and Miami Dade counties. This study was done over the period of July through September of 2009 and used a sample size of 372 respondents. Several major themes became evident. The following is a minor sampling of such themes.

In spite of the efforts of some Credit Unions to make the public aware that they are open to the community, still over 50% of the public are generally unaware (54.8%). This has significant implications for how Credit Unions market themselves. Credit Unions must carefully segment their market and utilize all the various forms of marketing to get their message out. If after one hundred years more people are not aware of the services offered by credit unions, then obviously, the message is being stymied somewhere.

When consumers think about choosing a Financial Institution their needs shape such decisions. Therefore Credit Unions must position themselves and their products to be one of the choices among many. Since Credit Unions cannot compete on the same monetary level as banks, they still have to offer products and services that are at least as good or superior to those of the big banks. They might not be able to win the brick and mortar challenge but Credit Unions can surely offer unique and diverse products to capitalize on the shaken confidence that many currently have in banks.

One might assume that a good way to attract new customers is to offer them great incentives. Interestingly, only19.9% of respondents chose a primary financial institution based on the incentives offered. The top reason for choosing a Financial Institution was that the bank or Credit union gives a sense of financial security. Credit Unions could benefit much from this sentiment since they are seen as more stable and secure. Unlike banks, where close to one hundred failed in the last year, only very few Credit unions failed over the same period. Since 2009 a total of 69 banks have failed and 8 credit unions, according to BankInfoSecurity.com.

Based on the research done by Clarocision Research & Marketing, thirty-point eight percent (30.8%) of people who do not have an account at a bank are likely to switch or to open an account at a Credit Union. This means Credit Unions have to ensure that they build customer loyalty. This response correlated with the reasons most respondents gave for making a bank or Credit Union their primary financial institution. The more products persons have at a financial institution the more likely they are to say that this is their primary financial intuition. This means Credit Unions can build greater member loyalty by listening more closely to the needs of their constituents and offering them more products that are unique to their life style. This is where careful research and profiling are necessary. According to Kristin Witzenburg, CEO of Market and Sales Logic, Credit Unions can improve their marketing strategies by focusing more on content based marketing. This content based marketing has to be research specific and involve the consumer. Members have to be educated in as many ways a possible about Credit Unions and their services. Otherwise even the ones who currently have accounts at Credit Unions could switch.

An opportunity for Credit Unions is that, with all the efforts that they are making still 60.8% of respondents in Broward and Miami Dade did not have an account at a Credit union. This is a very large market for Credit Unions. This can be seen as both a challenge and an opportunity. On the one had it is a challenge Credit Unions are not getting their message out very well. But on the other hand they have a very large market to which to appeal. The wise approach is to carefully segment and profile this market and develop specific member acquisition campaigns to reach them.

These are just a minor sampling of some of the major themes that arose from the study. If you are interested in the full result or a member acquisition campaign you may contact Clarocision Research & Marketing at www.crmfirm.com or call 954-741-2234.

Which is more important . . . acquiring or retaining customers?

2009-04-21T13:12:00.002-06:00

Many financial institutions fail to establish proper strategies for acquisition of customers and hence they fail to retain them as well. Consequently, many financial institutions are unable to build long-term profitable relationships with the vast majority of their customers. According to research firm Celent Communications, retail banks face challenges in building customer relationships, especially in the United States. While annual customer attrition rates are 2 percent in France and 4 percent in the United Kingdom, U.S. rates reach double digits. A survey done by Council on Financial Competition has determined that the U.S. attrition rate in 2002 averaged 16 percent. I believe, in order to address the issue of attrition it is important to find out why customers are leaving in the first place. You must aim to identify the critical challenges that exist in both the internal and external environment which may contribute to the problem. Do you have competitive rates, convenient service and exceptional customer service? How about your response time to customers’ requests? We live in a society of instant gratification. Financial institutions are force to provide services 24/7 through online banking to allow for instant services to customers. However, the point is, once you have a good grasp on why the customers are leaving you can put measures in place to correct the variables that are within your control. Otherwise much time and effort will be spent in acquiring customers that you won’t retain. If you have a leaking vessel there is little point in you trying to keep it filled. You first must stop the leak. This begs the question which comes first the chicken or the egg? Should the focus be on acquiring new customers or on retaining current ones? The truth is you should apply a “both and strategy” instead of an “either or strategy”. Retaining customers requires a thorough analysis of your current customer’s needs, perception and satisfaction level. Acquiring customers require careful targeting and skilful matching of their needs to your products and services. What are your thoughts?

Economic Value of Customer Retention

2008-11-11T19:30:00.000-05:00

Relationship selling is critical to the development of life long customers. It is much easier and cheaper to retain the present customers than to try to attract new ones. A study conducted by Pricewaterhouse shows that a 2 percent increase in customer retention has the same profit impact as a 10 percent reduction in cost. Thus, relationship building would be a good first step in developing a customer retention program. This might include: periodically assessing customer needs and matching them with appropriate products, conducting periodic customer satisfaction research, and developing customer loyalty programs. Learn more at www.crmfirm.com

Tough Economic Times Call for More Targeted Marketing

2008-06-05T09:14:00.001-06:00

In tough economic times credit unions need to increase their marketing efforts. However, to get the most bang for their buck, they need to be more strategic and targeted in their marketing efforts. The economy has created havoc in the real estate industry which has caused many banks to fall into financial hardships. Despite that fact, credit unions continue to do well. Based on a report issued by Callaham & Associates, credit unions have found a way to transcend the economic turmoil and are performing at phenomenal levels. In fact, credit unions posted $60.9 billion in loan originations in the first three months of 2008, the highest volume ever for the first quarter. Lending activity was led by an incredible 53 percent jump in first mortgage originations versus first quarter 2007. Share balances are growing at the fastest rate in four years as dividend payouts continue to rise despite a falling interest rate environment. Credit union membership now tops 88.9 million.

What does this mean for Credit Unions? On a macro level, the financial services sector is challenged. Banks are seeing massive write downs and losses. Credit Unions, despite the growth that they are experiencing, can honker down and try to weather the economic turmoil, by refusing to spend. On the other hand this might just be the time to expand. Consumers that have become frustrated with banks might just be looking for more stability and security. Credit unions have proven themselves to be more stable. Hence this might be the time for Credit Unions to increase their market share by expanding their membership. A credit union however, does not want to be indiscriminate about how it adds new members- customized research needs to be done. Credit Unions can analyze their current membership to determine the most profitable members. Then they can use that information to construct a profile of the kind of members they need to attract. Such information can be tied to effective consumer research to design strategies that attract the right people. In fact Carolana Research & Marketing has developed a customer retention strategy that does just that.

Now is the time for credit unions to increase their market share by doing what credit unions know to do best . . . helping those in the community who are struggling to achieve financial fitness. This can be done in such a way that allows credit unions to maintain their financial viability while extending a lending hand. Targeted profiling will allow credit unions to identify profitable members who have benefited from the credit union’s programs. This allows for a more focused and targeted prospecting approach. Such an approach typically translates into less waste and higher return on investment. Carolana Research and Marketing has developed a model to help credit unions to become more targeted in their marketing.

CONQUERING THE RETENTION CHALLENGE

2007-10-01T08:22:00.000-06:00

There is much talk today about retaining customers. However, many organizations haven’t got a good grasp of why customers are leaving. How then will they be able to prevent it from happening? In order to address the problem of attrition it is necessary to evaluate your own environment and processes to determine the best strategy. One common mistake many banks, credit unions and other organizations make is to copy the strategy of others without much thought of whether this strategy even works. A prime example is the wide-net or the one-size-fits-all approach of throwing big incentives at customers to entice them to join a particular financial institution. Then what? Many of these customers leave after the promotion is over to join the next bank that is making an attractive offer. As a consumer and a past bank and credit union employee, I have watched this happen time and time again. It’s no wonder customer attrition is highest within the first six months after joining. Bank Marketing Association indicates that banks lose up to 40% of new-to-the-bank customers before their first anniversary. What’s even worse is the fact that most banking relationships take four to eight months to become profitable. Hence, why not invest more in retaining the current profitable customer, rather than over investing in "un-focused" customer acquisition tactics. Retaining customers requires a through analysis of your current customer’s needs, perception and satisfaction level.

Is Marketing Segmentation Obsolete?

2007-05-24T17:06:00.000-06:00

In the early 2000’s, in an effort to compete many banks moved away from segmentation to saturation marketing using the wide net approach; “Cast a wide net and catch whatever you can.” Segmentation is the process of dividing the market into groups of common characteristics and tailoring your marketing efforts to each group. However, in the era of free checking many banks moved away from the idea of marketing segmentation to mass marketing. Is marketing segmentation obsolete in the banking industry?

Of course one also has to give some credence to this change, since it is also possible to define the target market too narrowly. When this happens there might not be a big enough market to achieve profitability. The question still remains, however, is market segmentation obsolete and is the wide net approach the more advantageous path