Why aren’t Financial Institutions Trading in Customer Commerce?
Why people and not services are integral to your trading strategy
For some time now the world of marketing and sales have been on a collision course. The advent of technology and then mobile technology has really changed the game for businesses in financial services. That means banks, insurance companies and brokers and trading firms from stocks to currency have seen massive changes across their industry.
Technology retired many telephone and paper based ordering systems, automated customer services to a degree and enabled you to make paperless applications for bank and business accounts, as well as to trade in stocks, currency and commodities online. This also allowed you to book your car, house and holiday insurance online too!
In short the financial landscape changed in a very short amount of time.
People not Products and Services
The increase in mobile search hasn’t stopped financial services businesses from focusing on sales rather than customers. In many cases it’s sell, sell, sell rather than attract convert close delight. It seems that there’s so much more focus on converting, that the lead nurturing side of sales has gone by the wayside.
What is really surprising is that people are far much more search savvy, so whilst comparison sites play a huge part in the education and buying process for a customer, in fact many are doing far more research into financial products and services than ever before. Potential customers are looking to a particular financial institution or insurance company to answer their questions for them through their website content, they expect it. So where is it?
Build Trust for Profits
Unfortunately the PPI and paid banking services reclaim issues, plus the recent global meltdown and the massive PR issues around bankers bonuses mean that potential customers are no longer happy to believe the financial industry on what they say, or believe that they act with their best interests at heart. They don’t, it’s simply profits that drive the industry forward or at least that’s public perception.
So why aren’t banks and other organisations looking much deeper at how they can become inbound and customer centric, overall creating a customer commerce focus, trading in the long term strategy of the customer buyer lifecycle?
Customer Commerce – Strategic Planning for Financial Institutions
Let’s look at the typical purchases the standard UK resident will make along his or her interaction with banks, building societies and insurance companies:
- Savings Account
- 16 year old bank account
- Student Loan
- First Credit Card
- Current Account
- Car Loan/Car Finance
- Home Insurance
- Investment Products
- Premium Savings Products
- Life/Health Insurance
There are possibly a minimum 12 points for sale within a lifecycle and yet many banks are only focusing on selling these in a piecemeal way, so their email marketing falls way short of what Inbound Marketing considers good practice. One single financial institution could have the capability to nurture an individual through twelve sale points during the relationship, but many do not because of the internal structure in these companies.
Many break down the products mentioned into so many departments or ask one sales person to offer a multitude of products that a simple cohesive strategy would probably be harder and more costly to implement than to maintain the current status quo.
Personally from my experience within the Investment Banking Industry, many projects are put off for a number of reasons, but surely it’s far more costly to maintain a sale by sale approach than to look far more into the future and build an ongoing, lifelong relationship with an individual or their family.
Short Term Cost for a Long Term Gain
Let’s look at the implications for a financial institution that doesn’t facilitate the long term customer commerce approach and remains with a short term view rather than the longer term view.
- Stays focused on a sale by sale approach – TRANSACTIONAL
- Does not align marketing with sales – NO COHESIVE STRATEGY
- Doesn’t implement a cohesive lead nurturing strategy using inbound marketing
- Remains focused on TV Commercials and full page newspaper adverts – OUTBOUND ACTIVITY
- Sets in-branch sales targets via a regional manager which rely on traffic generated by the outbound activities mentioned in number 4.
This is today’s approach, this is what stops the established banks converting to a customer commerce focused approach. Many will have sales and marketing directors that are of the same opinion as this article, who do want change but have been told that the bank is too big to change. They also said they were too big to fail, but that’s another piece of content altogether!
Customer relationships with your bank, stock broker or insurance company are all going to be driven by customers in the longer term, much akin to families supporting the same football team for example. One or two may stray, but the majority will remain loyal to the one team.
Looking at a financial institution with a longer term strategy, it adopts inbound marketing and makes a cultural shift to nurturing its customers throughout their life, this could look like this.
- Adopts Customer Commerce and Customer Centricity – LONG & LONGER TERM VIEW
- Aligns Marketing with Sales – TIES THE PERFORMANCE OF EACH DEPT TO EACH OTHER
- Implements a cohesive lead generating inbound marketing strategy
- Reduces overall spend on outbound activities and paid search
- Becomes an ethical business focused on selling products by education and early consent in the buyers cycle
- Improves customer loyalty
- Increases brand recognition
- Becomes part of the family
A financial institution operating in this fashion definitely seems the type of organisation many would be keen to follow and adopt, as long as the products and services were competitively priced within the market and they could build in longer term discounted rates for those who are lifelong customers.
A bank of generations, rather than a bank of transactions how does that sound to you?