Category Archives: Commercial Banking

Use of Incentives: Proceed with Caution

Effective use of incentives like coffee cards and gas cards requires both an understanding of the strategic context and a feel for customer behavior. A simple assessment (high/moderate/low) of key variables will provide a clear picture of the applicability and potential desired magnitude of a campaign incentive.

The three most important variables (and their assessment scale) when weighing the value of incentives are:

  • The strategic value of the action to the company (a “high” assessment supports incentive use)
  • The perceived benefit of the action to the respondent (“low” supports incentive use)
  • The barrier(s) to desired action (“high” supports incentive use)

For example, compelling responses to a web-based market research survey have:

  • Moderate strategic value since it’s several steps removed from revenue generation
  • Low perceived benefit to the respondent
  • A high barrier to action assuming the survey is more than a few questions long

Together, these ratings point to this being a solid use of incentives.

On the other hand, a poor application of using an incentive would be to drive someone simply to visit a website or respond to an email: the strategic value is low because providing an incentive trains the customer/prospect to respond to incentives rather than content, the perceived benefit to the respondent is moderate, and the barrier to action is low.

Reports of branch channels’ demise greatly exaggerated

A few months ago, Bank of America reported that it would consolidate reducing the size of its branch network, with speculation that it would eventually close up to 10% of branches (Bank of America has grown its branch network aggressively over the past decade (organically and through acquisition) and even with a 10% decline, the bank would have approx. 5,500 branches).

Some industry commentators saw this announcement as indicative of the long-term demise of the branch channel.   With self-service channels accounting for a majority of service transactions, branch density does not have to be as high, so some branch consolidation is inevitable.

However, the bigger change is the repositioning of branches as platforms for more complex transactions that require one-to-one transactions with specialists.  The staff mix in branches will change, with fewer tellers needed to handle everyday transactions, and greater deployment of sales specialists (Chase recently reported that it grew its sales specialists from 5,454 in 1Q09 to 6,319 in 1Q10).

Does social media really work?

Clients ask us all the time.  Our answer:  depends on what you’re trying to do and whether you’re committed to an ongoing honest dialogue with your markets.  If you’re trying to sell a story in social media, we’d advise you not to bother.  If you’re up for learning what your buyers want, imaginative in finding creative ways to reach them, and capable of articulating how your product or service meets those needs…or not…then it’s a potent channel, to be nurtured and nourished like any other powerful medium.  But marketers beware…marketing was once about creating a dream, and now it’s about being clear, concise, transparent and relevant.  Without these,  you’ll do more harm than good.