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ARTICLE

TCS 2019 CMO STUDY

 

How Financial Firms Personalize Content to Convert Prospects into Customers

Sunil Karkera
Global Head, TCS Interactive
James Wheless
Global Managing Partner, Consulting & Services Integration, Tata Consultancy Services
Lakshmi Ramesh
Head, Media Center of Excellence, Cognitive Business Operations, TCS
Lisa Fairbanks
TCS Product Management Leader Customer Experience Strategist and Customer Analytics Innovator

Introduction

This report on marketers in the banking and financial services industry is based on TCS’ larger 2019 study on digital marketing opportunities for CMOs in 11 global industries. The findings of this report pertain to just one part of the study: how marketers in this sector are using digital technology to personalize communications intended to convert prospects into customers. Marketers create communications to achieve this goal in what we refer to as Stage 2 of the brand experience. (Converting prospects to customers is one of four stages; we are also issuing reports on what marketers from select industries are doing in the other three stages.)

We surveyed 63 banking and financial services firms in North America, Canada, Germany, the UK, and the Netherlands. Of course, every banking and financial-services company that we surveyed had marketing programs in Stage 1 (generating awareness of their companies’ products and services to prospects). (See Figure 1.) While fewer financial marketers were active in the other three stages, overall the sector remained highly active compared to the average of the 516 marketers we surveyed across all industries.

In Stage 2, 81% of financial firm marketers said their function creates communications, compared with 72% for all industries. Similarly, 49% of financial industry marketers created communications in Stage 3 (post-sale customer support) vs. 37% for all industries on average. And 59% develop communications for Stage 4 (cross-selling and upselling to existing customers), versus 47% for all industries.

Among the 11 sectors, banking and financial services marketers were the third most likely to be active marketers in Stage 2, behind only retail and automotive companies.

The CMOs we surveyed and interviewed said their marketing departments will increasingly be involved in all four stages, suggesting this industry’s marketers are relatively advanced in digital marketing. However, the survey data reveals that at 81% there are some unexploited opportunities for financial marketers in personalizing communications in the Conversion stage of the brand experience.

Among the 11 sectors, banking and financial services marketers were the third most likely to be active marketers in Stage 2, behind only retail and automotive companies.

Key Findings in Stage 2—Converting Prospects To Customers*

#1 Financial Marketers Are Capitalizing on Digital and Traditional Communication Channels

Banking and financial-services marketers’ channel choices largely resemble the overall survey average for all sectors. The survey results show that financial marketers are widely committed to communicating with prospects via online ads (100%), the company website (100%), online videos (98%) and field outlets such as retail branches (98%). (See Figure 2)

There are, however, a handful of notable exceptions where financial marketers stray from the norm. For an industry built on trust and reputation, they are significantly less likely to deploy ads on free-wheeling online review forums such as Yelp; only 2% of financial marketers choose this channel, versus 9% for all industries. Similarly, fewer use print media advertising (88% vs. 94%) or contact centers (80% vs. 86%).

On the other end of the spectrum, financial firms are much more inclined to commit advertising dollars to broadcast media (86% vs. 77%). Nearly a quarter (24%) use direct mail, a channel that for the Conversion stage has largely been largely abandoned by every other sector with the exception of telecom, according to the survey results. As “junk mail” has become less common and the science of targeting mailings to prospects has improved, a significant minority of financial marketers is apparently seizing the opportunity. Florida’s CenterState Bank calculated its cost per sale for direct mail as a modest $169, with the most interesting targets being commercial loan prospects.

* Note: While 51 media, entertainment and information companies participated in the survey, the findings below are based on the 33 companies that create marketing content in Stage 2.

At 86% financial firms are much more inclined to commit advertising dollars to broadcast media vs. the average 77% for other sectors.

Surprisingly, 24% use direct mail for the conversion stage, a channel that has been largely abandoned by almost every other sector.

#2 Financial Marketers Rely on Demographics but Could Benefit from Harnessing Other Data Sources

Personalized marketing is prevalent in the banking and financial services industry. Only one of 51 financial marketers active in the Conversion stage indicated their company does not personalize communications. But the sector largely trails others in capitalizing on rich data sources to personalize communications to prospects. Four out of five financial marketers said they use demographic data (which has long been in use, before and after digital channels emerged in the 1990s). Of the five data sources covered in the survey, this was the only one where 80% usage by financial firms exceeded the 78% cross-sector average.

Financial services CMOs deploy demographic data more than twice as commonly as any other data source, each of which fell short of the cross-sector survey average. These sources include past buying behavior with other companies (used by 39% of financial firms, versus 44% overall), web traffic (27% vs. 47%), social media behavior (37% vs. 41%) and real-time location data (33% vs. 44%). (See Figure 3.)

Our survey results show that respondents from financial firms use about two data sources for personalization. This means that the vast majority use demographic data and one other source. Fewer than 25% exclusively use two or more recently developed data sources, such as web traffic and social media data. Considering the richness of available data and the ability to harness AI and machine learning, financial services firms have substantial opportunities to improve prospect targeting. For instance, in an interview with a large bank, a marketing executive said it is working on identifying exactly which individuals are in the market for large purchases, to improve the conversion rate for its credit-card business.

The variety of available data sources combined with AI and machine learning to mine those sources means that financial services firms have substantial opportunities to improve prospect targeting.

#3 Financial Marketers are Less Aggressive in Capitalizing on the Breadth of Personalization Opportunities

The marketing personalization tactics most frequently used by banking and financial services firms to convert prospects include communicating useful information, deployed by 70% of financial services respondents and providing special deals (62%) based on knowledge about prospects. About a quarter also tailor the graphic design of their communications (26%) and connect prospects with videos that are relevant to their needs (26%). (See Figure 4.)

Compared to other sectors, banking and financial services companies are somewhat less likely to use a breadth of such personalization tactics. Of the 356 of all surveys whose companies are using data to personalize communications in Stage 2, on average each company uses 2.04 tactics, while financial firms use 1.84. Only companies in two industries deploy fewer personalization tactics: automotive (1.63) and healthcare and life sciences (1.67). Considering the complexity of financial services and clients’ diverse needs, this represents a competitive opportunity to exploit data for providing a better experience and converting more prospects into customers.

Banking and financial services companies are less likely to use a breadth of personalization tacts. Financial firms use 1.84 tactics whereas the average cross-industry sector is 2.04.

Only companies in two industries deploy fewer personalization tactics: automotive (1.63) and healthcare and life sciences (1.67).

About This Research

Demographics

We surveyed 63 banking and financial services firms in North America and Europe. Most (57%) were retail banks, while about a fifth each were commercial (22%) and investment banks (21%). (See Figure 5). Most of the firms described their business as B2C (62%), while 24% are B2B, 13% target both B2B and B2C, and 2% are B2B2C.

Nearly half (48%) are based in the U.S., 16% are in the UK, 14% in Germany, 11% are in the Netherlands and 11% are in Canada. (See Figure 6.) Forty-seven percent had marketing budgets of $250 million or more (Figure 7), and 57% of the firms had revenues greater than $5 billion (Figure 8).

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