Digging for Gold: Data Mining for Marketing Success
Banks of all sizes should apply data analytics to maximize their marketing strategy
There’s no shortage of tools for bank marketers to deploy in their efforts to attract and retain customers. Social media, digital advertising, traditional print and media marketing, and good old-fashioned cold-calling all have their place. However, tools are ineffective without a strategy. You can have all the hammers, nails and wood you need to build a house, but if the architect didn’t design a floorplan, it’ll never come together. For bank marketers, data analytics is a critical component in creating a strategic marketing plan, though many banks aren’t fully leveraging the data available to them.
“Data analytics is critical to building a successful marketing strategy. You just have to do it,” said John Verre, president and CEO, Leap Strategic Marketing. Leveraging data starts with two primary processes: discovery and distillation of the data.
The discovery process involves collecting traditional consumer and business data, including number of accounts, balances, and attrition rates, as well as breaking down that data by branch and market segment. According to Verre, those metrics provide a holistic view of the institution and help delineate between trends at the specific bank and national trends. “That discovery is absolutely key to developing a sound business and consumer marketing plan,” he explained. “Data analysis leads to all of the strategies and tactics that drive the direction of the plan. The more data you use, the better the plan can become.”
It’s also important for banks to collect data about individual customers on a regular basis. While it may sound like an enormous task, it’s actually part of what most community banks do every day. “First and foremost, in order to enter data into the CRM, you have to get to know the customer anyway,” said Jeff McCarthy, vice president – marketing director, First Bank Financial Centre, Oconomowoc. “When a new customer comes in, you have to take the time with them on the front end. Learn everything from if they own a home and are married to how they take their coffee and if they took one of the free cookies when they came in.” Rolling this practice into a data collection strategy simply means recording all of this information in a centralized location where it can be updated and analyzed as needed. This practice can help cement customer relationships by ensuring that all bank staff have current information about each customer. “When you onboard a customer properly by asking the right questions, you become more customer-centric,” said Verre. “If banks work this well, the customer feels like you really know them.”
Tom Hershberger, president, Cross Financial Group, explained that data collected during this phase can also help the bank identify potential new customers. “In the absence of an intentional pursuit of customer segments outside an organization’s average customer profile, tomorrow’s new customer will be a clone of the customers served today,” he said. “An in-depth analysis of current customer relationships—including account balances, product possession, service usage and preferred delivery channels—will set the stage to determine what will be attractive for the next new customer.”
Distillation The second phase in using data analytics to create a successful marketing strategy is the “analytics” part of “data analytics:” distilling all of the data collected to allow for a focused analysis. “Because data can become a big landscape very quickly, it is essential that organizations direct their data assessments to the critical priorities emphasized in strategic and corporate planning,” said Hershberger. “The key is not collecting all of the data possible, but rather collecting and examining data that will improve marketing activities directly connected to desired outcomes.”
Want to increase cross-selling? Collect data on which products and services customers currently utilize and compare that with what would be appropriate for their needs. Want to acquire new customers? Collect data that will help you build a profile for your best current customers, which will tell you the type of potential customer to seek out. “There are so many things you can do every day, so you need to isolate the opportunities that make the most sense,” Verre advised.
An essential step to planning future campaigns, bank marketers can distill data to assess past efforts. “As data analytics begin to improve marketing activities, it will be important to learn what worked and what was simply a distraction,” Hershberger explained. This analysis doesn’t have to be limited to specific marketing campaigns, either. A focused approach to data analytics can also help the bank identify how best to serve current and future customers. “It’s not just about customer acquisition,” said McCarthy. “It’s about acquiring the right customers and servicing them the right way for the life of their relationship with us.”
The same theory applies to both retail and commercial customers. “Marketing efforts with retail households can be enhanced dramatically with effective data management,” said Hershberger. McCarthy pointed out that good customer data is essential for both customer service and cross-selling. “Getting to know your customers is not only good business from a customer service perspective, but from a cross-selling perspective as well,” he explained. For business customers, Hershberger said data can help expand the client’s relationship with the bank beyond lending services.
So, where should a bank start after deciding to integrate data analytics into its marketing strategy? Fortunately, banks don’t have to go far to find a data processing vendor. The most common core software providers in the financial services industry (such as FIS, Fiserv and Jack Henry) also offer data analytics and customer relationship management solutions. “I honestly believe the data processing vendor you already have is the easiest solution,” said Verre. “They can also help you sort through and find the data that’s most important.”
Some spreadsheet and database manipulation can also be a good starting point. “Most community banks have access to mainframe report writing software, or at minimum, the ability to select customer data and export it to a separate file,” Hershberger said. “Simple merge/purge activities can create a clean, non-duplicated customer list with as many products as possible connected to one family or business unit.”
In addition, there’s a wide variety of cloud-based software solutions for specific data needs, most of which all users to plug in raw data from their own systems. For example, there are several cloud applications that focus specifically on analyzing data for email marketing, and others that specialize in optimizing data for sales and cross-selling processes. Analyzing one specific piece of the bank’s marketing is one way to generate very specific returns. For example, McCarthy explained that they recently started emailing the bank’s newsletter to customers so they can monitor which articles generate the most views and click-throughs. That data will empower the bank to provide more targeted content as well as open up cross-selling opportunities. “We’re still building the data right now, but it’s a way for us to get smarter with the information we’re providing,” he said.
Technology is essential for data analytics, but the most important resource for banks to rely on when processing and analyzing data is their people. “Data is only data,” Hershberger said. “We need the human component to determine what questions to ask for the data analysis and then combine that knowledge with product and service invitations that have the greatest potential for success.” The human element is also a critical component of collecting data. “The data can tell you a customer is getting older and getting ready to retire, but conversations will tell you the meaning behind it,” McCarthy explained. “As data and technology evolve, people still want to have face-to-face interaction when complex financial issues arise.”
Ultimately, the challenge for banks is to begin using the data they have available to them. Data analytics is not an easy undertaking, requiring both time and technological investments from the institution. “It’s a commitment to actually do it,” said Verre, insisting that it’s worth the effort. “If you have the data, the insights can happen.” And those insights could be the competitive advantage that sets your bank apart.