Integrating sales and marketing to optimize core deposit growth

Successful approaches leverage all bank marketing, sales, service and distribution capabilities to focus resources on high priority opportunities.

By Rolland D. Johannsen

Over the past year, banks have focused considerable resources on increasing and stabilizing their core deposit franchises, diversifying funding sources and trying to control overall funding costs. This has been both challenging and expensive as the interest rate and competitive environments have forced banks to use pricing as a primary strategy. Most have combined some form of marketing campaigns with promotional rates and offers to attract new customers, accounts and deposits. While some of these initiatives have been effective in helping banks grow their deposit portfolios, the questions remain: At what cost? And will they stay?

There is no question that many banks had to turn to premium rate promotions to solve immediate funding needs. Let’s face it, there just are not a lot of alternatives when the need is great and the time is short. Banks found success using data-driven performance marketing techniques to target high opportunity prospects through digital marketing channels to drive prospects to online fulfillment portals. While rate was still a dominant component of the “value proposition” of many of these campaigns, the use of these highly targeted marketing techniques helped drive down acquisition costs and increase marketing ROI. However, while marketing initiatives are important in addressing the deposit challenge, they are not sufficient on their own to build strong, stable, growing and cost-effective core deposit portfolios. Rather, success requires an enterprise-wide, integrated approach that leverages all the bank’s marketing, sales, service and distribution capabilities to focus resources on high priority opportunities and build sustainable core deposit franchises.

Two plus two can equal eight

A key to consistent core deposit growth is combining sales and marketing techniques to create integrated programs that work together to achieve specific agreed upon and shared objectives. Too often, marketing and sales functions operate within their own silos, only touching at the margin (such as when direct mail prospect lists are distributed to branches to inform outbound calling programs). Unfortunately, these types of marginal tactics usually deliver only marginal performance. The real power comes when sales and marketing work together to produce multiplicative, not just additive, results. This requires a holistic approach that integrates all components of the marketing and sales process, from program design through establishing shared objectives to performance tracking and reporting. Integration and coordination activities should occur at every step:

• Program planning and management: Joint planning frameworks and templates that set out program components, timing and responsibilities clearly and succinctly.
• Opportunity identification and targeting: Actionable and shared data sources to identify type and location of opportunities, establish targeting factors, and develop sales support tools.
• Performance metrics, goals and objectives: Market-aligned goals to establish performance objectives by location and inform marketing messaging and budget allocation.
• Promotional offers and incentives: Offers designed around each type of identified opportunity and tools provided to the sales force to communicate the right offers to the right prospects at the right time.
• Communication and recognition: High energy and frequent internal communications programs to highlight marketing initiatives, recognize superior performance and sustain engagement.
• Performance measurement and reporting: Shared scorecards and “real time” performance reporting against established key performance indicators to identify performance improvement and program modification requirements.
• Program review: Joint interim and post program reviews to identify objectively what worked, what did not and what revisions are necessary to improve the performance of subsequent campaigns.

Building strong, growing, sustainable and cost-effective core deposit franchises is hard. There are no easy answers or quick fixes. Success requires programs and approaches that identify specific market and customer opportunities and leverage and focus of all of the bank’s sales and marketing resources to achieve specific results.

There are only three ways to grow deposits: Acquire new customers either organically or through purchase, cross-sell and deepen relationships with existing customers, or close the back door and reduce attrition. Marketing and sales initiatives by themselves can address some of these opportunities but cannot optimize performance across all three. Rather sustainable performance through all economic cycles requires identifying the size and nature of growth opportunities in each category, establishing clear and attainable objectives, developing differentiated value propositions and creating integrated and coordinated sales and marketing programs that produce true market power.

Rolland D. Johannsen is a senior consulting associate at Capital Performance Group.