By Marilyn Kennedy Melia
No one is a mind reader. But the skill sure would come in handy to marketing officers in their constant quest to understand what consumers really think about their bank’s products and services.
The good news: Used appropriately, focus groups can provide a useful window into what’s on consumers’ minds. The bad news: A lot can go wrong with a focus group. If you want to get any value out of the exercise, you have to get it right.
What are the best practices for rounding up consumers and asking them what they think?
To find out, we rounded up some experts and asked them what they thought. They had plenty to say about why, how, and when to use a focus group.
When insights, not stats, will define your strategy.
“When you really need to take a deep dive into what’s appealing and what’s not,” focus groups are more effective than any other research method, says Stephanie Gonthier of Market Street Research.
Typically, banks conduct focus groups only when they have a need to flesh out a customer profile, or discover how a product should be structured to be of real value to a customer segment.
Questions like these, say experts, befit a focus group approach:
- “We serve a population that’s 11 percent Latino, but they’re a much smaller fraction of our customer base. Why?”
- “We know that owners of businesses with revenue between $1 and $2 million are our most profitable and active commercial clients. How can we attract more of them?”
- “We are launching a new version of our mobile app. What features do customers want?”
While surveys can provide some of the answers to the questions above, quantitative data simply can’t provide the narrative a focus group session provides.
“With a survey, you provide a few different answers [for respondents to select], but you might be way off on what you think the answers are,” says Adam Grahek, VP of marketing/marketing strategy at Wells Fargo.
And with surveys, “it is usually impossible to go back to the same respondents to get more granular on a particular issue or response,” adds Patricia Jatkevicius, EVP and CMO for Connecticut-based Liberty Bank. She’s quick to credit focus groups for some long-term wins: “Truthfully, focus group input was the driving factor in creating a product set eight-plus years ago that is still driving superior business results,” she says.
How surveys coordinate with focus groups.
While focus groups are the deep dive, they often take off from a platform established by a survey.
Austin-based Q2 houses an “Experience Research Center” to conduct focus groups. Anthony Ianniciello, Q2’s VP of product design, explains that if, for example, a bank is investigating how consumers are using tools to budget their money, it might survey hundreds of people. But then, Ianniciello says, “when you want specifics on the three tools that are most popular, you’d set up a focus group.”
Moreover, a bank might mine data already available to it, and augment that by focus group research. “We helped one client,” relates Paul Schaus of CCG Catalyst, “who knew [the profile of]their most profitable business client from their own data. And, from public data, we knew that their share of that [business profile]was just three percent and they had a lot of room to grow.”
Why the bank’s role in a focus group is limited.
Once a marketing officer identifies a problem and it’s determined that a focus group is the best method to find the answer, a third-party firm typically takes the reigns.
In fact, explains Tom Hershberger of Cross Financial, distance between the bank and the focus group helps ensure unbiased results.
The sponsoring bank usually isn’t revealed, and the focus group sessions are conducted at a third-party site.
If a banker were to moderate, he might unconsciously steer the conversation the way he thinks it should go, adds Gonthier.
Marketing officers, however, are usually involved with “the development of the facilitators’ guide,” says Hershberger, who is also on the faculty at the ABA Bank Marketing School. “They typically identify the core topics, subjects, and concepts that need to be investigated. When bank customers are included in a focus group recruitment process, the marketing staff is usually responsible for generating the segmented customer list.”
Bankers typically do attend the focus group sessions, which often run an hour and a half, hidden behind a two-way mirror. “You can watch the group online, but you get a much better feel for reactions [from participants]if you are there,” says Grahek. “And sometimes during the break, we ask the moderator to get more information on certain areas.”
Even the final analysis of the group’s session is handled by the third party. In fact, the outside firm conducting the groups “must believe in and protect the integrity of their findings despite pressure they might receive from a client to influence or omit certain points from their final report,” says Jatkevicius.
How costs are determined.
Expect the cost per focus group to run from $3,000 to $5,000.
Ideally a focus group should be homogenous, with about 10 participants. So you’ll likely need more than one. Consider, for example, a bank that wants to investigate what millennials want in mobile banking. Assume the bank has offices throughout one state, and demographics are different in the more urban areas. You might then have two different focus groups—one with younger millennials, and one with older—in three areas of the state, for a total of six groups.
One influence on the price firms charge is the difficulty of recruiting participants, says Ruth Stanat of SIS International Research.
Actually, she notes, costs have been held down because recruitment has become more efficient in recent years, since focus group providers now maintain wide databases of potential participants.
Online focus groups are another relatively recent development. These tend to involve many more participants than the 10 or 12 people who are typically in a physical focus group. Participants can log in at their convenience to join the chat.
These online focus forums, which cost anywhere from $5,000 up, are particularly suited for banks that want to garner feedback from a relatively large region, or nationwide, Stanat explains. “We have done credit card research on high net worth individuals” using online groups.
What’s appropriate for discussion?
Grahek, who’s been involved with many focus groups sponsored by Wells Fargo, finds them “really great to test marketing programs and to get insights on products.”
But he doesn’t like this approach for eliciting feedback on finished products, asking if it’s something they’d likely use. “Really, I don’t think people can articulate why they buy anything, whether it’s an iPhone or Nike shoes, or a bank [product],” he says. “People like to tell you their frustrations with something, but they are not necessarily good at sitting in front of a finished product and saying if they’ll buy it.”
He points to one study where focus group participants were asked if they would switch to a different bank’s checking program if money were given to the charity of their choice, and they overwhelmingly indicated that they would. “But when we actually did [a pilot]very few did,” Grahek says.
“People tend to overestimate their likelihood of doing something, whether it’s in a survey or in a focus group,” agrees Gonthier.
And, because many people would be hesitant to admit to poor money management practices, better responses are usually elicited with a “projection” technique. “For instance,” Gonthier adds, “you’d ask, ‘Why do you think people carry credit card debt?’”
When you word the question in the right way, the answers participants give are more likely to relate to their own habits.
Marilyn Kennedy Melia is a banking and personal finance writer based in Chicago. Email: firstname.lastname@example.org.