Crunch time for Financial Services marketers

Following a tumultuous period for financial services marketers and with consumer confidence in financial organisations at an all time low, there's plenty of opportunity for marketers prepared to take a fresh approach.

No matter which way you look at it, the financial services sector has been through the mill in the last couple of years - with database and direct marketers operating in the sector being dragged along for the ride from one calamity to the next. From unjustifiable bonuses to the near collapse of once imperious institutions like Royal Bank of Scotland, it's been a torrid time and the effects are likely to be felt for a long time to come.  

"For one thing, any predictive models that marketers built for the financial services sector prior to the recession can be thrown straight in the bin - they are now worthless," says Steve Cox, Managing Director of Funnel Lead Marketing.  

And it's not difficult to see why he believes this. The market has changed beyond recognition and, most importantly, consumers have changed beyond recognition 

For one thing, consumer trust in the sector is arguably at an all time low. Mention the word 'bank' to a typical consumer and the response is likely to focus around ridiculous bonuses, rewards for failing, exploitation of publicly-owned assets and so on.  

But does this mean that it's a terrible time to be trying to market financial services and products? No, not necessarily, says Luci Penn, Managing Director of REaD UK.  

"What looks like a hopeless situation may just turn out to be the opportunity of a lifetime for marketers prepared to embrace change, up their game and focus on working smarter. The big banks and institutions have never been held so low in consumers' esteem, so this is a wonderful opportunity for next tier organisations prepared to grasp this thistle. Consumers may just be ready for a new offer from a new business that hasn't been tainted by the bloodbath of the last few years."

And that's a very good point indeed - but as Penn points out, capitalising on this opportunity will involve change, and possibly fundamental change at that.  

The evidence that this opportunity exists is all around us, don't forget. Financial services direct marketing has been reigned in hugely compared to the heyday of several years ago, and the offers themselves are typically far more restrained than they have been in the past, thanks largely to a shrinking appetite for lending. Or, to be more precise, a shrinking appetite for risky lending, the very lending that fuelled the boom years that preceded the current recession.  

So does that leave room for manoeuvre for savvy marketers willing to think outside the box? 

"I think you'd have to say it does indeed," comments Dee Toomey, Managing Director of Scentia Data. "Financial services has historically been a major player in data and direct marketing but volumes have plummeted in the last couple of years. There's also been a noticeable shift from acquisition activity into retention and cross-sell and up-sell activity, and you can understand why. Combine that with wide scale mistrust of the biggest players and you have a market full of possibility for financial services marketers."  

But to capitalise on the opportunity, marketers will have to be prepared to do things differently.  

Make it Relevant

"Consider that in a recent survey an overwhelming 70% considered the majority of direct mail they received from financial services businesses "irrelevant" to them," says Cox. "In the same survey, however, 13% said that a substantial proportion of the direct mail they received from these companies was of interest to them, so that tells you that a minority of marketers are in fact getting it right."

One issue that frequently crops up in financial services market research is the thorny issue of the older demographic. Older consumers typically have an instinctive wariness of marketing communications with only 9% of respondents in the above survey between the ages of 45 and 54 saying that a significant amount of direct mail they receive is of interest. Some 77% said outright that most of what drops onto their doormat from financial businesses was irrelevant. 

"This in itself represents a fantastic opportunity for marketers," says Dean Standing, Bureau Sales Manager at meta-morphix. "The older demographic tends to have higher disposable income, it tends to be keener to invest and it is also the most likely demographic to actually need the products or services being marketed to them. With such a vast majority of them seeing what they receive as irrelevant, there is a massive opportunity for marketers to get their direct marketing spot on and hit this audience with personalised, relevant, targeted communications. 

"It's a ready-made audience with all of the attributes that marketers look for."

But to get their marketing "spot on" as Standing puts it, requires a commitment to high quality end-to-end data asset management - and that IS precisely where The REaD Group is uniquely positioned to be the ideal partner. 

"Through REaD UK and its suite of products such as GAS and TBR, marketers can ensure the data that underpins all of their subsequent activity is as accurate and up to date as possible," says Penn.

And the existing data is always a good place to start. Once the data held on marketers' databases is in good order, there may be a need to build the sales funnel by adding in contact details for consumers demonstrably interested in the financial products and services that marketers are selling. 

"The chances are that the information you hold on existing customers or prospects is out of date now," says Cox. "In fact it could be so out of date and inaccurate after the chaos of the last couple of years that it's almost literally worthless to marketers now. So many consumers have seen their financial position changed beyond belief that it's difficult to know where to start for marketers looking to identify solid prospects to target." 

And this, of course is where Funnel Lead Marketing comes in. With huge experience in lead management, the division is able to generate a steady stream of high quality leads that will help marketers grow their sales funnel and drive up ROI. 

"Lead marketing is an extremely efficient way of identifying prospects who are definitely in the market for your products and services," says Cox. 

And if you want to add further intelligence into your database, Scientia Data has a number of excellent solutions. 

"Marketers that want to set their offers apart and steal a march on their rivals in this time of flux need to work harder and make their data deliver more efficiently for them," says Toomey. "Just sending out untargeted or semi-targeted campaigns doesn't cut it any longer and marketers need to think smarter if they want to give themselves the best possible chance of success."

One avenue that more and more marketers in the financial sector are considering these days is SMS. Once touted as 'the next big thing' SMS has still yet to establish itself as a favourite of the direct marketing industry, but Toomey believes 2011 could be the year when it finally makes its mark on the big stage. 

Scientia is also close to unveiling a new INTRA Insurance tool that will allow marketers to target an ever more specific sub-sector of the financial services market, with a lending version due to follow after that. The upshot is that marketers targeting the sector will have an invaluable new tool to help them optimise their marketing communications. 

And holding all of the other services together under The REaD Group banner is meta-morphix. "As a group we offer our clients a holistic, comprehensive data asset management service," says Standing.

And Standing is confident that marketers who take a bottom-up look at how they carry out their marketing communications have a world of opportunity in front of them. 

"There's a whole lot of business up for grabs at the moment in financial services and by getting The REaD Group companies on board as partners, marketers can arm themselves with everything they need to grow their businesses."

Article from Database Marketing, Jan 2011