As banks contemplate budget pressures, limited data analytics resources and other challenges, they will need to rely on confidence and tenacity.
By Mark GibsonThe discipline of marketing continues to evolve at a rapid pace and take on a larger footprint within financial institutions. Given its importance and evolution, five marketing trends have emerged for this year.
One is ‘evergreen’—digital marketing—but four are new to the list. Budget optimization and customer data analytics are to be expected in a challenging economic year. But personalization and artificial intelligence are probably not too surprising either, given their recent prominence in marketing circles. We will explore each of these five in turn, and what implications they have in store for banks in 2024.
First, a word on methodology. The list is based first and foremost on what we are hearing from chief marketing officers and marketing directors across the country. However, for the first time, we also asked two large language AI chatbots what they thought. Those findings were eye-opening and quite different from their human ‘counterparts.’ Read on!
Here are trends bank marketers will see this year, followed by analysis of each:
- Artificial intelligence-powered marketing
- Digital everything!
- Budget optimization
- Customer analytics
1. Artificial intelligence-powered marketing
The bank CMOs we spoke to highlighted the benefits and possible concerns that AI already poses, but only one of the two AI chatbots mentioned AI as an important marketing trend. The promise of improved productivity and efficiency were top of mind. ChatGPT or Bard are incredibly effective at performing fast research on a topic, but they can also be quite good at writing a first draft of copy. However, as Paul Roetzer dramatically highlighted in a recent ABA Marketing Conference keynote session, AI can already do much more for marketers, with an ‘avalanche’ of innovations coming in the near future.
Advertising: There are firms such as Albert which use AI to manage and continuously optimize paid media advertising.
Analytics: Companies such as Crayon analyze all your first party customer data to find sales and service opportunities for human marketers and sales teams to act upon.
Social media and PR: Meltwater has invested in AI and data science companies to establish AI-powered social intelligence and PR capabilities.
Content marketing: While the previously mentioned AI chatbots are creating content, products such as Adobe Marketo Engage and PathFactory use AI to build personalized content journeys for each of your customers.
The remarkable thing about AI is that it is developing so fast, we are early in the first inning of a nine-inning game. So 2024 promises many more advancements for bank marketers to assess.
Bank marketers have heard the ‘personalization mantra’ for several years, so what is new for 2024? Chief marketing officers have shared with us how hard it is to truly personalize at the individual customer level. But they have also shared some ‘foot-in-the-door’ techniques they are either deploying now or are planning to get up and running next year.
Of course, marketing automation is a precursor to being able to personalize at scale. But not all of us have automation or can justify its purchase this year. If you don’t have automation, what can you do to move the ball forward?
Understand and segment your customers: Append third party data onto your customer base so you can group them into segments with similar characteristics, behaviors, and even interests. This allows you to personalize by group of customers.
Use customer names: Ensure your letters, emails and website address customers by their first name can increase engagement and satisfaction with your brand.
Use email and website channels: Even without automation, these two channels allow you to tailor subject lines, messaging, content and product recommendations based on an individual customer’s interests and behavior.
Test digital and social advertising channels: Digital advertising platforms allow for fairly tight targeting on demographics and interests, which allows you to ‘personalize’ your message to a particular group. Develop different ads for different audiences and see which ones perform better.
Personalization is a challenge for a small team without automated tools. However, tools you have at your disposal like your website and digital ad platforms can do much of the work for you. And even a little personalization can go a long way toward increasing engagement with your customers.
3. Digital everything!
When asked about trends, one of our CMOs almost shouted: “Digital, digital, digital! Digital everything! Channels, products, and advertising!” Similar to personalization, ‘digital’ is has been on marketers’ radar screens for a while. But a tipping point has been reached. Another respondent put it this way: “Amazon and other providers are training our customers on what to expect with a digital experience, and we are struggling to meet that high bar in terms of speed and CX.”
Of course, the pandemic forced consumers and business owners to use digital channels for things they never had before. What banks are finding is that, unlike a rubber band, those behaviors are not bouncing back. So digital channels have become the dominant channel for many existing customers. That fact has big implications for products. For instance, your online banking and cash management products better have full functionality and excellent user interfaces.
And finally advertising. The average American now spends nearly eight hours per day using digital media, more than twice what they spend with traditional media. (When do they work or sleep?!) Implications for marketers in 2024 are significant and include:
Products: Have your products kept up with changing digital expectations? For instance: Are you offering ways to get early access to paycheck or avoid overdraft fees? And why are we still calling it a ‘checking account’ when many people don’t use checks anymore! Time to take a fresh look in 2024 to make sure you are not turning into a ‘dinosaur.’
Services: Most customers have found it is faster and easier to do it themselves on a website. You better make sure it is faster and easier on YOUR website. What are the most common service needs? And can customers easily find them and do them on your website? If not, 2024 is a good year to remedy that and improve customer satisfaction AND bank efficiency.
Digital media mix: Strive to understand which media your target audience is using to research and buy your products, and be sure to test. Don’t forget local influencers or social media. Because many consumers believe other people more than they believe what the bank says about itself.
Digital call to action: Ensure you are building and highlighting a digital call to action in your advertising and website. Provide more information on the product, highlight the on-line application or make it easy to fill out a form or request an application.
On-line application: If you have an on-line application, ensure it is fast and easy for customers to use. Remember the ‘Amazon effect.’ If customers cannot complete it in five or 10 minutes without jumping through hoops, they WON’T.
4. Budget optimization
Two of the three CMOs we spoke with had budget at the top of their lists, which is not surprising given the uncertain economic environment. Michelle Cassel, SVP and marketing director at Origin Bank, headquartered in Louisiana, provided good advice on how to preserve or even increase your budget in times like these: “First, I make sure I understand what our bank strategic goals are. We call them the ‘big seven.’ Then I show how our marketing activities directly support accomplishing those.”
Michelle hits on one of our best practices for budget optimization: When promoting product, be sure to correlate your marketing spend with sales increases. While we know that not every sale can be attributable to specific marketing actions—especially branch and commercial banking sales—we do know that when we spend money effectively, we see results.
There are two things you can do next year to get credit for what your programs are generating:
- Link marketing and advertising metrics to bank performance metrics that are a priority of executive management, as illustrated in the diagram below.
Source: Capital Performance Group
- Take credit for the entire sales lift occurring in the product you are promoting, not just those you can digitally attribute to the campaign. By properly measuring a pre-campaign and during-campaign sales level, you should be able to quantify the sales lift associated with marketing. After all, the sales effort was relatively consistent during those two time periods.
5. Customer analytics
Data analytics is another one of those topics that has been around a while. But it is rising to the ‘top of the pile’ in 2024 for two reasons: it’s essential to do almost anything effective in marketing today (and has already been mentioned associated with two of the four trends highlighted above); and it becomes even more essential in a cookie-less world. Let’s talk about that one first.
As cookies go away, it becomes much harder for advertisers to track internet users’ behavior and target ads according to their interests. This has two implications for bank marketers:
Prospecting becomes more challenging: As obtaining consumers’ web behavior becomes more difficult, more power is placed in the hands of large internet companies such as Google, Facebook and Amazon who have plenty of behavioral and demographic data on their users. This forces marketers and their agencies to work with the giants, often on their terms.
Existing customers become more important: As prospect data becomes more challenging, the logical corollary is that ‘first party data,’ or data about your existing customers, becomes much more important. You already own most of it! And you can use it to provide useful content, identify relationship deepening opportunities, and even understand what type of person prefers your brand, so you can go find more of them.
Now, back to the first point about customer data analytics becoming pervasive in, well, almost everything. We’ve already mentioned that understanding and putting data to work is essential to most AI applications as well as personalization of marketing. Implicitly, it’s also fundamentally important to budget optimization because you need to be tracking sales in order to take credit for them! Here are two specific actions you need to take with regard to customer analytics next year if you are not already doing them:
Relationship deepening: You can use data about your existing customers to identify cross-sell opportunities. For instance, you can analyze your ‘best deposit customers’ to see what their characteristics are, then look at the rest of your customer base to find people with low deposits who look just like ‘best depositors.’
“Smart” prospecting: The next time one of your business line executives asks you to help them attract new customers, ask the ‘five questions.’ “Who are they?” “How are they different from other prospects?” “What product(s) are they willing to stray from their primary bank for?” “What is most important to them in terms of choosing a bank? And: “How do they gather information before selecting a bank?” Answering all of these questions requires data. And the better your answers, the more effective your acquisition campaign will be!
The year of the dragon
This year is designated by Chinese astrology as The Year of the Dragon. Characteristics of people born in this year include: idealism, innate courage, tenacity, confidence and intelligence. As we ponder trends such as artificial intelligence, personalization and rapid digital innovation, it will take all the intellect, idealism and courage we have to understand and apply these innovative techniques for our institution’s benefit, while effectively managing their risks.
As banks contemplate the challenges we discuss here—and this year especially, shifting regulatory requirements as well—they will need to rely on confidence and tenacity to meet these challenges where they are and craft plans to satisfactorily manage them. While we can never predict the future, we can prepare for what we believe to be true. Similar to 2023, we believe 2024 will be challenging from an external standpoint, but offer a myriad of rich tools for marketing professionals to leverage to set their organizations apart and help accomplish their business goals. It’s time to breathe a little fire!
Mark Gibson is the marketing practice leader at Capital Performance Group, a strategic consulting firm that assists banks in making the most of their marketing efforts. He can also be reached on LinkedIn.