Big data, small data, and that’s-not-all data: It’s everywhere. But harnessing it to create an actionable strategy can prove overwhelming. Regardless of what kind of data you work with, know that you can—and should—use it to sell any and every product in your bank’s product suite.
Data-driven marketing appealingly provides us with a multi-use resource, not a “one-and-done” activity. This means marketers must connect the insights from data gathered across the customer lifecycle. Doing so compounds the return on investment of any single program or campaign.
Marketers: Wave goodbye to the interest rate wave
For most of the past ten years or so, the financial industry stayed in a largely (and some say artificially) low interest rate environment. The Fed kept rates at or near zero post-2008, when the Great Recession began. We’ve since experienced a rising rate environment, exemplified by the past few quarters until the Fed’s recent rate cut (interestingly, the first since 2008).
Today, uncertainty in the current global economic environment puts a big question mark on the immediate future of interest rates. And marketers don’t control these: the Fed does, and its orientation can be unpredictable. Earlier this year, Fed chair Jerome Powell hinted at numerous rate hikes, a far cry from current circumstances. Some even predict the Fed will cut rates yet again going into the fourth quarter of 2019.
What to do? Instead of fixating on rates, marketers should focus instead on proactive approaches that improve their net interest margins.
Good data's good uses
In general, three things positively affect net interest margins—high loan rates/low deposit rates; deep customer relationships; and strong loan demand. Of course, most banks operate in highly competitive markets, which means they can’t simply charge higher loan rates and offer lower deposit rates to shore up their net interest spread. Fortunately, bank marketers can positively affect net interest margins in other ways.
For one, bank marketers can drive customer growth and deepen relationships by putting more products and services in their hands, or increasing the balances obtained from them. Marketers can also help generate more loan demand, as loan yields can bolster the net interest margin. We see data really come into play in this area. For example, you can use it to:
» build awareness of your brand and product offering with prospective customers
» acquire new customers
» activate new accounts, from the very start of a customer’s relationship, driving fee income
» identify where or whom to contact to encourage accounts and service activation and use
» deepen customer relationships through persona-based cross selling
» boost retention through continued relevant conversation.
But to do this, you need good data. Don’t fall into the “bad data” trap. Not all data is created equal and in many cases what marketers possess doesn’t match what they need—so their analysis doesn’t tell them what they need to know.
In other words: Poor data yields poor marketing.
Think of data analytics not merely as something to “get,” but rather as a business discipline: not unlike marketing or customer engagement. Embed robust data analytics into all bank processes.
Follow the roadmap: Let the data — and customers — drive
Above all, banks can build trust when they improve a customer's financial well-being. That includes showing them how specific products or services will help their particular situation, as detailed in a recent Gallup article.
Instead of making a customer a data-informed offer, banks have traditionally used general marketing that may overlook a specific customer’s needs.
In other cases, a customer may receive marketing for a product he or she already has because the customer’s situation and marketing campaigns don’t connect. Aside from missing a cross sell opportunity, this also risks creating a negative customer experience. Banks should instead strive to become more data and customer driven instead of product driven.
Conduct a diagnostic evaluation of core data or marketing customer information files. When you evaluate whatever core data you possess, it will help you segment customer purchases and reasons for attrition—the latter you can now properly address. This means identifying customers potentially ready to leave your bank or do less business with it, as well as product and service penetration and engagement services.
Today’s marketplace finds the pace and pressure of competition at a fevered pitch. Especially with unpredictable interest rate activity, banks more than ever must utilize data-informed planning to accomplish marketing priorities.
What’s more, you will get to know your customers better—wants, needs, priorities and preferences—and increase the odds of hitting that marketing sweet spot where you optimize how the timing and match of products to customers.
In this way, you can focus marketing dollars on your most efficient, cost-effective and measurable activities. Then watch your customers send you big business, small business and that’s-not-all business.
Traci DeGolier is vice president, data analytics, Harland Clarke.