Consumers Are Increasingly Using Multiple Devices to Support Banking Needs

Traditional bricks and mortar facilities are being visited less as the use and importance of online and mobile devices continues to increase according to Intuit Financial Services' 4th Annual Financial Management Survey released yesterday. According to the survey, while a large percentage of consumers still manage their finances offline (45%), the percentage of consumers using online services from their financial institution has continued to increase annually; increasing 11% since 2009 to 38% in 2011.

The main reason consumers said that they don't visit their bank branch as often as they used to is because they are visiting their FI's website and use their online banking tools (76%). These online banking tools are so important that one-third (33%) said they would switch their relationship to another institution if there were better online tools offered elsewhere.

Source: Intuit Financial Services' 4th Annual Financial Management Survey

The importance of online tools was reinforced by Brett King, author of the bestseller Bank 2.0 and founder of direct mobile banking start-up Movenbank at this year's BAI Retail Delivery Conference in Chicago. "Banking is quickly changing from a place you go to something you do everyday," stated King. He provided a chart from the American Bankers Association and Nielsen Research that illustrated the channel migration occurring today and projected in the future.

Source: ABA, Nielsen Research

It appears that the growth of mobile banking is only limited by the growth of ownership of a smartphone according to the Intuit study. Forty-one percent of all respondents indicated ownership of a smartphone, 23% said they used a mobile banking solution, and an additional 17% intend to try mobile banking in 2012. The primary reason consumers indicated that they do not use mobile banking was because they do not own a smartphone (25%) followed by the fact that they prefer to bank online (22%).

Source: Intuit Financial Services' 4th Annual Financial Management Survey

These findings are similar to the findings last week from comScore that drew a correlation between mobile banking and smartphone adoption. "The investments in mobile made by financial service institutions, along with the continued growth in smartphone adoption, have had a positive effect on the use of mobile financial services," states Sarah Lenart comScore vice president for marketing solutions.

As expected, the adoption rate of mobile banking is demographically skewed. Young adults (aged 18-32) are three times more likely to carry their bank in their pocket, compared to Gen X, baby boomers or seniors. And while 65% of mobile banking users access their accounts through the internet/Web, 28% use a mobile application. "Regardless of age, each customer expects to connect to their financial institution in their own way," said CeCe Morken, president and general manager of Intuit Financial Services.

In another Intuit study of more than 50,000 mobile banking customers, it was found that consumers tend to interact with their financial institution 45% more often if they use a combination of both mobile and online tools. These customer also tended to have larger relationships and a better retention rate.

"While we anticipate that there will be some mobile-only consumers, most people will be using multiple devices on any given day in the future," said Intuit spokesperson Tobin Lee in a conversation yesterday. "Financial institutions must be prepared to deliver financial information and insights across multiple devices (PC, phone, tablet), optimized to the merits of each device it they are going to meet customer's needs. If they don't, someone else will . . . probably displacing a bank's relationship."

The desire for 'anywhere app access' is also supported by a just released study from Oracle entitled, Opportunity Calling: The Future of Mobile Communications - Part Two which found that while there was a stronger preference to use a tablet for mobile banking (34%) compared to a mobile phone (11%), the majority of consumers (55%) would prefer to use both devices. This is important to prepare for since the same study found that almost 30% of the U.S. mobile customers that do not already have a tablet device plan to purchase one in the next 12 months. These findings were also reinforced in last April's, Intuit 2020 Report: The Future of Financial Services.

As customers continue to use multiple channels to connect with their bank, it will be increasingly important to have a 360-degree view of customer device touch points and to leverage the advantages of each device to provide an optimum customer experience. The current anxiety over online and mobile security needs to be addressed at the same time as innovations such as near field communication (NFC) and location based services get integrated into online and mobile solutions. Bankers will need to get ahead of the payments innovation curve and prepare for major distribution channel disruption. In short, banks will need to do a paradigm shift by becoming nimble at a time of increased regulation and consumer scrutiny.

Are today's banks prepared for the massive changes ahead? Or will new online organizations such as Ally, BankSimple, Movenbank and others steal the hearts and wallets of Gen Y and device savvy consumers?

I would love to hear from you.

Seven Steps to Reduce Offline and Online Bank Product Purchase Abandonment

According to Forrester Research, the number of consumers using the Web to research, buy and manage their financial products has grown steadily. In 2009, 63% of US online adults who researched a financial product did so online, with the number increasing over the past two years. Virtually all products were researched, from mortgages and student loans to savings and checking accounts. Interestingly, more than a third who researched products did so exclusively online.

The Web provides inherent advantages when researching and applying, including the convenience of being able to research whenever the user wants, the ease of comparing providers, and in some cases the ability to open the product or service in real time. While the use of the Web is correlated to age categories (with Gen Y using the Internet more frequently), all age groups are increasing their use of online and mobile channels to evaluate options before purchasing financial services.

Online purchase of financial services varies significantly by product type, with complexity and locational considerations driving the sales process. For instance, while almost half of online adults applied for a credit card online, a far lower percentage purchased a checking account online since convenience is a primary consideration, making the ability to walk into a branch to open an account more feasible.

Building awareness and even consideration online, however, does not guarantee the prospect will apply for or open their relationship online. According to a recent Forrester Research study entitled, Injecting Next-Generation Thinking Into Your Financial Services Acquisition Website, almost 40% of online households who researched a financial product online used another channel to complete the sale. This cross-channel selling behavior provides both opportunities and challenges for banks.


Source: Forrester Research 2011

In the example above, a customer may gain awareness through mass media or even direct or online channels, only to further research the service online, over the phone or in person, with the actual purchase of the product or service culminating either online or in a branch office. Each of these steps in the buying process (or sales funnel) can lead to abandonment of the process by the prospect due to complexity, competitive considerations, other prospect priorities or poor sales inquiry follow-up at the bank.

While research indicates that the success rate of moving a prospect from the awareness to consideration to purchase stage varies significantly depending on the product, the research channel, and the ultimate sales channel, the opportunity diminishment can be 80% or higher. In fact, with lending products where there are numerous steps between the awareness stage and loan closing, close rates can be as low as 10% of the shopping universe.

This sales inefficiency provides many opportunities for banks at a time when the cost of new customer acquisition has never been higher and the competition for customer share of wallet is extreme. Some of the ways to improve conversion of awareness to sales include:

• Provide online information from alternative perspectives: Some people will shop for a specific product (credit card), while others research to solve a specific problem (debt consolidation), while still others may inquire from a lifestage perspective (student). A bank website and search engine strategies need to be built with this interplay in mind, providing alternative paths to reach the best solution.
• Leverage dynamic and customized content: Whether the Web, the phone channel or in the branch system, dynamic and customized content needs to be developed to assist in moving a prospect from the awareness to the purchase stage. Understanding segments, purchase intent and competitive position in the marketplace can greatly improve results both online and offline.
• Capture prospect insight from all channels: Surprisingly, some of the newest channels (online) have the best refinement of insight capture through digital tracking and jump page data collection. Alternatively, far fewer banks capture insight from prospects who indicate potential purchase intent by phone, in the branch or through direct mail. Without a formal method of capturing information on how to follow-up on inquiries, we greatly reduce the potential for sales success.
• Develop a multichannel follow-up strategy: In the same way that prospects leverage many channels in their consideration process, it is important to follow-up on all leads using multiple channels. Dependent on the level of insight capture done when the prospect initially inquired about your product or service, quick and consistent follow-up on leads using all channels possible will improve chances for success.
• Monitor the sales funnel: As important as a strong follow-up strategy, the monitoring of each prospect in the sales funnel is needed to better understand the paths prospects take to purchase different products and the success of your follow-up efforts in generating a strong close ratio. Similar to online navigational pattern monitoring, internal monitoring of prospects allows for the development of a sales waterfall that can assist in the identification of service and communication gaps that depress sales results.
• Develop metrics for improved results: Focusing only on the beginning and end of the sales funnel oversimplifies the opportunity cost of lost sales. By better monitoring each stage of the sales process from awareness to consideration to final sale allows for the potential improvement of ROI. For many banks, an improvement of 5-10% in the consideration stage and similar improvement in the closing stage of the process can improve results by more than 100%.
• Online and offline retargeting can provide big returns: Sending an email, making a call or delivering a piece of direct mail to a person who has abandoned a shopping cart has been found to be the most efficient online strategy for all categories of online merchants. While banks don't have online shopping carts per se, they do have abandoned purchase processes for a number of reasons. Retargeting allows you to show your ads to visitors that left your website (or other channel) as they surf elsewhere on the web. These potential customers can get highly targeted ads that are designated to entice them to return to your website and convert their visit into a completed action. Many studies have found that the open rate on these emails exceeds 50%, while the conversion rate can exceed 20%.

In a content-driven world, with the number of messages consumers receive on a daily basis continuing to increase, making follow-up communication personalized and pertainent is extremely important. Therefore, any form of sales communication (even if the prospect indicated interest) needs to respect the prospect's time and privacy.

In addition, the timing of the communication should reflect the channel that the prospect used to shop for a service. In the first 24 hours following an online abandonment, 54 percent of returning customers who make a purchase will do so within the first few hours according to research from the remarketing firm SeeWhy. In other words, more than half of customers will abandon the cart for good if not remarketed within 24 hours of the abandonment. Alternatively, if a prospect is shopping for rates or asking questions about a checking account fee schedule via phone, a person should reconnect within 24-48 hours to answer any follow-up questions.

How many channels can a prospect use to investigate one of your services? Do you capture insight from the shopper and follow-up in a timely manner to determine if any other questions can be answered? Do you measure the effectiveness of these efforts and maintain a waterfall illustrating where improvements can be made? Do you know the cost of lost potential sales if effective management of the sales funnel does not occur?

I am interested to know how your bank manages this process. I also discussed the various views of a sales funnel in a world where prospects enter from various channels late last year on this blog.

The Sales Funnel Revisted

For my whole career, both in marketing and sales, I have understood the concept and importance of the sales funnel. Conceptually speaking, the traditional sales funnel starts with awareness being generated at the top of the funnel (the widest part) and then having the prospect work down the funnel through the stages of interest, consideration, commitment and eventually having a sale made at the narrowest part of the funnel. The funnel framework worked fairly well in providing the foundation for understanding what metrics should be concentrated on and where resources should be deployed.

But what happens in a world where prospects have so many more tools at their disposal to evaluate your offerings on their own or where they skip stages of the process all together?
In addition, while the traditional sales funnel usually ends when the sale is consummated, should that really be the end of sales and marketing's engagement with the customer? Shouldn't we also measure post sales activities that build share of wallet and recognize the challenges of an unengaged customer or one who attrites?

A couple months ago, the people at Focus.com asked 14 sales and marketing experts to view the sales funnel concept in a world of the Internet, social media, word of mouth marketing, massive choice and competition? They reached out to their Focus Expert Network to submit their version of the sales funnel with one condition . . . the funnel and the rationale for their depiction had to fit on one page.

The results just released this week were, to say the least, both innovative and thought provoking. Some experts provided an interpretation that redefined the steps of the sales process and the sources of leads, taking into account the impact of the Internet and the need to more closely integrate sales and marketing. Matt West from Genius.com had a traditional shaped funnel but added the important steps of lead nurturing and cross-selling while discussing the challenge of unknown prospects 'above the funnel'.

There was more than one version that visually looked more like an hour glass, reflecting the important post-sale steps that are required to get a new customer engaged and to build the value of the relationship through repurchase or evangelism. Matt Heinz from Heinz Marketing stated that, "the traditional sales funnel only reflects half the story", ignoring the impact of referrals, repeat business, renewals, etc.

My favorite, however, was probably the entry from Michael Damphousse from Green Leads who threw away the visual of the funnel altogether and provided a diagram of a 'DemandGen Cloud', reflecting that prospects have the power and capability to insert themselves anywhere they want in the sales and marketing funnel. He also reflected that once in the funnel, the prospect can jump to any step they want as a result of web content and word of mouth. He emphasizes the importance of harnessing the chaos to maximize results.

So what does this have to do with banking? First of all, it reflects the impact of the new communication channels such as the Internet and social media. It also emphasizes the importance of going beyond generating a sale, and instead, generating a relationship. Finally, it reflects the diversity of ways to look at the interaction of sales and marketing in any sales process. This is especially true in more complex sales such as small business, commercial, investment services, etc. Whatever funnel you prefer, however, one major challenge needs to be addressed. Whatever the steps, sales and marketing must be in alignment and finance needs to buy off on the metrics and business case. With this uniform and integrated view, the sales process will definitely not be optimized, and it may actually fail.

What does your sales funnel look like? I would love to see even more creative examples of what your interpretation of today's sales funnel might be. Share it with me at jmarous@aol.com and I will post some of my favorites. Oh yeah, the same rules of a one page limit still apply.

Demand Generation Essential for Effective Lead Management in Banking

One of the biggest challenges facing small business bankers, mortgage loan officers, corporate bankers and trust officers is the ability to keep pipelines filled with qualified, sales ready leads. While marketing may execute programs that feed the funnel at the top, sales teams within the bank are still tasked with determining which leads are qualified and nurturing these leads in an environment where buyer behavior is less predictable and the evaluation of alternatives is being done more and more online and through social media.

In many cases, bank marketing and sales team are executing with conflicting strategies while working toward a common goal of generating sales. Leads are often provided by marketing before they are 'sales-ready', while sales is accused of not closing enough leads generated by marketing. This creates departmental conflict and lower sales team engagement due to the expectation of poor lead quality. In most cases, if a lead is not immediately sales-ready, no nurturing of the lead ev ntakes place resulting in program failures.

To address this challenge, many B2B sales organizations in and out of the financial services vertical have turned to technology based Demand Generation solutions, building repeatable processes that effectively manage more interactions using expanded communications channels to attract, educate and qualify a prospect. While not very familiar with this marketing capability in the past, my company's acquisition of Protocol Integrated Marketing Services late last year has allowed me to learn a great deal more about the benefits of this process from a team that are leaders in the field.

The benefits of a Demand Generation process include:

• Tired of arguments between marketing and sales regarding the effectiveness of marketing programs, Demand Generation uses an orderly, scaleable and consistent manner to determine if a lead is qualified and ready to buy. This allows for a quicker response to market opportunities and actionable metrics.
• Demand Generation helps to make marketing efforts more effective and repeatable since the lead management process follows a consistent pattern. This results in an improved opportunity-to-pipeline conversion, deal velocity and revenue stream.
• At a time when large sales are more complex than ever, take a longer time to progress, involve multiple decision makers and may need significant nurturing, Demand Generation helps manage the communication process, building trust through dialogue.
• Demand Generation replaces spray-and-pray approaches like blanket postal or emailing with campaigns aimed at invigorating stale contacts, reducing churn, or winning back defectors - programs that couldn’t run efficiently without automating customer profiling and outreach.

In short, Demand Generation shortens the time and improves the efficiency of B2B sales efforts from program implementation to close. Additional benefits from the process include the identification of the decision maker(s), the problem(s) they are trying to solve for, the most likely decision time frame, and the investment they are willing to make before the lead gets passed to the business developer.

Finally, for those prospects that do not have identifiable 'pains', are not ready to buy, or fail to purchase the financial product or service expected, they are fed back into the sales pipeline for ongoing communication and nurturing.

Marketing still has an important responsibility to develop relevant, multichannel content to feed the lead qualification and nurturing process and stimulate dialogue. Without this content, the Demand Generation engine will slow to a stop since there is no value in continuing engagement from the prospect's perspective. But done well,  a strong Demand Generation process optimizes marketing's impact on sales and helps eliminate waste.

Does your bank have a centralized Demand Generation process to develop, manage and score leads? Is the process automated, with results shared between marketing and sales organizations at your bank? What has been the impact of this process on your sales results?

Small Business Acquisition Strategy Should Correlate to Potential Value

According to Barlow Research, a small business customer ($100K to $10MM in sales) will bring about $5,173 in Net Potential Revenue to a bank each year. This revenue estimate is based the value of short-term and long-term loans, demand deposit accounts and other business banking products balances and fees paid by a small business in 2010. Based on these revenue estimates, a shift in one percent of primary bank market share can increase the Potential Customer Lifetime Value of your small business banking portfolio by approximately $577 million.

Even with this potential, most banks are viewed as underserving the small business market according to research from Barlow, Aite Group, JD Powers, Greenwich Associates and others. The perceived brand of large banks (assets of $50+ billion) became especially tarnished due to big banks' questionable financial stability, slower responsiveness to small business requests and perceived dwindling appreciation for the small business customer. As a result, more small businesses than ever state that they are willing to consider a change in financial institution partner.

The path to rebuilding trust with both current small business customers and prospects is by better understanding the needs of individual small businesses and getting in front of these business owners to present viable banking solutions. But, even though the average small business has tremendous value, just like the retail bank customer, not all small businesses should garner the same amount of marketing investment.

Instead of casting a wide net across all small businesses, your acquisition efforts should be tiered, leveraging product focused and proximity-based direct mail for the smallest businesses, multitouch solution-focused communications for mid-tier small businesses and investing in high-touch multichannel Demand Generation strategies for the highest value businesses where the engagement of a small business relationship manager is most important.

As a sales person for most of my life, I understand that there is no bigger risk to the success of a marketing program, and the credibility of those people who build the program, than the quality of leads I receive. Bottom line, sales people will not work leads with enthusiasm (or at all) if they do not believe the quality of the lead is reliable. This is the challenge most banks face with their small business marketing initiatives.

The best solution we have found to this challenge is to match the marketing communication strategy to the effort needed to close the sale. For that most coveted segment, where the business banking calling officer is required to optimize the value of the sale, we have successfully used a Demand Generation team, that leverages email, direct mail and a centralized outbound calling effort to improve the accuracy of the prospect database (notoriously bad to begin with), identify the appropriate decision maker, help identify a financial 'pain' that can be solved by the bank and score the lead. Only after the lead is thought to be 'ready to buy' is the prospect lead sent to the small business calling officer.

With an investment in an effective Demand Generation program, a bank can spend their time in front of prospects with a need instead of asking the calling officers to follow-up on leads of questionble value. In addition, unlike traditional direct marketing programs that drop and we hope they are followed up on, a Demand Generation process allows for continuous, and immediate, test and learn adjustments and changes in the determination of lead value.

Is small business acquisition and cross-sell part of your marketing plan? Do you tier your marketing investment to the potential value of the relationship and the effort required to close the sale? Are you leveraging multiple channels for your efforts? I would love to hear about your strategies. 

Online and Social Media Emphasis Grows

As the focus on marketing spend is magnified and marketers are asked to do more with less, marketers are continuing to increase their online and social marketing strategies, according to the CMO Council's 2010 State of Marketing report.

The global affinity network, which surveyed 600 of its members from across the world and representing most industry verticals, found that 46% of its members ranked investing in digital demand generation and online relationship building as a top initiative for 2010. The survey also found that 62% will be crunching customer data to improve segmentation and targeting. Most of the respondents plan on doing much of the heavy lifting internally or by specialized outsourced providers.


The survey also saw a significant uptick around online channel integration and multi-channel offerings that deliver the brand promise consistently across online, mobile, in store, and traditional channels.

The challenge for bankers and non-bankers alike will be to find the skill sets to successfully implement these strategies. With only 6% of those surveyed rating their online marketing performance 'excellent' and the majority trying to grow their capabilities, finding people with a successful track record is difficult.