The financial services industry, those often perceived stogy, straight laced and too well-established entities, are firms that provide economic products and services that encompass a broad range of organizations that manage money, including credit unions, banks, credit card companies, insurance companies, accountancy companies, consumer finance companies, stock brokerages, investment funds and some government sponsored enterprises. Known as one of the industries that is notoriously slow to catch on to new technologies, marketers have long been stymied by concerns about security and reputation on public pages, poorly-executed strategies and missed opportunities.
During the national and global meltdown in 2009, purveyors of financial services in general took a hit to their reputations, public perception and consumer trust and loyalty. Given the shortness of the economic recovery and the length of consumers memories formulating a strategic marketing plan to move the financial industry to full recovery and future growth is a daunting challenge to industry marketers.
Marketing in the finance industry is nothing less than a minefield, with controversy lurking around every corner and products that often are physically intangible and beneficially misunderstood by consumers. As regulation surrounding all parts of the finance industry gets stricter, it is becoming more difficult for various firms to market their services. The challenge isn’t beating the regulation, but coming up with creative ways to market products and services. Collective trust in financial organizations remains low and marketing initiatives are often seen as trying to gloss over any shortcomings a financial brand might have had in the past. Simply continuing to pump out traditional marketing campaigns isn’t the answer. Often, owning up to the mistakes of the past and putting forth a plan to address those negatives in the future is the first step in gaining attention and begin restoring consumer trust.
Everyone has an opinion of financial matters, but it is still the minority that holds real knowledge about what products and services are available and how the industry works. This creates challenges in a world where most people find themselves occupied with concerns about when they’re getting paid and how much disposable income they have left after paying their bills, and how to start planning for retirement. For the majority of consumers, seeing the benefits of purchasing a new car, television or the latest fashion is easy but for most consumers, financial services are a mystery and few have an understanding as to why and how any of the products and services should be important to them. Educating the target consumer is elemental to growing a client base. Marketing is wasted effort if it isn’t directed at the right people. The internet is providing an exciting opportunity to find, target and capture the attention of specific market segments faster and more economically than with past media options.
While the finance industry is arguably one of the most challenging of all in which to achieve a successful marketing campaign understanding the challenges and how to meet them, these firms can enjoy a dramatic improvement in their return on marketing spend. Social media is becoming a broader part of industry strategy aimed at engaging customers and is fundamentally reshaping the way financial services companies market themselves, and how effectively they do it. A report from the McKinsey Global Institute, “The Social Economy: Unlocking and Productivity Through Social Technologies,“ found that social technology not only boosts productivity in marketing departments, but also adds 5.2 percent to companies’ top-line revenues. That makes social technology one of the biggest-drivers of value generation in marketing departments today.
Traditional cost-saving strategies employed by financial firms, such as mass direct-mailings, which most often wind up in the trash cans of potential customers, can actually have a negative impact on marketing effectiveness as a whole. McKinsey says that, by using social media-generated data instead, banks can move away from mass-marketing and target consumers based on their specific needs. Financial firms can leverage social technologies to target consumers based on the major life events that many consumers broadcast to their social networks. Some companies like Credit Suisse, Sun Life Financial and Putnam Investments are moving ahead in the learning curve and beginning to take a more innovative approach to content.
Customer acquisition remains a huge cost for financial institutions, according to the McKinsey report. On average, banks and other financial companies spend between $70 and $300 to acquire each new customer. However, McKinsey’s research shows that across banking and insurance, social technologies can actually reduce the cost of customer acquisition by as much as 30 percent and customers who interact with companies on Twitter and other social media are likely to buy up to 40 percent more products and services from those companies. Some industry companies, such as American Express and MasterCard, are already harnessing the power of Facebook and Twitter and Morgan Stanley is effectively leveraging Twitter and LinkedIn for business and client communication.
Forming a comprehensive digital marketing strategy is a key element to successfully advancing the goals of today’s trending financial companies who desire to develop new and reliable sources of revenue, enrich and increase the business value of customer relationships, restore public confidence in their firm and the industry and effectively deal with aggressive and innovative competitors. A successful new strategy will address new core markets and customer segments that will focus on smaller and more specialized market niches.