Lecture Materials BANK MARKETING. Lance Kessler President Lance Kessler & Associates Mechanicsburg, Pennsylvania

Transcription

1 Lecture Materials BANK MARKETING Lance Kessler President Lance Kessler & Associates Mechanicsburg, Pennsylvania August 2, 2016

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3 Graduate School of Banking at the University of Wisconsin - Madison

4 Bank Marketing August 2 nd The Path to Superior Execution August 3 rd Marketing Planning Lance Kessler Tom Hershberger August 4 th Building and Sustaining a Relationship Development Culture Jack Hubbard 1

5 Graduate School of Banking at the University of Wisconsin - Madison 2

6 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

7 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

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9 The Path to Superior Execution The Changing Environment Developing Strategy Building Structure The Challenge is Execution 6

10 The Changing Environment 7

11 Lance Kessler & Associates Marketing Consulting and Training The Path to Superior Execution Financial Services Industry: Issues & Trends 1. Net income for 2014 was $152.3 billion for all FDIC-insured financial institutions. Did net income increase, remain flat, or decrease for all FDIC-insured financial institutions in 2015? a) Increase b) Remain flat c) Decrease 2. From 2013 to 2014, FDIC-insured bank deposits grew at 5.9%. From 2014 to December 31, 2015, FDIC-insured bank deposits grew at %. a) 2.6% b) 3.8% c) 5.2% d) 8.2% 3. Were total loans for all FDIC-insured financial institutions on December 31, 2015 higher than, lower than, or about the same as total loans on June 30, 2007? a) Higher than b) Lower than c) About the same 4. As of December 31, 2015, noncurrent loans decreased to % of all loans outstanding on December 31, a) 1.56% b) 1.96% c) 2.71% d) 3.94% Issues and Trends in the Financial Services Industry

12 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 32% of customers? a) Branches b) Mobile c) Internet d) ATM 6. Within just ten short years, we ve gone from percent of our day-today 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. % of consumers whose bank offers a mobile app have downloaded it. a) 23% b) 56% c) 61% d) 72% 8. % of consumers still visit their branch at least 5 times a year. a) 44% b) 56% c) 65% d) 74% 9. % of small businesses are in the branch monthly. a) 60% b) 70% c) 80% d) 90% Issues and Trends in the Financial Services Industry

13 Lance Kessler & Associates Marketing Consulting and Training The Path to Superior Execution 10. When business customers were asked to rank what they find most lacking in their bank s business services, which of the items below was ranked number 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 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. % of Millennials would rather go to the dentist than listen to what their banks are saying. a) 52% b) 63% c) 71% d) 84% 13. % of Millennials demonstrated basic financial literacy. a) 24% b) 31% c) 44% d) 49% 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% Issues and Trends in the Financial Services Industry

14 Lance Kessler & Associates Marketing Consulting and Training The Path to Superior Execution % of companies believe that they are delivering a superior customer experience. % of customers perceive their experiences as superior. a) 8% b) 20% c) 32% d) 44% Issues and Trends in the Financial Services Industry

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16 13 Source: Only the Paranoid Survive Andrew S. Grove

17 ATM Kiosk Call Center Credit Debit Card Online Banking Mail 14

18 Branch Banking Web Site ATM Face-to-Face Video Teller Machines Credit Prepaid Debit Cards Online Banking Call Center 15 Mobile Banking Smart Phone/Tablet

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20 Developing Strategy 17

21 Competitive Advantage Low-Cost Position Uniqueness Perceived by the Customer Strategic Target Broad Target 1. Cost Leadership 2. Differentiation Narrow Target 3a. Cost Focus 3b. Differentiation Focus 18 Source: Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance.

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24 Identify the Key Drivers that will result in a Superior Customer Experience Define from the Customer Perspective Put into Written Form 21

25 Attributes Important to Customers Trust Responsive Customized/Individualized Respect Caring Guidance/Good Advice 22

26 Responsive to customers individual needs Received special treatment from someone who respects them and cares Trust us and our advice today and in the future Viewed as trusted financial advisor 23

27 Customer Perspective: When we are successful in creating a superior relationship sales & service experience, our customers will feel we have been responsive to their individual needs. They will feel like they have received special treatment from someone who respects them and cares, and they will trust us and our advice today and in the future. We will be viewed as their trusted financial advisor. 24

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29 Customer-Centric Self-Test Customer Familiarity 7 or 8 Misaligned Customer- Centric 6 or less Aimlessly Wandering Misdirected 6 or less 7 or 8 Organizational Engagement 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. Source: Adapted from Forrester Research, Inc. Total Organizational Engagement 26

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31 Loans Deposits Fee Income 28

32 Retention Retaining the customers you already have Penetration Generating new business from existing customers Acquisition Generating new business from new customers 29

33 Lance Kessler & Associates Marketing Consulting and Training The Path to Superior Execution Competitive Strategy ~Key Questions~ 1) What is your competitive advantage / primary point of difference? 2) Does it relate to price or value? 3) If it relates to value, what dimension of value is your primary point of difference? 4) Do you want to be product-focused or customerfocused? 5) Do you want to be transaction-oriented or relationship-oriented? 6) Is your strategic target the broad market or selected segments in the market? 7) How does your competitive strategy relate to each employee s role in the organization? 8) Are you committed enough to your competitive strategy to stick to it over the long-term? 30

34 Branch Banking Web Site ATM Face-to-Face Video Teller Machines Credit Prepaid Debit Cards Online Banking Call Center 31 Mobile Banking Smart Phone/Tablet

35 Human Engagement Digital Engagement 32

36 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. 33

37 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. 34

38 How do you make sure all of the delivery channels work together seamlessly to deliver a superior customer experience? 35

39 Building Structure 36

40 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 37

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42 Strategy Structure & Processes Targeted Customers Targeted Customers 39

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44 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) 41 Source: Adapted from investopedia.com

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47 Market Segmentation Framework The General Marketplace Prioritize Market Segments / Marketplace Potential The Existing Customer Base Analyze Customer Penetration & Retention Levels Profitability of the Existing Customer Base Analyze Segment & Customer Profitability 44

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49 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) 46

50 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 years old No children living at home Stage IV Mid Full Nest Head of Household age 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 47

51 Young Empty Nest/ Young Full Nest years old Income: $25,000+ Mid Empty Nest/ Mid Full Nest years old Income: $25,000+ Older Empty Nest Employed years old Income: $25,000+ No Children at Home Older Empty Nest Retired 65+ years old Net Worth: $90,000+ No Children at Home 48

52 Young Young Mid Mid Older Empty Older Empty Empty Nest Full Nest Empty Nest Full Nest Nest Employed Nest Retired Under $25K $25K- $50K $50K- $75K $75K Plus

53 Market Segmentation Framework The General Marketplace Prioritize Market Segments / Marketplace Potential 50

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55 15 $90, % 7.7% $20, % $37, % 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 52

56 Market Segmentation Framework The General Marketplace Prioritize Market Segments / Marketplace Potential The Existing Customer Base Analyze Customer Penetration & Retention Levels 53

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58 Overall Bank Marketplace 15 $90, % 7.7% $20, % $37, % 64 6 A C F B D G E H I J Bank Customers 15 $19, % 14.8% $ 9, % $20, % 56 4 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 55

59 Market Segmentation Framework The General Marketplace Prioritize Market Segments / Marketplace Potential The Existing Customer Base Analyze Customer Penetration & Retention Levels Profitability of the Existing Customer Base Analyze Segment & Customer Profitability 56

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61 % $ % 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 58

62 Young Empty Nest/ Young Full Nest years old Income: $25,000+ Mid Empty Nest/ Mid Full Nest years old Income: $25,000+ Older Empty Nest Employed years old Income: $25,000+ No Children at Home Older Empty Nest Retired 65+ years old Net Worth: $90,000+ No Children at Home 59

63 Core Needs Sales & Service Needs Delivery Channel Preferences 60

64 The Challenge is Execution 61

65 #1 YOUNG EMPTY NEST #2 YOUNG FULL NEST #3 MID EMPTY NEST #4 MID FULL NEST #5 OLDER EMPTY NEST EMPLOYED #5 OLDER EMPTY NEST RETIRED Under $25K $25K-$49K $50K-$75K Over $75K Senior Relationship Manager Relationship Manager Relationship Manager Relationship Manager Relationship Manager 62

66 Mid Empty Nest / Mid Full Nest Years Old Household Income: $50,

67 Developing a Financial Plan Preparing for Retirement Financing children s education Paying Off Debt (Mortgage & Other Debt) Helping Elderly Parents 64

68 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 65

69 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 66

70 Shawn Bennett Male Age - 51 You proactively contact him for a face-to-face appointment 67

71 Consultative Selling (Focused on Customer Needs) Hard Sell (Pushing Products) Level of Intensity 68

72 Date of birth Annual household income Marital status Children in the household (Yes or No) Occupation 69

73 Shawn Bennett Male Age

74 Strategy Structure & Processes Employee Behaviors Targeted Customers Targeted Customers 71

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76 (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. 73 Source: Gallup Management Journal s semi-annual Employee Engagement Index

77 General Workplace Financial Services (1) Engaged Employees % % (2) Not-Engaged Employees % % (3) Actively Disengaged % % Employees 74 Source: Gallup Management Journal s semi-annual Employee Engagement Index

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79 Key Measures 76

80 Employee Satisfaction Customer Satisfaction & Loyalty Revenue Generation Profitability 77

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82 Job for Life Brutal Accountability

83 Responsiveness Focus Alignment/Integration Engagement/Passion Measurement Leadership/Accountability 80

84 Lance Kessler & Associates Marketing Consulting and Training 6206 Charing Cross Mechanicsburg, Pennsylvania Telephone: