Post on 23-May-2018
Lecture Materials
BANK MARKETING
Lance Kessler President
Lance Kessler & Associates Mechanicsburg, Pennsylvania
lekessler@aol.com 717-766-1005
August 1, 2017
August 1st The Path to Superior Lance Kessler Execution
August 2nd Marketing Planning: Tom Hershberger Developing an Effective Marketing Plan
August 3rd Building and Sustaining Jack Hubbard a Relationship Development Culture
Bank Marketing
1
Identify the four phases in the path to superior execution for every organization.
Understand the dramatic changes that are occurring in the financial services industry and the effect those changes are having on the competitive landscape.
Explain how the organization’s competitive strategy relates to its market efforts.
3
Describe market segmentation and how it relates to an organization’s marketing, sales, & service efforts.
Identify the key factors necessary for your organization to reach superior execution.
4
The Path to Superior Execution
The Changing Environment
Developing Strategy
Building Structure
The Challenge is Execution
6
Issues and Trends in the Financial Services Industry 2017
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ The Path to Superior Execution
Financial Services Industry: Issues & Trends
1. Net income for 2015 was $163.3 billion for all FDIC-insured financial
institutions. Did net income increase, remain flat, or decrease for all FDIC-insured financial institutions in 2016?
a) Increase b) Remain flat c) Decrease 2. From 2014 to 2015, FDIC-insured bank deposits grew at 5.2%. From December 31, 2015 to December 31, 2016, FDIC-insured bank
deposits grew at ______%. a) 2.6% b) 3.8% c) 5.2% d) 6.8% 3. From 2014 to 2015, total loans for all FDIC-insured banks grew at 6.4%. From December 31, 2015 to December 31, 2016, total loans for all FDIC-
insured banks grew at ______%. a) 2.6% b) 3.8% c) 5.3% d) 8.2% 4. As of December 31, 2016, noncurrent loans decreased to ______% of all
loans outstanding. a) 1.41% b) 1.86% c) 2.51% d) 3.44%
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Issues and Trends in the Financial Services Industry 2017
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ The Path to Superior Execution 5. According to an ABA survey, which one of the following banking methods
ranked the highest and was preferred by 55% of customers? a) Branches b) Mobile c) Internet d) ATM 6. Within just ten short years, we’ve gone from 50-60 percent of our day-to-
day transactions being done over the counter at the branch to ______% of our day-to-day transactions now going through the Internet, mobile, call center, and ATM.
a) 65% b) 75% c) 85% d) 95% 7. According to Accenture Research, ______% of Millennial respondents in
the United States say they would be willing to make the switch to do their banking with Google or Amazon.
a) 34% b) 41% c) 50% d) 65% 8. ______% of consumers rate locational convenience as the primary
determinant in choosing a bank. a) 44% b) 51% c) 64% d) 79% 9. ______% of consumers want the human touch to remain a part of
customer service while the complexity of the service request is shown to heavily influence the preferred channel.
a) 43% b) 56% c) 67% d) 79%
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Issues and Trends in the Financial Services Industry 2017
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ The Path to Superior Execution 10. ______% of Millennials demonstrated basic financial literacy. a) 24% b) 31% c) 44% d) 49% 11. There are 100 million people in the U.S. that are over 50 years of age. They control approximately ______% of the disposable income in the U.S. a) 40% b) 50% c) 60% d) 70% 12. When business customers were asked to rank what they find most lacking in their bank’s business services, which of the following items was ranked #1? a) Poor omnichannel experience (access over web, mobile, etc.) b) Lack of modern services such as video, etc. c) I feel my bank does not know me very well as a business customer d) Understaffed in terms of specialists 13. ______% of business executives rate their organization’s ability to act on
insights derived from customer data as “poor” or “very poor.” a) 12% b) 33% c) 42% d) 54% 14. A ______% increase in customer retention will increase profits
somewhere in the range of 25% to 95%. a) 5% b) 8% c) 17% d) 20%
10
Issues and Trends in the Financial Services Industry 2017
Lance Kessler & Associates Marketing Consulting and Training
_____________________________________________________________ The Path to Superior Execution 15. 50% of financial institutions think they’re relationship-focused and
providing the desired type of financial consultation and advice.
______% of account holders at those financial institutions agree. a) 13%
b) 25% c) 36% d) 42%
11
Call Center
ATM
Credit
Online Banking Mail
Kiosk
Debit Card
14
ATM
Online Banking
Credit
Face-to-Face
Call Center Mobile Banking Smart Phone/Tablet
Video Teller Machines
Branch Banking
Web Site
Prepaid Debit Cards
15
Low-Cost Position Uniqueness Perceived
by the Customer
Broad Target
Narrow Target
1. Cost Leadership
2. Differentiation
3a. Cost Focus 3b. Differentiation Focus
Competitive Advantage
Strategic Target
Source: Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance. 18
19
Identify the Key Drivers that will result in a Superior Customer Experience
Define from the Customer Perspective
Put into Written Form
21
Attributes Important to Customers ◦ Trust ◦ Responsive ◦ Customized/Individualized ◦ Respect ◦ Caring ◦Guidance/Good Advice
22
Responsive to my individual needs
I received special treatment from someone who respects me and cares
I will trust the bank and its advice
I will view my Encore Bank banker as my trusted financial advisor
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Customer Perspective:
When Encore Bank is successful in creating a superior customer experience, I (as a customer) will feel the bank has been responsive to my individual needs. I will feel I received special treatment from someone who respects me and cares, and I will trust the bank and its advice today and in the future. I will view my Encore Bank banker as my trusted financial advisor.
24
Customer-Centric Self-Test
7 or 86 or less
7 or 8
6 or less
Misaligned Customer-Centric
Aimlessly Wandering Misdirected
Organizational Engagement
Customer Familiarity
Source: Adapted from Forrester Research, Inc.
Scoring: 0 = Disagree with statement 1 = Somewhat agree with statement 2 = Mostly agree with statement Customer Familiarity 1. Our company has a clearly defined set of target customer segments. 2. Employees across the company share a consistent and vivid image of
target customers. 3. Market research is used to fully understand the needs and behaviors of
target customers. 4. Decision-making processes systematically incorporate the needs of target
customers. Total Customer Familiarity Organizational Engagement 1. Senior executives regularly interact with target customers. 2. Senior executives consistently communicate the importance of serving
target customers. 3. Employees across the company are recognized and rewarded for improving
the experience of target customers. 4. The quality of interactions with target customers is closely monitored. Total Organizational Engagement Source: Adapted from Forrester Research, Inc.
26
Retention ◦ Retaining the customers you already have
Penetration ◦ Generating new business from existing customers
Acquisition ◦ Generating new business from new customers
29
ATM
Online Banking
Credit
Face-to-Face
Call Center Mobile Banking Smart Phone/Tablet
Video Teller Machines
Branch Banking
Web Site
Prepaid Debit Cards
30
In the branch environment, banks need to shift from focusing on transactions to meaningful interactions.
In all customer contact situations, bankers need to understand the customer and his/her situation in a way that allows them
to create real value that is perceived by the customer.
32
The bank needs to figure out how to fit into the context of the customer’s life rather than expect the customer to fit into the
context of the bank’s physical presence.
The bank needs to also remove the obstacles/friction wherever feasible and make it as easy for the customer
as possible.
33
How do you make sure all of the delivery channels work together seamlessly to deliver a superior customer experience?
34
Organization Structure Human Resources Support
Issues Training Marketing Database Product Management &
Development Process
Relationship Sales &
Service Process Technological Support Market Segmentation
Approach Marketing Planning Process Measurement
36
A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Generally three criteria can be used to identify different market segments:
1) Homogeneity (common needs within segment) 2) Distinction (unique from other groups) 3) Reaction (similar response to marketing)
Source: Adapted from investopedia.com 40
Profitability of the
Existing Customer
Base
The General
Marketplace
The Existing
Customer Base
Market Segmentation Framework
Prioritize Market
Segments / Marketplace
Potential
Analyze Segment & Customer
Profitability
Analyze Customer
Penetration & Retention
Levels
43
• Where a person stands in their family life cycle determines their financial needs
• The three factors which identify a customer’s life cycle are: –Age – Income –Presence/Absence of Children in the Household
• Each family life cycle segment has unique financial core need(s)
45
• Stage I—Younger Empty Nest – Head of Household under 35
years old – No children living at home
• Stage II—Younger Full Nest – Head of Household under 35
years old – Children living at home
• Stage III—Mid Empty Nest – Head of Household age 35 – 54 years old – No children living at home
• Stage IV—Mid Full Nest – Head of Household age 35 -
54 years old – Children living at home
• Stage V—Older Empty Nest – Head of Household age 55
years or older – No children living at home
• Stage VI - Older Empty Nest
Retired – Head of Household age 65
years or older – No children living at home – Retired
46
1 5 9 13 17 21
2 6 10 14 18 22
3 7 11 15 19 23
4 8 12 16 20 24
Under $25K $25K- $50K $50K- $75K $75K Plus
Young Young Mid Mid Older Empty Older Empty Empty Nest Full Nest Empty Nest Full Nest Nest Employed Nest Retired
47
The General
Marketplace
Market Segmentation Framework
Prioritize Market
Segments / Marketplace
Potential
48
15 $90,594 14.9% 7.7% $20,357 6.6% $37,348 5.0% 64 6
A C F B D G E H I J
A = Segment Number B = % of Total HHS this Segment Represents C = Average HH Loan Balance (HHS Using) D = Average HH Deposit Balance (HHS Using) E = Average HH Investment Balance (Total HHS) F = % of Total Loan Balances this Segment Owns G = % of Total Deposit Balances this Segment Owns H = % of Total Investments this Segment Owns I = Priority Rating J = Priority Ranking
50
The General
Marketplace
The Existing
Customer Base
Market Segmentation Framework
Prioritize Market
Segments / Marketplace
Potential
Analyze Customer
Penetration & Retention
Levels
51
15 $90,594 14.9% 7.7% $20,357 6.6% $37,348 5.0% 64 6
A C F B D G E H I J
A = Segment Number B = % of Total HHS this Segment Represents C = Average HH Loan Balance (HHS Using) D = Average HH Deposit Balance (HHS Using) E = Average HH Investment Balance (Total HHS) F = % of Total Loan Balances this Segment Owns G = % of Total Deposit Balances this Segment Owns H = % of Total Investments this Segment Owns I = Priority Rating J = Priority Ranking
15 $19,474 20.6% 14.8% $ 9,746 10.1% $20,581 12.4% 56 4
Overall Bank Marketplace Bank Customers
53
Profitability of the
Existing Customer
Base
The General
Marketplace
The Existing
Customer Base
Market Segmentation Framework
Prioritize Market
Segments / Marketplace
Potential
Analyze Segment & Customer
Profitability
Analyze Customer
Penetration & Retention
Levels
54
15 14.8% $102 11.3%
16 8
A B C D E F
A = Segment Number B = % of Total HHs this Segment Represents C = Average HH Profit (Dollars) D = % of Total Profit this Segment Generates E = Priority Rating F = Priority Ranking
56
Older Empty Nest Employed
55-64 years old Income: $25,000+
No Children at Home
Older Empty Nest Retired 65+ years old
Net Worth: $90,000+ No Children at Home
Mid Empty Nest/ Mid Full Nest 35-54 years old
Income: $25,000+
Young Empty Nest/ Young Full Nest 18-34 years old
Income: $25,000+
57
Under $25K
$25K-$49K
$50K-$75K
Over $75K
#1 YOUNG EMPTY NEST
1 5 13 17 21
2 6 14 18 22
3 7 15 19 23
4 8 16 20 24
Senior Relationship Manager
Relationship Manager
Relationship Manager
Relationship Manager
Relationship Manager
9
10
11
12
#2 YOUNG FULL NEST
#3 MID
EMPTY NEST
#4 MID
FULL NEST
#5 OLDER EMPTY NEST
EMPLOYED
#5 OLDER EMPTY NEST
RETIRED
60
Preparing for Retirement
Financing Children’s Education
Paying Off Debt (Mortgage & Other Debt)
Helping Elderly Parents
62
Ease of doing business—low-touch methods Strong desire to stay in control Desire variety of options and supporting information Accumulating funds in 401(k) and pension plans Saving/investing for retirement & paying college expenses Need help in planning for retirement (concerned about outliving
their retirement dollars) need someone with expertise they can trust
Want convenient, quick, hassle-free credit
63
Older Empty Nest Retired ◦ Traditional branch banking
Older Empty Nest Employed ◦ Mixed channel user
Mid Empty Nest/Mid Full Nest ◦ Mixed channel user
Younger Empty Nest /Younger Full Nest ◦ Self-service banking
64
Date of birth Annual household income Marital status Children in the household (Yes or No) Occupation
67
Shawn Bennett Male Age - 51 ___________________ ___________________ ___________________ ___________________
68
(1) Engaged employees work with passion and feel a profound connection to their company. They drive innovation and move the organization forward.
(2) Not-Engaged employees are essentially “checked out.” They’re sleepwalking through their workday, putting time – but not energy or passion – into their work.
(3) Actively Disengaged employees aren’t just unhappy at work; they’re busy acting out their unhappiness. Every day, these workers undermine what their engaged coworkers accomplish.
Source: Gallup Management Journal’s semi-annual Employee Engagement Index 71
(1) Engaged Employees _____% _____%
(2) Not-Engaged Employees _____% _____%
(3) Actively Disengaged _____% _____% Employees
Source: Gallup Management Journal’s semi-annual Employee Engagement Index
General Workplace
Financial Services
72
Revenue Generation Profitability
Customer Satisfaction Employee Satisfaction & Engagement
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
& Loyalty
75
Responsiveness Focus Alignment/Integration Engagement/Passion Measurement Leadership/Accountability
78