Author Archives: mronan

Trends in Bank Marketing Spend

As banks look at their advertising marketing spending, they are impacted by a number of different forces. On one hand, they are under pressure to reduce expenses in the absence of strong revenue growth. On the other, there are some signs of economic recovery (although dangers remain), as well as growing consumer and business confidence. If this confidence translates into growing demand for financial services, banks will want to be in a position to benefit from this market growth, and so will seek to grow their marketing investment. Another key issue for banks is how they direct their advertising/marketing spending, given the ongoing demise of traditional marketing categories, such as print, and the emergence of new media.

With these issues in mind, EMI Strategic Marketing studied marketing spend levels for 13 leading banks for the first 9 months of 2012, relative to the same period in 2011.  Ours analysis reveals that:

  • Overall marketing spend fell 5% y/y.
  • 5 banks reduced spending, but, significantly, these included 4 of the top 6 banks.
    • The largest percentage declines were reported by Chase and Bank of America, who both decreased spending 17%.
    • Chase had the largest dollar decline, reducing spend by $400 million. However, it is notable that Chase’s 2012 decline follows a 77% rise in marketing spend between 2009 and 2011.
  • Among the 8 banks increasing spending are:
    • Regional banks PNC, Regions and KeyBank, who grew marketing spend by double-digit rates.
    • Capital One, which has traditionally been a heavy advertiser, but dramatically scaled back its spending significantly in the wake of the financial crisis.  Since then, it has gradually returned its advertising spend to pre-financial crisis levels.

Discover 3Q12 Financials: 10 Credit Card Metrics to Track With Other Issuers

Discover Financial Services reported third-quarter financials this week. As it publishes financials a few weeks before other leading card issuers, Discover’s results often act as leading indicator of broader credit card industry trends. Using Discover’s results as a benchmark, the following are 10 key credit card metrics to follow when other issuers report over the next month.

10 Ways That Banks Can Build Small Business Customer Relationships

As the U.S. financial system emerges from the financial crisis and the resulting recession, leading banks are refocusing on the small business banking sector, with some banks reporting strong growth in small business loan originations.

Following the financial crisis, banks are seeking to have a more equal balance between new customer acquisition and optimizing existing customer relationships.  With this in mind, here are ten tips that banks should consider in growing their relationships with small business customers.

  1. Communicate small business commitment. Feature small business in advertising campaigns and other communications (e.g., in-branch merchandising and on their bank website) to demonstrate their commitment to the small business segment and rebuild the trust that was damaged during the financial crisis.
  2. Target high-potential segments.  Identify and target segments that are underserved or have significant growth potential.  Examples include KeyBank focus on women-owned businesses, Wells Fargo’s marketing to minority-owned businesses, and Fifth Third’s targeting of healthcare firms.
  3. Market bundles.  Generate greater revenue per customer, while also reducing propensity to switch, by bundling products and services.  Banks that are currently prominent in marketing small business bundles include Wells Fargo, U.S. Bank and M&T Bank.
  4. Deploy dedicated staff in branches.  As small business owners migrate to self-service channels for day-to-day banking transactions, the branch’s role to selling and relationship development through dedicated small business staff.  Compensation structures for these business banks should reflect customer relationship goals.  Bank of America recently hired 130 small business bankers in Florida, as part of a broader plan to add 1,000 small business bankers nationwide.
  5. Market special offers.  Leverage small business customer data to develop targeted cross-sell offers.  These offers can be based on different factors, such as customer firmographics, activities, milestones (such as anniversaries) and external events (e.g., Wells Fargo markets Appreciation Offers to coincide with National Small Business Month in May every year).
  6. Reward relationships.  Develop rewards programs that recognize the totality of the small business customer relationship.  A standout example is the KeyBank Relationship Rewards program, which enables the business owner to generate points from various activities and business product ownership.  The program also gives anniversary bonuses and allows small businesses to combine business and personal points.
  7. Develop customer outreach.  Develop and implement a communications plan to build engagement with small business customers.  Focus on key stages of the customer life cycle (first 90 days, anniversaries, etc.).
  8. Provide information and advisory tools.  Enhance your positioning as a trusted financial advisor by providing a range of resources to help small business manage their business.  A number of banks are leading the way with online small business portals that combine information, advice and networking opportunities.  Examples include Associated Bank’s Associated Connect, Bank of America’s Small Business Community and U.S. Bank Connect.
  9. Market online and mobile banking.  Reflect small business owners’ comfort with using Internet-based tools to manage their business by continuing to add online banking functionality, while introducing/enhancing mobile banking.  Integrate online and mobile banking with other customer service channels to provide a consistent user experience.  Where appropriate, incorporate sales functionality into service channels.
  10. Sell personal financial services to small business owners.  Capture significant revenue opportunities and reduce the propensity to switch by cross-selling personal banking and wealth management services to small business owners.  This opportunity has been greatly facilitated by recent moves by many leading banks to dismantle their silo-ized organizational structures, which has led to improved communication and data-sharing among different business units.  In addition, banks are changing compensation structures to reflect the value of generating referrals and cross-sell revenues.