Episode Transcript
[00:00:00] Speaker A: Hey, everybody, you're listening to Top Quartile where we bring you stories from the front lines of growth in community focused financial services.
All right, today we've got a special episode of Top Quartile. Coming back on the show is a frequent guest, Tim Keith. Tim, great to have you on the show today.
[00:00:17] Speaker B: It's great to be back. Always good to be on.
[00:00:19] Speaker A: Awesome.
All right, so today we're talking and this is going to be a dialogue around kind of a hot topic. Digital marketing, of course, gets a lot of buzz. What's happening with cookies and everything is always a hot topic. And Infusion has really unique perspective in this space, perhaps a surprising perspective based on where we sit. And so we're going to be talking shop today around just what do we see in terms of best practices in digital and omnichannel marketing from the perspective of being focused on financial services and what has become kind of digital or performance marketing over the last couple of decades? So excited to have you join us for this conversation. So, Tim, when you think about Infusion's perspective, do we start with a channel or an audience?
[00:01:06] Speaker B: Digital marketing has been revolutionary in a lot of ways, particularly the ability for community financial institutions to create awareness in an economic way that has leveled the playing field with the large institutions, the large banks in particular.
That said, digital marketing is not a panacea. It doesn't make people who aren't credit worthy suddenly credit worthy just because you sent them a beautifully executed video ad or they saw that on a website. For us, digital marketing starts with the audience, not the channel. Who do I want to talk to about what subjects based on what the data tells us, that individual's propensity or interest in the subject and capacity to purchase a product or to take advantage of the proposition we're promoting. So if you start there and say, who do I to communicate with about what subjects? And then the question becomes, how can I find them in online environments where I can create engagement through my marketing?
So that's a really simple concept and it goes all the way back to the early days of targeted direct marketing, direct mail, pre email days, where the ability to create audiences based on specific data criteria, in Target with personalized messages based on the data.
Digital's no different there in terms of that discipline, even though it does have some economic advantages over direct mail and particularly for smaller institutions, over general advertising. Yeah.
[00:02:32] Speaker A: And so in this digital context, certainly part of digital marketing is your website. And I would say in this environment, the website and the mobile iterations and mobile apps is really central. I mean that's the hub that people experience your brand. We see that in our own business and as being previous bankers.
That really is the primary front door. Wasn't that long ago that we talked about alternative channels being online banking. And now the most frequent interaction, I bet if you looked at your own data, the most frequent interaction your customers have with your brand is your website. And so that's at the center. And so content and earned media and organic traffic into that site is an important part of the equation.
What's interesting is in financial services, some of the anonymous digital that seems very targeted actually ends up having problems. So like I've done a lot of stuff with paid search in the past for community focused financial services.
The problem with paid search is you're bidding against much bigger competitors in your marketplace and a lot of times that's a very price shopping type audience.
And then it's very difficult to track because somebody might be researching your product online and visiting your website, may have gone to a branch locator, for example, and then ultimately opened the account in branch. Or even if they open the account online, they jumped channels, right? So they might have done some research on their desktop computer at work, but then end up buying on their mobile phone at the soccer field, for example. It's not even the same spot. And so it becomes very difficult to tie all those pieces together.
Whereas one of the advantages of this approach we're talking about here, first party targeting, we start with a person or we start with a household more accurately. And because the benefit we have in financial services is people have to open the account, they have to give us an address that actually allows us to be very precise with both our targeting and the tracking. That's why we don't really worry about cookies, for example. And then you can bring to bear a lot more analytics. So Tim, talk for a little bit about how sort of capacity and propensity plays out in a digital context.
[00:04:45] Speaker B: It's different for different types of products. I think you start with what is the role of digital marketing, what is the goal? And I think you can kind of lay out three broad goals for digital marketing consistent with other forms of marketing as well. One is just basic awareness building. Let's say in the case of lending, there's all kinds of first party data that's highly predictive of active credit behaviors. By leveraging that data, you can over time create awareness in those credit active populations of what you have to offer from a product solutions rate perspective and then how that connects to your overall Brand values, brand themes and so forth, broader brand themes. So awareness at the most basic level is the first thing you're trying to do. The second thing you're trying to do is create engagement.
In engagement is when awareness goes from this most basic form to when the person who is targeted with your ad clicks on the ad in that clicking process is taking a step towards you, is engaging with your content, with your brand, making a connection there, even if they don't buy at that point in time. That engagement is a start of a process where that awareness building has then created that next step forward. And then the third thing obviously you're trying to do is to grow your institution by selling loans and deposits. And so you want to be able to evaluate success based on those three broad overarching goals.
When it comes to capacity and propensity, you're never going to get beyond awareness building without effective targeting, and your awareness building is going to be limited in value. So in other words, if you're targeting someone who is primarily concerned with managing the value of their personal assets, they don't use credit, they're kind of beyond that point in their life. If you're targeting them with personal unsecured loan offer, you may be creating an impression and it may even be mildly positive, but you got no chance of creating engagement because there's no propensity to buy there and no chance of selling that particular credit product because that person just doesn't have propensity for the product. As I alluded to earlier. On the flip side, you can have someone who have a very strong need for credit. They've got significant cash flow challenges, but they've got a 580 FICO and they don't have the capacity to borrow. And so you may create awareness and even some engagement, but ultimately not be able to deliver against the proposition you're promoting.
So it's really the bringing together of capacity, propensity and awareness that makes the process work effectively for both the person receiving your message as well as the institution.
I'll mention one other thing too, just on that awareness building piece.
Even before the pandemic, the nature with which we were engaging with customers was already changing because of technology. We've given customers technology to manage accounts without coming to branches and to resolve a lot of issues without having to deal with our people.
Obviously with the pandemic, you had closed branches appointment only banking, and really forced a lot of the remaining customers who hadn't adopted digital behaviors to adopt them in order to be able to bank and transact and manage your finances at the same time all of that was going on. You have this expanding plethora of online lending options and also online providers of all kinds of other financial services. And they built technology with low friction, specifically designed to create engagement with your customers. And so if we are not proactively creating awareness, if we're not proactively communicating with these high capacity, high propensity segments about the various value propositions that we have to offer, not only are we not creating awareness and engagement, but we're missing opportunities because our customers end up doing business with someone else and they may have a positive view of our institution.
And so a good example would be, you know, I'm a good credit risk thinking about doing a home improvement project. So I'm in the market, a home equity loan or a home improvement loan. I get engaged online with an online lender before I even think about you.
Where I have my checking account, I've already gotten down the path. And you never get a shot at the business versus if you're proactive with your outreach, if you're creating engagement, you're much more likely that that person will ultimately engage with your marketing, your solution messages, and then you've got a chance at getting that business. I think the way things are going, it's not just missing opportunities in that scenario, but it's the risk of the rest of the relationship following that initial product sale right out of your institution. And so it's more incumbent on everyone, but I think especially community financial institutions to be proactive in communicating with high capacity, high propensity segments. And I think retention priority factors in too, because you may have someone who has a little bit lower propensity to buy, but when you do sell them, the retention benefits are very high and disproportionately important to the institution's financial structure. And so, you know, that factors into to again, the question who do I want to communicate with about what subjects and then how do I go find them in digital online environments where I can create engagement?
Last thing I'll say, as you might expect, there's a definite correlation between the conversion of that initial engagement into a product purchase that directly relates to the experience of your online account opening process.
So clients that have more efficient, easier online account opening processes have less abandonment. So that factors in because you can create all kinds of awareness and ultimately engagement. If you can't cash that in in terms of actually meeting that need and turning that into a product sale, you're still going to end up, you know, with a Very low return on your marketing investment.
[00:10:33] Speaker A: And I think to that point it's really important to think about, you got to do digital marketing for digital account origination channels and physical marketing for physical channels. And the reality is, just like you were talking, I think that example of the online car shopping is a perfect one. Customers just looking for solutions.
And so if we're not proactively reaching them in the channels that they are using and then going to markets. And one of the advantages community focused financial services have is you do have local people. And so somebody, they might research your product online, they might see an ad online in their Facebook feed, but they might still want to come in to your branch to actually open the account or vice versa, they may want to open it online and they prefer doing business with you because they can get customer service. I remember a research study I did one time where we were talking to, I guess would be a Gen Z now, and the young lady, very articulate young lady, business owner, had created her own side business and everything and said, oh, she opened a business account. Well, she opened it and we asked why did you open it online and how'd you pick the bank you did? And she said, well, it has a branch down the street. Oh, did you open the account in the branch? No, opened it online. Well, why was that important? Well, because I knew if I want to have a problem, I wanted to go in and see a person.
And so these channels work together both on a promotional basis and a delivery basis. And that's why it's really important to have this orchestrated view. And I think everybody can always improve some aspect of their experience. The example we just talked about, online account opening can be improved. It can be mobile enabled and all those things. It can reduce friction. But one of the fundamental advantages that the community bank or credit union have is it has a local connection in the community, local connection with the people. And you can talk about that customer service.
And then the value of using some of these digital techniques like we're talking about is you don't have to buy the whole audience, you don't have to buy blindly because you're able to use digital media to reach specific people. It allows you to not have a lot of waste and going to market, reaching people across multiple channels where you know something about their capacity, propensity to need that product allows you to be much more effective and much more targeted. And then ultimately from a tracking perspective, we can track how that omnichannel delivery of a message results. It pulls through to actual account openings and that's really powerful.
[00:13:06] Speaker B: Yeah.
So every week we're tracking campaign tiered infusion for all kinds of products, deposits and loans. 95% of campaigns show a direct correlation between the number of ways I could show show the message to the audience and the likelihood that they would purchase a product. So there are times when customer may not actually engage with the digital ad, but the digital ad still contributes to the likelihood of them opening a product through a branch or through a call center because it builds on that awareness factor. Tracking that stops at clicks is just not adequate in 2022 and just is not. And I think it's a struggle for the industry because it takes a dedicated effort to go beyond impressions and clicks, you know, but you have to do it. And that's one of the ways we help clients is really as an extension of their team to bring those resources to bear to get really timely and a depth of results tracking that can assess all aspects of the equation. So am I getting interest but I'm just not cashing it in? So I've got an issue with conversion or I'm just not getting enough engagement to start with. And so I need to do something to make my message more compelling. Where along the lines can I look at my process and determine how to improve it? And ultimately, if you don't have a peer group comparison, even if you're doing the measurement, you have to ask, well is this good or is this bad? I mean, what could I do better or am I really topping out at the high end? Could I reduce my checking incentive and still get a better than normal response? You know, what should I be offering, you know, these sorts of things. And so that's another piece of our value proposition is really helping clients understand what the how their results compare to the current trend. Is that a function of product features, benefits, offer incentives, or is it a function of lower pull through rates or you know, these sorts of things? And so it's very hard for clients on their own to just do basic tracking, but beyond that to be able to understand how results compare. Part of the reason is because it's a dynamic environment. As we know interest rates are going up.
That affects a number of things in terms of how consumers react to different types of marketing messages.
[00:15:22] Speaker A: We talked about channels and the purchase process.
We think about the life cycle of prospects, customers and sort of new to bank customers, those people that have recently become moved from prospect to customer.
Sometimes people, Tim, have the perception that digital marketing maybe only plays for branding or acquisition or something. How do you see from what we do that impact different parts of the life cycle?
[00:15:50] Speaker B: Well, ideally, again especially given that banking has become completely digital.
Ideally you want continuity in your digital presence from a pre customer relationship acquisition mode through customer onboarding to ongoing long term customer cross sell. You want that continuity of message, look, feel brand values and so forth. And that's part of a digital banking experience.
I think the good news for community financial institutions really starts with acquisition. Where if you're, let's say a credit union in metro Dallas, or you're a community bank in Atlanta with six locations or something like that in the old days, you're a significant disadvantage to your large bank competition that's all around you. Because media is very expensive and the percentage of the audience that you end up targeting, there's a ton of waste. And so it's very inefficient to try to create awareness outside of your existing or pre existing customer or member base. But with digital, what we have the ability to do is to use geography, use other types of life stage data that has historically correlated with successful acquisition efforts, and target only those segments in proximity to branch locations that are in these more responsive segments and then get much better bang for our buck in terms of awareness building and the brain ability to then grow our customer base from outside by attracting new customers through digital outreach.
The general economics, I can show my brand and my offer my message to a non customer 10 times for what it cost me to send that same non customer one piece of mail.
And so that's a game changer for community financial institutions because not only do I vastly expand awareness building, but when I send someone a piece of mail, they may look at it, they may set it aside, they may forget where they put it, they may throw it away, but those 10 impressions I can create, they can click at any one of those points in time and then get more information, start an engagement process and we can measure all of that. Whereas we have no view into what happens to the piece of mail once it goes out. We do have really good data on what type of engagement we're creating and how that compares to peers.
So I think you start there and then as you get customers in, you want to continue the digital dialogue through onboarding. Email is a really important channel in onboarding because it's the format where you can deliver educational type of information in an efficient way, in a convenient way, but also where customers can click, sign up for online banking, click and sign up for bill pay or estatements or these sorts of things. And of course we can measure all of that. And the email address is fresh, the customer just giving you the address, high deliverability and so forth. So and then you know, once a customer gets beyond the onboarding period, six months or so, their needs don't stop changing. So they became a customer a year ago. At that point they didn't need a mortgage, but now they do because they're buying a home. And so we have an opportunity there to meet a changing need. And so the ongoing cross sell, you want to keep the digital messages coming. And that's where the capacity propensity data really comes in to say in this customer's journey journey, what messages are most relevant to their financial life and how does that sync up with my solution set?
And then how do those things ultimately sync up with our financial priorities as an institution in terms of growth? And sometimes that's challenging.
Sometimes customers have needs in areas that we're not particularly interested in growing.
And that's just part of the process of determining how to invest your marketing resources, which are obviously finite. But you got to go through that process and really understand what your opportunities are in different categories and how those correspond with your customers needs and how to create a consistent digital communication stream throughout the process.
[00:19:40] Speaker A: Yeah, and I think just to emphasize the cross sell, I mean sometimes clients are surprised to hear that we can be as precisely targeted in digital channels for cross sell. This is not like just a kind of still a very broad geofence. For example, this is precision where we start with those factors and say so for example, you don't want to sort of promote a general checking message to somebody who already has your checking account. For example, being able to target that message to current customers or current members that don't have checking and deliver that across channels. Certainly email is kind of the workhorse these days, but there's multiple targeted digital channels that can be delivered on a one to one basis. And just to emphasize something Tim said earlier, we've seen, we measure this result, the more channels you expose the message to, the increased response. And so this is kind of proving through data one of the old axioms from marketing of the more you see the message, the more chance it is to purchase. Or there's rules of thumb about you've got to see the message 16 times before you take action.
Actually what we found is the more places you see the message, that has a very strong effect on your propensity to buy or your actual buy buy. And so that's a powerful insight that we apply in constructing cross sell programs where it's not just email or mail type question. It's a comprehensive proactive digital messaging strategy so that we're helping you become top of mind with relevant messages and a mix of relevant messages. We don't know exactly when somebody will enter a buying cycle. We know from the capacity and propensity analysis who has a good chance. The question mark is the win.
[00:21:22] Speaker B: Yeah. And so, you know, maybe a good subject to kind of take that and flush it out a little bit would be ott. So you know, we're constantly looking to expand the ability to deliver a message in a targeted way and create different types of engagement and awareness engagement and so forth. And so as you kind of evaluate, okay, I can place ads on Roku, on Hulu, these various ad supported your streaming services and those services actually would probably sell you and other companies might sell you some demographic data to say, okay, these are people in your market who you know, have a certain net worth or that sort of thing. And so you could place ads and that, that's better than untargeted. But you know what if I could take someone who's in my app every day, who has a demonstrate affinity with my institution, whose balances indicate that they are in their active borrowing years, for example, and I can target that message in where I've already got demonstrated first party propensity to buy, capacity to buy type factors. And by the way, they also represent retention priorities for the institution. Or do I show that person who has a mortgage with me but not a checking account.
And if I get that checking probably improves the likelihood the mortgage continues to get paid and it makes it two or three times more likely they'll open a home equity a year, two years, three years down the road by opening that checking. You know, it's just a slight smarter way to go about the targeting until you get excited about a channel like ott. Okay, I can use, I can take video content that we're creating for different types of products and so forth and I can put it out there in this new kind of streaming environment. But you still gotta have the discipline to get your targeting right. Irrelevant stream. Your messages are still irrelevant whether they're, you know, on a delivered through Hulu or whether they're a piece of mail. It just, you know, and so that's where you want to maintain that the relevance of the message and the ability to tie the data you gather from that message back to ultimate product, you know, purchase activity.
So again, that's maybe a good way to kind of think about what you may be thinking in terms of, you know, you know, because we have this kind of expanding plethora of ability to put digital content out to different audiences, but we've got to maintain our discipline to prioritize our audiences based on their likelihood to respond, retention priority and so forth. I mentioned one other thing too, and going back to something you said earlier, Dan. When you have a non checking audience and you're talking about checking, that audience is much more likely not to have an email address because checking is the way you collect the email address in a lot of cases. So institutions have gotten better about collecting emails online checking.
So you miss a lot of opportunities by not having other digital channels and relying solely on email, particularly in growing your checking base but also more broadly.
[00:24:17] Speaker A: Well said.
So we hope you've enjoyed. We try to keep these relatively short, so we've covered a lot of ground here and just as we sort of wrap up, I think some of the key takeaways that I had in this conversation as we work with clients all over the country, it's really a joy to help community focused financial institutions thrive and so a digital does not have to be intimidating. We can help your bank or credit union get started very quickly in a comprehensive way that's very targeted.
All the factors that Tim said, this is not a random acts of marketing, this is very targeted. And the benefit of being first party targeted is we can track it, we can be accountable in many cases getting paid for delivering actual accounts that match back to omnichannel and digital marketing. And so that we really believe that is a best practice in your go to market digital technology wherever you are on your digital account delivery journey.
Digital media is here to stay and especially gives a competitive advantage to those community organizations that love their communities and want to help more of their customers and members thrive by having them helping them meet their financial goals and dreams.
That's it for today on Top Quartile. If you haven't already, be sure to subscribe to Top Quartile wherever you find podcasts on any podcast app. And while you're at it, we'd really appreciate a five star rating. And if you're interested in getting an opportunity assessment, head over to infusionmarketinggroup.com to learn more. Thanks for listening.
