Bank Marketers Face Challenging Times With Great Opportunity

After two years of responding to government intervention into the revenue structure of financial organizations, bank marketers are now faced with heightened levels of competition, a more demanding customer base, an unfavorable rate environment and, in many cases, a shrinking budget. But potentially most challenging to financial institution CMOs I meet in my travels is the ability to respond to the shift in the ways we interact with customers and prospects.

The flood of data, channels, devices and changing consumption patterns have marketing departments in financial organizations of all sizes trying to determine if they are prepared. They are reviewing the skills sets that will be required to take advantage of the opportunities these challenges present, and realizing that gearing up may require a heightened level of personal engagement from all members of their team.

These challenges are reinforced by a set of studies that I recently reviewed that surveyed marketers from all industries. IBM's 2011 Global Chief Marketing Officer Study entitled, From Stretched to Strengthened found that the majority of CMOs feel unprepared when it comes to the explosion of data available (71%), the impact of social media (68%) the growth of channels and devices (64.5%) and the movement from mass markets to micro markets (64.5%).

More importantly, several of the areas where CMOs stated they were least prepared were also those they believed would be the most important for their businesses. As shown below, each of the top four areas of preparedness gap are also in the quadrant where the impact on the marketing function was thought to be the highest.

Preparedness vs. Impact on Marketing Comparison - IBM CMO Study, 2011

But while there were many references to the growing analytical side of online measurement and monitoring in the IBM study, only 26% of CMOs surveyed track blogs, 42% track third-party reviews and 48% track consumer reviews. The need for a much better understanding of ROI was referred to many times in the study, going as far as saying that the CMO of today is in position similar to that of the CFOs 10 years ago.

Turning data into action was also the primary organizational issue in Unica's Annual Survey of Marketers, with the need to harness the power of the mobile device and to leverage the potential of truly integrated marketing also ranking high. As with the IBM study, the Unica research indicated that there is a significant gap between desire and achievement, with much more progress needed in the use of insight for better customer communication and measuring the impact of efforts across channels.

Three Most Important Issues for Marketers - 2011 Unica Survey of Marketers

What was interesting about the Unica study was that, while social media definitely registered as the champion of emerging channels in terms of use (53%), the enthusiasm for the channel was less than in recent years, possibly signaling the desire to see more tangible results from efforts. This also seems to be true in the bank marketing industry, where many are questioning the financial impact of investments made in social media and wanting to connect 'fans' and 'follows' into leads and sales.

Just like most other industries, bank marketers are being tested daily during a period of unparalleled change and will be required to respond to these new market realities:

• The consumer is definitely in control of the business relationship, with the ability to shop with a click and change bank partners without ever confronting us face-to-face.
• While margins are thin and the tolerance for fees is low, delivering customer value is the table stake in the game both from a perspective of products offered as well as access afforded.
• There is a greater need for seamless integration of marketing channels with an eye towards both effectiveness and efficiency.
• Accountability for marketing investments has never been more important at a time when bank revenues are at a premium, with new tools for measurement and skills for assessment being leveraged.
• Each of the above realities will require a more robust and continuous level of testing as tools, approaches and consumer attitudes continue to change.

Over the last few days at the National Center for Database Marketing Conference, where hundreds of practitioners met to discuss current trends and share success stories from a variety of industries, one thing was clear . . . there is no silver bullet. In fact, most marketers are working hard to hone their skill sets in a very fluid environment.

The good news is that there are amazing solutions being developed daily to help marketers do their jobs more effectively. The bad news is that the change is continuing at a more rapid pace every day. To be effective, bank marketers will need to have both great learning agility and adaptability to 'what's next'.

What do you see as the biggest challenge facing your marketing department in the coming year? Is your team prepared for the changes ahead? What are you doing to prepare for the new marketplace?

I would love to hear your comments below.

Benefits of Social Media Sign-In Must Offset Privacy Concerns

One of the most important yet tedious components of opening a new account account at a bank is completing the new account form. Whether done at a branch or online, the new account registration process is the first (and sometimes only) time when a bank can learn about a customer's needs, behaviors and expectations of the relationship.

Unfortunately, this process has changed very little over the years and is usually only comprised of gathering the most rudimentary of information from the potential customer (name, address, phone, social security number, account type desired, etc.) and collecting funds/obtaining a signature. The rationale for only collecting the most basic information has been to balance the desire for insight with a respect for the customer's time. This balance becomes even more important in the online world, where a customer can easily abandon the account opening process with little repercussion.

Online Account Opening Abandonment
According to a recent report from Javelin Strategy & Research entitled, 2011 Online Account Opening: Faulty Process Hobbles FIs in the Battle for Customer Acquisition Profitability and Retention banks lost close to $1 billion and 5.8 million customers due online abandonment during the account opening process over the past year. In fact, it was found that only 53% of new account applicants were able to successfully open and fund their new accounts. While some may later go to a branch, many new customers may be lost forever.

The research underscored the importance of delivering a fast and relatively simple account opening process for online/mobile consumers. "Most people open accounts online because they expect it to be faster and more convenient than doing it over the phone or visiting a branch," says Mark Schwanhausser, senior analyst with Javelin. To succeed, Javelin outlined two primary areas of focus:

• Reduce abandonment rates by focusing on usability and simplicity to minimize points of friction.
• Reduce rejection rates for qualified consumers by upgrading and optimizing identity and funding verification.

The research from Javelin is reinforced by research done late last year by Blue Research on behalf of Janrain that found that three out of four web users would rather leave a website than complete a registration process. Among those that would complete a brand new registration, 76% said they would give false or incomplete information. 

This creates an interesting dilemma for banks where every new online and branch based customer could be worth hundreds of dollars in annual revenue and where understanding the new customer is paramount to an enhanced customer experience. On the other hand, the information collected needs to be accurate.

Social Sign-In (SSI) as a Potential Solution

Social sign-in could provide a viable and highly profitable enhancement to the traditional new account opening process. With a single click, anyone who has already registered on Facebook, LinkedIn or most other social networks could have a significant amount of required information transferred to the new account form in addition to insights associated with the social network.

"With social sign-in, there is greater engagement and companies have access to richer profile information because the data elements collected on social networks are more extensive than what firms usually request from customers," states eMarketer principal analyst Jeffrey Grau in his report Social Commerce: Personalized and Collaborative Shopping Experience. When a consumer gives permission to access personal (or business) data on Facebook or another social network, the bank can see more about what these people like and their interests. And the insight can be updated over time as opposed to traditional collection techniques where the insight goes stale.

While banking is definitely different than retail from a consumer's perspective of need for privacy, two-thirds of respondents to the Janrain study preferred social sign-in to completing an entirely new registration form. Interestingly, according to Forrester and Nielsen, the people who preferred social sign-in were also more valuable as consumers and more likely to be active on social networks.

"Consumers are frustrated with the traditional online registration process and will favor brands that make it easy for them to be recognized . . . the rapid growth of social media has dramatically impacted consumer's expectations of websites . . . ," states Paul Abel, Ph.D, and managing partner of Blue Research.

Social sign-in is not unfamiliar to people who use the web regularly. According to recent statistics from Janrain, Facebook is the most popular choice for sign-ins, used by 39% of consumers, with Google being ranked second with 30%. Even Twitter is used by 8% of the respondents even though this network is used to share 32% of the content.

Movenbank Social Sign-In

While still in the start-up (Alpha) phase, Movenbank is requiring it's first members to register and log in using Facebook. Over a breakfast with Movenbank founder and Bank 2.0 author Brett King a few weeks ago in Chicago, Brett mentioned that the current method of new account application is outdated in today's highly digital environment.

"A customer doesn't want to sit in front of their computer or on their phone completing lengthy forms. A social sign-in provides an easy way for the customer to start the process while providing us more (and probably more accurate) information," said King. He added that he has found no regulatory stipulation for the traditional signature card, and that there would be instant cross referencing of traditional databases (possibly credit bureau data) to help solve identification issues.

Of particular interest to King and Movenbank is the enhanced level of insight provided through the integration with Facebook (and eventually other social networks such as LinkedIn and Twitter). With this insight (and the completion of a relatively short survey), Movenbank can create a 'Financial Personality'. According to King, the intention is to provide a unique customer experience where financial solutions can be developed based on the customer's behavior and lifestyle.

Social sign-in also provides the opportunity for social sharing beyond the 'liking' of a product within a social network. By connecting friends that are using the same social channel (with their permission) people can interact, share experiences and potentially even be involved in the product development process. In my breakfast with Brett King he mentioned the possibility of customer panels that can digitally interact and make the Movenbank experience 'richer'.

Security and Privacy Concerns

Along with almost any discussion around social media and banking come security and privacy concerns. How will the bank (or retail site) use my personal information on Facebook or another social sign-in site? How will my information (and identity) be secure? 

Movenbank addressed some of the concerns in a recent blog post stating that Facebook would not be the sole source of information used for setting up an account or determining your needs. In addition, the customer would control what insight is collected and shared. As Finextra stated in a recent post dealing with the issue of security, Movenbank (and others) need to tread carefully when accessing personal data.

Consumer concerns are evident in the comments to a recent blog post in the Harvard Business Review by Larry Drebes, founding member of the non-profit OpenID Foundation and CEO of Janrain. While his blog post is definitely a bit biased towards the benefits and growth of social sign-in, the comments of readers illustrated the sensitivity of people around privacy and the return they need to get for the sharing of their social history. One reader stated, "Marketers are digging the hole for the intelligence community's future mass data-mine, and ordinary people will get the shaft". 

Probably the best response to the HBR post was from a gentleman who stated that each time he is asked for a social sign-in, he needs to balance the benefits with the potential 'risks'. He stated, "Over the past few years , online offerings have become increasingly rich and complicated. I am a heavy consumer of online services and have used social media sign-ins on a number of occasions, Any time I am faced with logging in, I have to look at; 1) The cost in time and effort of completing a new registration, and 2) The value of my information I am asked to ante up". He continued, "My hypothesis is that the entities that are offering social sign-ins right now are more sophisticated in the social space and realize there is a fundamental shift in the way businesses interact with their customers online.

To help alleviate some of the public's concern over both privacy and security of information associated with social sign-ins, the National Strategy for Trusted Identities in Cyberspace (NSTIC) has been established by the White House to improve on the password and log in process on the web. This organization is a collaboration of both private, public and consumer organizations established to develop a common 'Identity Ecosystem that benefits all constituents.

Whether social sign-ins are a 'data capture deal changer as presented by Loren McDonald from Silverpop in a recent blog post or a non-starter as some will profess, it is clear that the sharing of personal information is a value exchange between the potential customer and the business/bank. If a clear value enhancement proposition is not offered in exchange for the insight (or social network) requested, we will be relegated to traditional data collection with the inherit application abandonment that is costing our industry billions of dollars and millions of customers annually.

I would love to hear your thoughts on what Movenbank is doing with Facebook sign-in integration and on the concept of using social sign-ins to enhance and streamline online new account opening. I would also love to hear what enhancements to your current product solutions could be provided with the enhanced insight collected?

How Effective Is Your Bank's Social Media Strategy

Whether it is a company asking you to visit their Facebook page and 'Like' a product or brand or a peer wanting to keep in touch on LinkedIn, people are continually being driven to social networks according to Nielsen's latest report on social media. In this first report of its kind by Nielsen, it was found that social networks and blogs reach nearly 80 percent of active U.S. Internet users, and that social media accounts for 22.5 percent of the time Americans spend online. As expected, Facebook was by far the strongest social media brand.

In addition, it was found that nearly 40% of social media users access content from their mobile phone and that Internet users over age 55 are driving the growth of social networking through their mobile devices. As a result, "there is a need for companies to engage more strategically in the social space than they do currently," according to Radha Subramanyam, senior vice president for media and advertising insights and analytics at Nielsen.

Social Media Demographics, Nielsen Q3 2011 Report on Social Media

With networking continuing to increase, and the need to connect with customers and prospects in the most efficient and effective manner possible, more banks are using social media as part of their overall communications strategy. But, while interacting with customers through social channels can be effective, measuring the effectiveness of your marketing investment is no easy task. In fact, while many of the largest banks in the U.S. and overseas are leveraging many of the primary social networks, their strategies usually involve non-financial initiatives such as sweepstakes, charitable causes, etc. 

For instance, on August 16, Citibank used the front page of the Wall Street Journal to promote its Facebook page. On the Facebook site for Citibank US, visitors were prompted to hit 'Like' to learn how to get special access to Beyonce tickets. According to Jim Bruene from NetBanker there were 36,500 likes by midnight of that day for an increase of around 2,000 fans. Today, the page registers more than 125,000 likes (see below). But what is the return on investment for this strategy?

Citibank US Facebook Page, September 13, 2011

To show how fast what is considered a success in social media changes, we only need to look back to last March when Chase used their Chase Community Giving Facebook page to serve as the foundation for a voting process to allocate $5 million in charitable donations. At the time, this program was considered the industry standard with around 2 million 'likes'. Again, however, there was not a clear linkage between the buzz and revenues.

Chase Bank Community Giving Facebook Page

American Express, on the other hand has built very direct link between their Facebook page and credit card acquisition and engagement with their 'Link. Like. Love.' program. Unlike the Chase strategy described above, the American Express strategy is not limited duration and the program is all about their card product. With 'Link. Like. Love.', followers link their AmEx card using the Facebook platform to receive merchant-funded rewards. As rewards are communicated via Facebook (as opposed to on an online bank statement), the customer can link the offer to their card and are prompted to share the offer on Facebook with others in their network for a word of mouth marketing (WOMM) impact. As of today, AmEx has over 2 million fans with over 100,000 'likes' being generated each month based on a comparison to results on July 26.

American Express 'Link. Like. Love' Facebook Page - September 13, 2011

So how do you build a social media strategy that is effective from a financial perspective? How do you know how much to invest in a strategy and whether the strategy is successful from an ROI perspective? There is a great deal of debate today around 'attribution' and the real value of efforts that may not be directly tied to sales. And until we can do a better job of tying intangible benefits such as traffic, fans, mentions and views to some traditional metric, we should continue to be challenged by the finance departments of banks to provide more accurate measurements.

As shown in the infographic below developed recently by MDG Advertising, the vast majority of current measures used by CMOs are 'intangibles,' which by their very definition should prompt caution when using besides metrics like revenue, average order volume, reduced call volume or sales. And while 72% of CMOs cited that social media helped to close business, there was no direct connection between the investment and the return. 

Finally, even though the infographic indicates which social channels were thought to have the best ROI (Facebook), the majority of respondents didn't know what the return was on their investment or did not think there was an ROI. Obviously measurement and correlation needs to improve for social media to continue to grow as a viable financial institution marketing channel.

Infographic from MDG Advertising, September 2011

As with any marketing strategy, your social media strategy should begin with a clear establishment and understanding of your social media objectives. Look at how your competitors and those outside the industry are establishing goals and make sure that your measurement criteria is fully integrated with your current analytics system. Will your social efforts be to increase sales, improve customer service, generate customer engagement/loyalty, assist with product development or simply increase awareness of your brand? 

Once your objectives are delineated, you need to determine what percentage of your marketing budget should be allocated to your efforts. Be careful. Social media is not 'free'. Not only is there a cost for the internal team that manages the program, but there are usually external agency costs as well. In addition, since most banks don't have the luxury of simply implementing a social media strategy and getting immediate traction, most programs will need to integrate traditional media to promote social media efforts (advertising costs). Finally, there are creative, placement and tracking costs that also should be considered. 

The banking industry is known for moving en masse towards the next 'shiny object'. I would suggest viewing The Financial Brand's 'Reality Check 2.0: Myths and Facts' Webinar to understand some of the 'false reads' you could be getting from industry publications. While social media should definitely be part of every bank's strategy (customers expect a social presence), be cautious of building strategies that do not have a clear metric associated. Until key performance indicators (KPI) are established and agreed upon, bank marketers would be well advised to move conservatively and focus on integrating all communication channels.

Let me know: How are you leveraging social media at your bank? How are you measuring success? I am interesting in any success stories.

Social Networking Sites is Where the Action is for Hispanics and Emerging Minorities

The new town center and “plaza” is online and it is very relevant to today’s marketers in the new global village. In March 2011 we asked consumers to “please tell us how important to you the following reasons are for using social networking sites like Facebook or Twitter?” Respondents answered on a 5 point scale from “not at all important” to “extremely important.”

The two reasons for using social networking sites that stood up most significantly were: “Keeping up with new trends,” and “asking friends and relatives about their opinions on products to buy.” The graphs below summarize the aggregated percentages for the top two points of the 5 point scale.

Keeping up with New Trends

NHW stands for non-Hispanic White, AA for African American, A for Asian, HE for Hispanics who responded in English, and HS for Hispanics who responded in Spanish to the survey.

Asking Friends and Relatives about Their Opinions on Products to Buy

NHW stands for non-Hispanic White, AA for African American, A for Asian, HE for Hispanics who responded in English, and HS for Hispanics who responded in Spanish to the survey.

Minorities in general are more likely than non-Hispanic Whites to say they use social networking sites for keeping up with new trends and for interacting with friends and relatives about their opinions on products to buy. Latinos who answered in Spanish to the survey are more likely than anyone else to endorse these reasons.

There are several important implications of these findings. First, as we have seen in other results from similar surveys, emerging minorities are more engaged with the new media and are likely to use it as a source of information for their lifestyle and consumer behavior. This speaks strongly to the importance that marketers need to place in being where these consumers are, i.e., social media. Brands that facilitate interaction seem likely to have an advantage as that plays directly to what is important to these consumers.

Further, Latinos who prefer Spanish are even more engaged with social networking sites for obtaining guidance and knowing about things like fashion. While Spanish dominant Hispanics have lagged in the adoption of online technologies, they are now fast adopting them and once they adopt these technologies they seem to strongly depend on them. The synergies of social media and traditional electronic and print media are likely to be important and should be capitalized upon to create conversations and discussions. The virtual social world is opening enormous possibilities to people, and it is creating a new system of influence. Growing minorities appear to be eager to break traditional barriers.

Opinion leaders among these emergent minority groups are very likely to have an impact on their followers who share their background, but also on others who frequent social media sites. Thus, these minorities are not only finding a town center or “plaza” online but are likely to also be affecting a larger social milieu because of the very public nature of social media.
Figuring out the role of social media is still an ongoing challenge for marketers. They should start paying close attention to what is happening in the virtual marketplace. Understanding flows of influence in online networks can be crucial for the marketing of the future.

The data for this study was collected during March 2011. This online sample was comprised of 500 respondents per segment, for a total of 2,500, based on quotas by gender, age, and geographic location. DMS Insights managed the sample and data collection and they graciously contributed their effort to the academic program of the Center for Hispanic Marketing Communication at Florida State University. This study was conducted by the faculty and students of the graduate Multicultural Marketing Communication course offered by FSU.

Latinos Online And The Theory of Telepresence

As mediated communications increase in their importance, the question of how cultural differences may influence how people relate to each other in mediated situations becomes salient. Some time ago I published "A Theory of Electronic Propinquity" which basically states that the degree to which people are comfortable communicating via phone, teleconference, etc., varies with the degree to which there is a feedback mechanism in the channel, the complexity of the information being communicated, the skills of the communicators, the rules imposed on the communication, and the availability of alternative channels for communication that may be preferred over the current choice. A colleague Joe Walther at Michigan State University has done important research on the theory, but no one has done a cross-cultural comparison.

In particular, now that Hispanics are distinguishing themselves by embracing social media and online communications to a larger extent than other cultural groups in our society, cross-cultural comparisons are relevant. My hypothesis is that one of the reasons why Hispanics are eager to embrace social media, blogs, and other mediated online communications is because many of these media provide the feedback mechanism needed for satisfaction with the medium. This is because Latinos seem to rejoice in obtaining immediate feedback. That is, a fluid and spontaneous interaction. Further. As we have been raised with the expectation that we will be part of a close knit social group, we tend to have more skills to interact, even when the communication is mediated by technology.

Clearly, the complexity of the information is a limitation in that complex interactions are more difficult when mediated. Still, social media allows for broad bandwidth, or ample amount of information. Thus, social media is more acceptable in some situations than even face-to-face communications.  The rules for interacting in social media are flexible and it is precisely the lack of rigid protocol that is likely to entice Latinos to find satisfaction in modern online communications.

In other words, I have reasons to believe that new media allows Hispanics to recreate the village where everyone knows everyone else and where interactions are spontaneous. This cultural tendency towards going back to the village, but now in a global metaphor, liberates Latinos and other cultural groups. These are groups that have thrived in environments where interaction is free and enriching of everyday life. Environments where the satisfaction of life is found in social coexistence. Societal norms have stifled human communication but the emergence of online communications appear to be breaking them. That is why Latinos embrace these technologies, because they are technologies of liberation.

Clearly, we need to study these trends and consumer behaviors in much more detail. Still, the observable evidence is that the small village of our ancestors is now back online.

Banking on Social Sites Unlikely

According to a new research report by Forrester, Banking On Social Sites Is A Work In Progress, while social networking sites have a 30-day active population of more than 400 million users of which more than half visit on any given day, that love doesn't extend to banking through social networks. In fact, more than 70% of online households surveyed showed little or no interest in accessing their accounts through social sites like Facebook. Not surprisingly, the reasons for the lack of interest revolves around privacy and security concerns more than anything else.

So, while the majority of large financial institutions continue to look for more ways to leverage social networking's ability to engage customers, resolve problems and ultimately build loyalty, the reach of these sites beyond stronger interactive communication remains to be seen. At the very least, consumers will need the stronger security guarantees, authentication and more that is already afforded customer who use online and mobile banking.

Five Steps to Improved Customer Engagement Through Email

According to Peter McCormick, co-founder of one-to-one communications firm ExactTarget, there are five steps for engaging customers via email.

1. Express Gratitude: According to McCormick, fewer than 50% of marketers send a welcoming email thanking a customer for accepting communication from a brand. This should be the first step after a customer provides their email address. This communication also sets the tone for future dialogue so this is a great time to include a coupon for expansion of the banking relationship and/or a research report or white paper for a B2B client.
2. Take a Genuine Interest: Let the customer tell you about their communication needs and interests to enable more relevant content delivery. A preference center can achieve this where a customer expresses what they want to know going forward.
3. Let Customers Talk and Share: Embed social network icons directly within your email that is sent so your customer can share offers and research with friends. In addition, invite customers to contribute to your bank's blog.
4. Know Your Brand Advocates: Reward those customers that respond to emails, contribute to blogs and share your offers. Expand the loyalty and engagement by inviting those customers who are brand advocates to special events where they can further discuss and share their experiences. Email provides the springboard to a much stronger social media strategy.
5.  Build a VIP Area: Create private subscriber-only access to social networking groups, events, and special resources that address the needs expressed in step 2. This heightened level of engagement not only rewards the customer for their loyalty and engagement, but also provides a source of insight not available through traditional channels.

There is no doubt banks are getting better at leveraging the power of email and social networks. The most progressive organizations are now beginning to differentiate their email communication based on customer engagement and benefiting from improved insight which can assist in future customer service and product development.

Building Long-Term Deposits and Relationships Automatically

Over the past several years there have been a number of financial institutions that have built automatic savings programs where customers can set goals, establish recurring transfers between accounts to fund the goal(s), and track their savings progress.

One of the first programs developed was the Orange Savings Account from ING Direct which greatly simplified the process of opening new accounts for various savings goals. Following the success of the Orange Saving Account, SmartyPig was another program with that same goal in mind, making it easy for a customer to setup savings goals.

A customer can name their accounts, set the deadline for reaching their goals and even use an interactive calculator to determine the amount they will need to set aside each month. What makes Smartypig unique is that they added a social element to the mix . . . allowing other people such as friends and family members to contribute to the customer's goals as well.

The customer can even place a widget on their Facebook or MySpace page. Once the customer reaches their goal, they can either put all of your savings plus interest on a debit card, have it sent back to their bank, or receive bonuses by having the amount placed on a gift card from participating merchants like Macys, Amazon, Best Buy, etc.

While SmartyPig brings unique technology to its enterprise, it remains a one trick piggy (offering only savings accounts) and is a still-small Internet start-up. Being able to grow a savings account product from $0 to $500 million in deposits in less than two years is a phenomenal feat but its success can be assailed.

Full-service banks have begun to copy some of SmartyPig’s basic features and leveraged their own new savings features. For instance, U.S. Bank introduced the S.T.A.R.T. (“Savings Today And Rewards Tomorrow”) program in late 2009 in test markets, giving a $50 Visa gift card to a customer depositing $1,000 or more into a U.S. Bancorp money market savings account and establishing a monthly transfer from their U.S. Bank checking account. If a customer chooses to transfer between $.25 and $5.00 from their checking account into his money market savings account each time he uses his U.S. Bank debit or credit card, the S.T.A.R.T program counts those toward program term fulfillment.

In addition, customers maintaining a minimum $1,000 balance in the new savings account for 12 months will receive another $50 bonus, while U.S. Bank is offering another $100 bonus for establishing an automatically funding savings account tied to the bank’s standard checking account.

Building new products that encourage a long-term savings perspective supports the current trends toward more conservative money management while providing tremendous opportunity for additional cross-selling and relationship building. I fully expect more banks to develop both online and offline savings alternatives and to use these products as part of their onboarding and lifestage communication processes.

Using Social Media for Financial Services Marketing

As I travel across the country, more and more banks are dipping their toes in the waters of social media. While the banking industry has been slower than most industries to embrace social networking, the tremendous growth in social networks, the need to better monitor and participate in social network conversations that are taking place, and the value of reaching customers and prospects on popular social networking sites has banks using Twitter, YouTube Facebook and other sites. This almost instantaneous communication comes with new challenges for banks, however, including informality of communication, higher customer service expectations and another venue for customers to voice discontent.

Nate Elliott from Forrester Research has decided to research and write a report on how financial services marketers can most effectively use social media. He is hoping to include data on how different types of financial customers engage with social media and is also hoping to collect more insight from the bank marketers' perspective.

He is looking for financial services marketers willing to walk him through examples of how you've used social media, talk to him about how you manage risk and work with your legal and compliance departments, and share with him some of the lessons you've learned in social media marketing. He can be reached at nelliott@forrester.com.

Use of Social Networking Sites Among Diverse Cultural Groups in the US

Social Media Marketing depends on the popularity of social networking sites. In the study referred to in my prior Blog we also asked our large multicultural sample of respondents to "please indicate the social networking sites you visit regularly." We listed MySpace, HI5, QuePasa, Habbo, Orkut, FaceBook, Friendster, Bebo, Classmates, WindowsLSpaces, Xanga, Flixter, Tagged, Netlog, Reunion, Broadcaster, Cyworld, MyHeritage, Friends, Reunited, Linkedin, BlackPlanet, and SecondLife. We also provided the option "none."

The chart below illustrates the preponderance of use of MySpace and FaceBook among these emerging minorities:

The first observation is that Non-Hispanic Whites, as in the prior blog, show a lower incidence in visiting these sites regularly when compared with the other cultural groups. Interestingly both popular sites fare best among Hispanics who prefere English and Asians than among anyone else. Hispanics who prefer Spanish and African Americans, however, are still more likely to visit these sites than Non-Hispanic Whites. Again, it is emerging minorities that are leading the future of the digital era in the United States.

The following Chart illustrates that culturally targeted sites do better among specific cultural groups:

Sites that have a preponderance of particular cultural groups, or who target specific cultural groups appear to do well with them. The International Site HI5 and QuePasa do realtively well with Hispanics who prefer Spanish. Friendster, populated by a larger number of Asian Americans does relatively well with Asians as compared with other cultural groups. African Americans are more frequently regular visitors of Black Planet. Thus, cultural targeting seems to have great potential among those who strongly identify with their culture. Interestingly, none of these sites seemed to do particularly well with Hispanics who prefer English or with Non-Hispanic Whites. In the case of Hispanics who prefer English this may be because there are few sites specifically catering to them.

Perhaps even more surprising is that members of all of these online cultural groups visit social networking sites with regularity as the following chart shows:

This last chart illustrates that very few individuals in any of these groups use none of the social networking sites we listed in the questionnaire. This emphasizes the importance that this new social medium has for most online consumers.

Social networking is growing fast and becoming very popular among most Americans. Emerging minorities, however, are leading the trend. Social Media Marketing efforts can capitalize on this knowledge to establish their brands and territories in these social circles.

The moral of the story is: Go market where people are associating with others, and become part of their socio-cultural identity. As culture is rooted in social interaction, brands can become part of these complex patterns of interaction.

Social Media and Emerging Minorities

The new multicultural landscape of the United States is showing some interesting trends, at least with our recently collected data. The Florida State University Center for Hispanic Marketing Communication with the support of DMS Research (an AOL LLC Company), collected data in March of 2008 from a national online sample with over 500 cases in each of the following cultural groups: Hispanics who prefer English (HE), Hispanics who prefer Spanish (HS), Non-Hispanic Whites (NHW), African Americans (AA), and Asians (A) in the United States.


The results are quite interesting. When asked about how often individuals in these groups visit Social Networking sites like FaceBook and MySpace, the following distribution was obtained for TWO OR THREE TIMES A MONTH OR MORE OFTEN:

Hispanics who responded in English and Asians are the most avid users of Social Media with about 35% of them using these outlets 2 or 3 times per month or more often, while Non-Hispanic Whites are least likely to use these media with only 17% of them using them with similar frequency. Hispanics who responded in Spanish and African Americans are in between at about 25%.

What this new and original data seems to say is that emerging minorities are quite a bit more likely than the traditional mainstream of American society to be reachable with Social Media Marketing. It is fascinating that many traditional marketers still talk about "the General Market" when refering to Non-Hispanic Whites and seem to still orient most of their campaigns to this segment. It is revealing that it is precisely those who are not considered the mainstream are at the forefront of the use of Social Media, and apparently eager to participate in what it has to offer.

The lesson of the story is: Those who are forgotten may be your biggest opportunity.

Related links with additional resources:

http://hmc.comm.fsu.edu/

http://www.capturagroup.com/