Finding measurements that are understood and respected by your bank’s executive team.
Marketing is about telling stories that craft a compelling image to persuade and compel consumers to take action. But how can a bank marketer measure the results from these marketing efforts?
Enter stage right: tension between the need to prove a bottom-line return on investment (ROI)—especially in the bottom-line-oriented banking industry—and the abstract nature of advertising, marketing and public relations.
For those working with an outside agency (or agencies), the conflict between marketing and proving results can be even more pronounced. Especially when the case studies of many advertising agencies talk more about “living your brand” or “transforming your brand’s identity” or “generating positive reactions on social media,” than data-driven ROI results. And, let’s face it, vague marketing speak doesn’t hold much water in the boardroom and C-suite.
So, how can bank marketers hold their agencies accountable for measurements that are understood and respected by their bank’s executive team?
Having spent the better part of 30 years working in bank marketing—on both the bank and the agency side—here are five ways to get more meaningful results from your agency partners.
- If your agency is responsible for brand advertising and marketing, conduct independent market research to track your brand awareness.
You know what your brand is, but, in truth, brands live in the minds of consumers. Your brand is the sum total of how consumers perceive your company, products and services. And, because research has established that the majority of consumers have already chosen their next bank, the strength of your bank’s brand is the key driver of future growth.
So, if your agency is responsible for brand marketing, you should conduct regular market research to track your brand awareness and preference and/or your brand’s association with key attributes or services. Use that research to hold your agency accountable for its brand marketing campaigns.
Conducting statistically significant, quantitative market research every 18 to 24 months is ideal. Use an independent research company that answers to the bank, not the agency, and track a few key questions over time, such as:
–Top-of-mind awareness. (When you think of banks in your area which ones come to mind?)
–Aided awareness or familiarity. (How familiar are you with XYZ bank?)
–Preference. (If you had to switch to another bank today, which bank would you choose?)
For tracking attribute association, simply ask which bank comes to mind when consumers think about specific bank characteristics that are important: When you think of banks that offer (free checking/long hours/superior customer service/high rates on deposit accounts, etc.), which bank comes to mind first? Are there other banks you associate with that?
An agency that doesn’t want to be held accountable for changing consumer perceptions over time isn’t the right agency to help you grow; but, I understand, as an agency owner, that accountability isn’t always comfortable. There have been several times when our agency has gone into a tracking research presentation with a bank client knowing that our marketing plan, goals and objectives specifically stated that we planned on raising unaided awareness, familiarity and brand preference to specific new levels, and we’ve been the most nervous people in the room waiting to see the research results and whether or not we had achieved the stated results. And, we are absolutely OK with being nervous about that. In other words, it’s OK for your agency to be nervous when they are expected to show results. It comes with the territory.
- Work with your agency to establish measurable objectives for your marketing campaigns on the front end. It’s difficult to hit an undefined target.
In the example above, it’s important to note that our agency knew exactly which measurements to hit. It was baked into the marketing plan.
Good marketing plans always include objectives. We define objectives as “measurements that demonstrate progress toward the overall marketing goals,” and these predetermined objectives are the target for your agency’s marketing efforts, before they are launched. It’s also important that your bank leadership sign off on these objectives.
Different marketing campaigns will have different objectives. Brand campaigns should measure the strength of your brand. A product promotion campaign may measure product sales or traffic to a sales-oriented microsite. Public relations campaigns might measure the PR value of media exposure.
Having these measurable objectives determined before your agency begins executing a campaign is absolutely crucial because it’s almost impossible for your agency to hit a target it didn’t know existed or to hit a moving target. Most agencies will appreciate having a reasonable and predefined objective.
- Consider a results-based compensation agreement whereby your agency receives cost-only compensation for producing and executing a campaign and then makes a profit through performance bonuses when the desired results are achieved.
Some of my agency brethren may not appreciate this idea, but it’s beginning to grow in popularity. Understand that not all agencies will agree to this fresh approach. However, many agencies will find this an intriguing notion if it has a three-tiered structure approach.
Tier one is the base compensation level that allows the agency to cover its costs, regardless of the results. After all, no agency worth its salt will agree to work for free. In this tier, you cover the staff and overhead costs associated with servicing your account. That’s only fair.
Tier two allows the agency to make a normal profit if certain objectives are achieved. For a branding effort, you conduct tracking research 18 to 24 months into a campaign, and if you see a predetermined increase in awareness, familiarity, preference or attribute association, the agency gets a bonus for hitting those objectives.
And, if the agency exceeds the tier two objectives by, for instance, 20 percent or more, it receives an additional bonus that would increase its normal profit margin. This extra tier is, in my opinion, a very important component of such an arrangement because it’s the carrot that will very likely improve the agency’s performance and effort.
We have just begun to propose this agreement to clients. It’s worth your while to have a discussion with your agency to see if it’s willing to work this way.
- Make sure your agency—and especially your primary account service team—understands the basics of banking. If agency doesn’t bring that knowledge to the relationship, you will benefit by educating the agency.
How well does your agency understand banking? Does it know how a bank makes money? Does it understand why deposits are liabilities and loans are assets? Does it know the importance of spread and expense control? Does it fully comprehend how bankers think and why good banks and bankers put so much importance on risk control?
As a bank marketer working with an agency, you know good agencies love to take risks. They thrive on the risky nature of creativity. And while that’s a mark of good agencies, bankers—to some degree—are the exact opposite.
Bank marketing directors must educate agencies on bank marketing—and banking in general—if your agency doesn’t have a great deal of experience in the industry.
As a long-time bank marketing agency owner, some of the best work we’ve done for bank clients has come after the marketing director shares the bank’s annual business plan with us—when we understand exactly what the bank is trying to accomplish not just in marketing, but overall.
Almost 30 years ago, when I worked as an account executive for an agency and was given responsibility for a bank client (my first exposure to bank marketing), the marketing director helped me understand the basics of banking and then scheduled a working lunch once a quarter to update me on the overall state of the bank. She even taught me what an asset and liability management committee (ALCO) was and how it impacted our marketing plans. That experience was formative and valuable, which is why I recommend most banks do the same with their agency contacts.
- Don’t become overly enamored with the ability to track some types of media at the expense of others.
This tendency is becoming much too normal in today’s evolving media landscape—and not just with banks. Here’s how it typically plays out:
–The client’s last few campaigns included some very easy to track media channels such as social media, online display, pre-roll video, search, digital radio (Pandora and/or Spotify, etc.).
–The client was able to show reports to the executive team proving the “effectiveness” of these media, which made them happy, and now the client wants all future media plans to emphasize those media channels with instant feedback and “results.”
–Now the agency is held accountable for delivering easily quantifiable and reportable metrics—click-through rates, website or microsite traffic, likes and follows, etc.
And while there is nothing wrong with these metrics, it is dangerous to confuse these programmatic results with actual results. Dangerous because these types of results and reports—while they look and sound great—should not be confused with building a strong and preferred bank brand that consumers will switch to when it’s time to choose a new bank. And, oftentimes, building a strong, preferred brand will continue to involve harder-to-track media channels—outdoor, broadcast or cable television, over-the-air radio, etc.
The best case study for this is the massive shift in Pepsi marketing dollars away from traditional media and solely into digital and social media in 2010–2012. As measured by social and digital media metrics, it was a smashing success. They “engaged” the customers and received a boatload of new followers, likes, Web traffic, etc. The business results were abysmal. Both Pepsi and Diet Pepsi lost 5 percent of their market share in the first 18 months and Diet Coke replaced Pepsi as the No. 2 soda in the United States.
The takeaway lesson: We shouldn’t become reliant on programmatic results, and you shouldn’t put too much emphasis on holding your agency accountable for results that don’t gain new customers or sell more services. New customers and increased sales are what you should always expect from your agency partner.
Those metrics should be the bedrock of accountability because they are what increase market share and profitability.
Mike Sells is CEO and owner of the Sells Agency, Little Rock, Ark. He’s a 28-year veteran of the advertising and public relations industry and has more than 23 years of bank marketing experience. Contact him at [email protected] or call (501) 666-8926.