By Chris Nichols
Let’s all stop with the demographic targeting in banking.
How many “How to Market to Millennials” sessions have you sat through? Chances are you were wasting your time. It is true that every generation is influenced by a different set of environmental forces—war, protests, computers, the smartphone, etc.—but there is little evidence that shows human behavior has fundamentally changed.
No doubt you have seen a headline from every major news outlet that millennial home buying is down. However, if you adjust for income, affordability, and general falling homeownership rates, millennials are buying homes at almost the same rate of every other generation. Holding the traditional view of demographic marketing not only doesn’t help some banks, but it also hurts.
Demographic marketing can be insulting.
The concept of stratifying your customers into economic, racial, gender, or age cohorts is not only archaic but a hallmark of a lazy marketer. The concept of treating all millennials, race, or gender the same harks back to the Mad Men era. In days of yore, you researched consumer feelings and chose a message that would appeal to the largest common denominator. And then you would hit people over the head with the message again and again. Such tactics produced this gem below, from Marine Midland Bank. It was not only too broad in scope to be effective—but was both insulting and sexist.
The minute you lump all women, African Americans, Latinos or millennials together, you are not only wasting your marketing dollars, but you will end up insulting the large portion of the demographic that doesn’t fall into your preconceived notion. Not all millennials are comfortable with technology, are over-entitled, move jobs often, or are environmentally focused. They might be more vocal about their feelings on social media, but as a group, millennials are little different than the 17 to 37-year-old cohort from 1971.
There is a better way.
It was one thing when you only had mass media to leverage. For that matter, if you don’t care about marketing return, then a mass market Super Bowl ad targeted at men who like talking dogs makes sense.
However, in modern times, for a much better return, you can target a niche and jump your conversion rates like never before. Why design a single “campaign” when you can micro-target a variety of segments at just the cost of changing a tagline and visuals? During the last election, the Trump team ran 10,000 different ads with a variety of headlines, graphics, and messages to reach people who cared about various issues such as education, law and order, gun control, or job creation. Trump’s most successful ads targeted key occupations such as steel workers, law enforcement, coal miners, and farmers.
Banks can now produce display ads, retargeted ads, sponsored content, and email offers to target distinct populations like:
- Young medical professionals looking to buy their practice
- Stay-at-home dads looking to leverage their time
- Grandparents looking to help their grandkids to save for college
It is about intent.
More important than your demographic composition is your intent or buyer behavior. Market to women in mass and make a generalized pitch about mortgages, and you will likely get less than a 2% response rate. Target households or individuals that are just starting to look for a home, and your response rate could be greater than 30%. Today, it is about doing your homework and finding potential customers at the point of inflection where they are just starting to achieve a goal.
This is nothing new. Google has become one of the world’s most successful companies because they allow advertisers to serve ads to users who are looking for a particular product or service. Banks have just been slow to the game. Luckily, this is changing.
Here are some approaches to anticipatory banking.
- Use some basic data that every bank has access to and apply some simple analytics. Then any intern with a spreadsheet can work wonders. Banks can start with the data that they already have and key off balances or similar products. A simple reminder email to contribute to your 401k or health savings account if you have not in the past year can garner a phenomenal return. The same can be done for commercial accounts that utilize their lines of credit for non-seasonal draws. These accounts are either running into problems or are growing in positive fashion and likely need more banking services.
- Once you have the basics down, banks can graduate to apending their data with information from social media. Banks can leverage Facebook, Instagram, Snap, and Twitter to target a whole range of target customer personas. Some of these platforms already have the basics of intent deciphered, which is categorized as “behavior data” so banks can target “new couples” or “business owners” looking to accomplish certain goals. Other platforms can be monitored to look for potential customers mentioning particular actions, such as transferring banks, saving for vacation, tax planning, or looking for a home purchase.
- Taking this tactic to the next level, banks can also leverage certain brand influences such as Starbucks, Whole Foods, BMW, and even Beyoncé. These brands associate with being more open to certain bank products. While your assumption might be that these brands are markers of wealth—which would mean a greater proclivity to open a checking account—you would only be partially right. Wealth and brand only account for a certain attribution, as users of Kroger’s, Planet Fitness, Sonic, Costco, and Tough Mudder are also heavier-than-normal users of banking products.
Brand correlations are just one of many dimensions that banks can leverage. Data can be purchased, collected, or integrated from social media.
Banks can still do better.
Monitor debit, credit card, and check usage. And take note if you see a homeowner make major purchases with contractors and home improvement stores after more than five years of home ownership. If that event occurs, chances are they are getting ready to trade up. Correlate that activity with deposit balances, and banks can get amazingly accurate at predicting the need for additional banking product.
The same is true for renters. While other banks are busy targeting millennials, you could be looking for renters with rising balances and a series of Home Depot purchases, no matter how minor. Statistically speaking, that customer has dreams of owning a home.
The community bank advantage.
American Express now collects over 3,000 pieces of data on each of their millions of targets. Their data models are some of the best in the industry. However, here is the problem—JP Morgan Chase is using the same data with similar data models. Just like having a hammer when everything looks like a nail, to a large bank, every marketing effort looks like a major-metro household looking to save for retirement.
Community banks can leverage their local knowledge of their customer. Combine this knowledge with data and with social media to be hyper-effective using social media and content sponsorship. Community banks are perfectly positioned to better understand the nuances of their market and turn local data into actionable intelligence.
Putting this into action.
In the age of personalized, data-driven marketing, demographics mean little. When a person wants to switch banks, it doesn’t matter if they are 60-year-old married man or a 19-year-old suburban woman. If your bank can educate itself on deciphering intent, you can distance yourself from the competition that is still sitting in PowerPoint presentations about millennials.
Chris Nichols is a contributing editor to ABA Bank Marketing.com. Located in San Francisco, he is the chief strategy officer of CenterState Bank, which has its headquarters in Winter Haven, FL.