Banks have always possessed copious amounts of information about their customers, but until recently, used that storehouse almost exclusively to work with existing account holders. Now, as data has increased in volume, so too has the scope of what financial institutions can do with it as they venture outside an established customer base.
“Banks have always known where their customers live, how much they make, how they like to spend their money and how much they spend,” says Dave Macey, senior director at Cognizant Digital Business. And to that end, “customer relationship management tools have been traditionally used to drive revenue from existing customers. But things are changing—rapidly.”
As Macey describes it, "The big shift over the last three to five years is that you can now know as much about your prospects as you do about your current customers. You might not know the person’s actual address, name or Social Security number. But you’ll have a general sense of who they are,” including their spending tastes and the dollar tallies.
This information was historically collected by third-party data brokers. But now you can get it through your digital marketing activities via tools such as site-side data management platforms (DMPs) and digital advertising campaigns with partners such as Google and Facebook.
And all this data, he notes, creates a whole new world of targeted advertising.
With 2017 just a few weeks away, Macey offers two major predictions for the year. “One is that globally, there will be more money spent on digital advertising than TV. It's not a huge difference right now but if you look at the graph over time, TV spending is going down and down, while digital is going up and up.” And when this happens, it will be of historic importance: the first time in almost 50 years that TV is not the dominant advertising medium in the U.S.
And citing forecasts by Gartner, Inc., Macey says chief marketing officers will spend more money on digital than chief information officers. That’s because marketing nerve centers are evolving into data platforms where, once a message is sent out, its effectiveness can be measured.
What’s more, banks can now go to Facebook and Google, tell them the specific group they want to go after, and get help focusing on that group: a practice known as “lookalike targeting.”
“But the complexity is that every ad, every event you do in your retail or branch creation, every social media post—that creates a data point,” Macey says. It also creates a problem, which only compounds when financial institutions turn to outside vendors in hopes of finding a one-size-fits-all solution.
“There are thousands of companies and startups, and I'm being literal, taking advantage of this,” Macey says. “They’re going to marketers saying that they have this great new way to solve all their problems. So the CMOs—who never had to deal with this issue before—they buy it, and when they run it they don't get the results they wanted. It’s because they don't have the operational and organizational set up to do so.”
Instead of a quick fix for turning data into revenue, “You need a new marketing framework,” Macey contends. Here are four steps for getting the job done right.
- Start with an intelligent hypotheses. “You can't just buy these data tools, throw numbers into them and expect them to spit out insights,” he says, adding: “There's so much data, it's easy for groups within a company to cherry pick what's out there and make it look like it's proving their point, when it's not meeting the overall goal of driving revenue.”
- Set appropriate goals. Macey notes that each bank faces a different challenge. “If you're a community bank and simply looking to increase the number of high-value customers, the wealthier people, to open bigger accounts and take out loans, that's one goal. But if you're a super-regional and want to get 10,000 new accounts, even if they're worth as little as $300, that's entirely different.”
- Tap the right people with the right skill sets. “When it works, you're seeing a unified group of executives working on common goals—usually revenue generation goals—and a very clear understanding of the roles, the leaders and what teams are doing based on what the data says.” Specifically, “You need seasoned executives with experience in digital media buying and planning, creative messaging, user experience and, most importantly, digital marketing analytics.” Speaking of the right people, “You have to get executive buy-in.”
- Review and renew. As your understanding of data-revenue connections improves, think of it more as a continued process of optimization as opposed to short-term maximization. “Constantly look at the outputs, the successes, and alter the ad placement accordingly. The most important takeaway is that there is no grand solution. But you can now go in to management and say, 'This is everything we've done to drive revenue and this is where we've been successful'—then tie it all back to the data.”
The potential also exists for plugging customer and prospect data into a CRM, Macey says: “The ideal state is that you have a web tracking IP address, combined with a social profile and email for full customer view. Most modern views of CRM have moved beyond email and incorporate multiple customer touchpoints.” If a prospect visits a mortgage page on a website, for example, “you can then reach them with messaging on Facebook or a banner ad talking about mortgage rates.”
No matter where you stand, it’s more important in the end to take a path that fits your unique situation instead of gazing in envy at your peers and competitors. “The one thing to remember is that this is a brand new world and very few organizations have figured it out,” Macey notes. “In the past they over-relied on external partners to help them, or under-relied because they did things themselves.”
As for going to either extreme: “If your decision is only to give this to agency partners or keep it within your system, it's not going to work,” he concludes. “It has to be a mix of both. There's no other way to do it.”
Lou Carlozo is the managing editor at BAI.