Definitions Flashcards
anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or a need. All banking services including checking and savings accounts, CDs, safety deposit boxes, online banking, cash management services, and loans .
Product
The addition of a new product to an existing product line or of new product lines to an existing product mix.
product expansion
A group of products that have similar characteristics or serve related functions. In banking, the savings … includes passbook, statement, and money market savings accounts.
product line
The successive stages of a product sales and profits. The four stages, which vary in length from product to product, include INTRODUCTION which provide slow sales growth and loss and profits, GROWTH which indicates rapid growth in sales and profitability, MATURITY which is a slowed sales growth rate and reduced profits, and DECLINE
product lifecycle
The assignment of an individual or department to be responsible for introducing, marketing, and ensuring profitable sales of a product or product line.
product management organization
Do you need combination of for promotional activities: advertising, sales promotion, public relations, personal selling, that results in a profitable demand for products
promotion mix
Activities that communicate the availability of products or services to the target market to increase customer awareness and demand
promotion
A coordinated program of policies, conduct, and communication designed to foster goodwill and gain esteem from an organization’s Publics, which focuses on nonrevenue generating activity
public relations
The principle way to collect primary information
• Used to track year-over-year trends in satisfaction and loyalty.
• New account surveys allows marketers to see feedback from individuals/businesses that have initiated new relationships with the bank.
• Post-transaction surveys: random selection of customers, immediately following an interaction. Normally a phone call or online survey or on a mobile device for a financial institution.
Surveys
In collecting data there are three main elements
- Selecting a survey method
- Designing a questionnaire
- Fielding the study
Surveys
Usually composed of 10-12 customers. Used to identify topics and content that require additional discovery using other customer survey methods.
Focus Groups
Strengths, Weaknesses, Opportunities and Threats.
SWOT
- Conduct a self assessment. Evaluating internal secondary data and amassing feedback from customers and non customers through primary research
- Marketing Strategies (Product, Price, Promotion, and Place) - Analysis of the macro-environmental factors. Include employment trends, retail trade activity, and construction activity. Study demographic environment, social and cultural factors, political and legal environment.
- Analysis of the micro-environmental factors. Includes information on the bank’s customers. Can be obtained from surveys. Analysis of potential customers.
Answers the question, “ Where are we now?”
Situation Analysis
To gauge how much your target audience knows your brand.
Brand Awareness Study
One of the better indicators of a bank’s competitive strength is its market share- one bank’s or branch’s portion of all the banking business done in a market area.
This website includes a section of data called Summary of Deposits. This is the best source for competitive bank data.
Having the largest market share is not always ideal. Goal is to increase share of profitable markets.
Deposit Share FDIC
Helps you understand where you stand in the market compared to competition. It is used to measure all measures of brand awareness and how you stand next to competition.
Share of Voice
- Should be at the epicenter of all your marketing and business decision making
- Aims at capturing relevant information on the customer-perceived value of your organization
- Can be captured in various ways
- Used to improve customer satisfaction, product delivery, loyalty, and increase revenue for your organization
Voice of the Customer (VOC)
Customer Service & Experience Surveys, Customer Interviews, Mystery Shops, Focus Groups, Advisory Boards, Online Survey/Reviews, Geo-targeting branch visit surveys, in-app feedback, Social Media, Live chat, net promoter score
Examples of Voice of the Customer (VOC)
Can be done internally for surveying employees and their customer services skills and product knowledge and externally to monitor competition.
Mystery Shops
decisions about product or branch network adjustment, future development, or brand positioning and messaging.
Strategic planning
the need for brand awareness will vary. Existing market share, visibility, and longevity to each unique market. Most relevant to those in a newer marketplace. All brands benefit from continued awareness or top of the funnel market activity.
Awareness Building
Once awareness is attained, the next phase is to generate desire and preference for your brand, products and services. This kind of marketing is mid funnel marketing.
Demand Generation
Bottom of the funnel marketing. Focused on moving a perspective buyer. More time or context sensitive.
Targeted Promotion
Focuses more on careful planning and placement to encourage an unplanned purchase. Less relevant for a mortgage type product. Useful for products with online applications like credit cards.
Impulse Conversion
Demographic data for strategic planning may only have a couple of years. for location data is much shorter, perhaps only hours, should be targeted for short and impulse promotions.
data shelf life
Advanced analytics software solutions that aggregate and organize a bank’s various data points to provide a more holistic view of its customer base. Enhanced analytics that include: -House holding of customers -Demographic and psychographic insights -Customer share of wallet -Product usage -Customer profitability
CRM/MCIF
Secondary Market mortgage, insurance or wealth service, credit card provider, treasury management service provider, marketing and media data (Google, ad networks)
Third Party Data
Uses the banks core suite, and other analytical tools to create a detailed and targeted picture of a customer or a small group of customers. Involves applying analytical information about individuals to the marketing process so that each customer can be seen and marketed to. Enables the bank to see the needs, wants, preferences and buying patterns of customers. For a more customer focused organization.
CRM: Customer Relationship Management
Provides an alternative that allows marketers to integrate data from multiple sources throughout the bank and combine with demographic, psychographic profiles and profitability information. Tracks vital information on customers, products and services, competitors, demographics and more. A universal tool for banks of all sizes and complexities.
MCIF: Marketing Customer Information File
is an analytical tool that gathers transaction details and data on usage of bank products and services. You can identify key trends and opportunities for new products and services etc, patterns and trends that are developing and can analyze thousands of fields of data.
Data Warehouse
an important source of revenue and ensures a high degree of loyalty from customers. Furthermore, if the completion is advertising a new or different service, most interested customers will inquire whether their bank offers the same service before going to the competition.
Cross-sell next best product
examines customer expectations for service, products, sales activities, and relationship communications. Examples include: friendly greetings, accurate transactions, employee availability, and employees that express appreciation for the customer’s relationship. Loyalty is an extension of satisfaction.
desired experience
Every interaction you’ve had with a memorable or not is part of the this. If a customer is thinking about switching banks, they will first start by visiting your website. Website is an element of the this. They then visit the ‘Contact Us’ link to request more information.
Customer Journey
5 principles are: Geographic, demographic, psychographic, volume, and benefit segmentation.
Types of Segmentation
Divides the market according to geographic units. Example: Marketing debit cards, mobile banking, and low-cost checking in a marketplace with a college and a large concentration of the population between the age of 18-30.
Geographic Segmentation
categorizes the market in terms of population characteristics. Such as age, sex, income, occupation, and position in the life cycle. Example: bank establishes a professionals banking group specifically for attorneys accountants, and doctors has targeted an occupational segment. A bank that develops an equity credit line aimed at homeowners with incomes in excess of $75,000 is targeting another specific this.
Demographic Segmentation
classifying the market in behavioral terms according to lifecycle, lifestyle, or personality profile. Example: “young professional on the fast track” as a prime market segment for debit and credit card sales.
Psychographic Segmentation
the marketer’s attempt to distinguish heavy, medium, and light users of a product.
Volume Segmentation
the process of categorizing the market in terms of the main product-related benefits that different groups seek. Example: club-oriented checking accounts where customers receive access to travel opportunities and social events when they possess the related account.
Benefit Segmentation
your recent customer broadened by a combination of billboard, pre-roll video social ad, and SEM bought the initial product that you were offering, but within a given time frame also expanded their purchase with additional products or services.
“Halo”
What products are offered? What new services have been offered?
Product
What are the fees or service charges? What interest rates are paid/charged? What growth or decline has occurred in their portfolios that differ from yours?
Pricing
What advertising and promotional techniques are competitors using? What markets are they targeting? What do their current strategies appear to be? Are they effective? How much are they spending to deliver their message?
Promotion
What kind of facilities does the competition have? How do yours compare? How do your locations compare with theirs in terms of convenience and access? How do your branch services compare? How do you compare for hours of service? Are new locations being planned? Are locations scheduled to close? What delivery channels are available?
Place
Involves organizing information that is gleaned from published material or obtained when bank or other personnel actually “shop” the competition, posing as prospective customers
Mystery Shops
the measurement of the economic performances of your marketing program. The specific values of your this may vary by campaign and by product type. Channels leveraged, promotional details, and agreement with your bank’s CFO or finance department.
ROI
You recently completed a marketing program for a loan product with a total of $20,500 in expenses. By the end of your campaign, you attracted 900,000 in loan balances with a weighted average rate (WAR) of 4.50% and a cost of funds of .5%You also saw an incremental lift in interchange and fee income of $4,200.
ROI = 96%
(Incremental financial value gained as a result of marketing investment/cost of marketing investment)/marketing investment
ROI
To determine projected sales this review year over year sales statistics during the same time frame. Then using an MCIF or data from finance, determine the average balance of the products that are part of the campaign
Pre-campaign ROI = (x-y)/y
Product lift
allows for refined and targeted marketing, which can increase leads, revenue, website traffic, and brand awareness. can contribute to improved SEO. provides audience insight into who your “fans” are. Meaning who is interacting with your content. And includes things like age, sex, and location. You can even utilize for paid search where you can develop incredibly targeted communications based on your defined target audience.
Social Media Analytics
Likes, shares, followers, engagement rate, click-through-rate, reach.
Social Media KPI’s
Directly influenced by a website’s performance relating to the quality and relevancy of content and keywords, the website’s popularity, and the overall quality of the site. Utilizing this you can garner insights into how your online audience is interacting with your website and can effectively optimize content and the user experience. Ultimately attributing to the increased organic traffic leads and revenue for your organization.
Website and Search Engine Optimization (SEO)
- runs on a PPC model which generally has higher CTR
- typically has lower CPM
Search Engine Marketing (SEM) and Digital Display
success metric – increase in brand awareness.
Measured by – conducting top-of-mind awareness survey, seeing an increase in website traffic, receiving increase in social media followers, and receiving online impressions through search & online display
KPI for Branding
Success Metric- increase in accounts, loans, and/or an increase in qualified leads for products through digital channels
Measured by – tracking clicks, conversions
KPI for Growing Customer Relationships
Success metric- impressions, reads, downloads, and shares of applicable content
Measured by- reads and shares
KPI for positioning the bank as a resource for financial literacy
you only pay once a user clicks on the ad. can be a more expensive strategy to deploy but it generally has a higher click through rate than other channels. As you are marketing to your audience in real time in their moment of need which is a key advantage.
Pay-Per-Click (PPC)
are static or animated digital billboards or banner ads that can be targeted to your particular online users based on demographics, geographic, or psychographic profile. are a strong channel for brand awareness and is increasing website traffic. Typically with a lower cost per thousand (CPM) you can get a substantial amount of ad impressions
Display Ads
When writing content for your bank’s website, make sure you create quality content that highlights your products & services, customer support, company information, and financial literacy resources. Web pages should contain keyword-rich text and focus on condensed subject matter.
SEO
the process of gaining traffic and visibility from search engines through paid efforts. PPC (pay-per-click). Allows you to reach people as they search for keywords or phrases. Google Adwords is a good place to start.
SEM
you can foster information on audience insights. Which includes detailed information on demographics, device usage, interest and location.
Google Analytics
helps you understand how people are getting to your site and from which channels
Acquisition Analytics
provides insights on what page or pages your online users are visiting and for how long and what events are taking place on your site. For example, an event can be considered completing a form, downloading content, or opening an account.
Behavioral analytics
Comparing to prior periods, you can evaluate how content changes have performed on your site, indicating how engaged your target audience or customer is with your content. Understanding this KPI can allow you to evaluate page content, backlinks, UX, and CTA’s for improved customer experience, lead generation, and conversions.
Using various analytics available to you and analyzing these trends, you can then develop actionable insights and make better-informed decisions.
Page views
It should be valued, governed, and managed as we would handle any other valuable asset
Data
- Know what matters most
- Be a data advocate
- Leveraging data for decision making
- Understand the C-Level data
- Add value through data
- Be a student of your data
ways to communicate the value of data
understand your critical data elements. Be clear about the data points that are most critical to your success and take the initiative and the time to thoroughly review each. Creating and communicating common definitions and consistency to use across the organization.
Know what matters most
participate in data hygiene initiatives. Even when the source is outside of marketing, marketing’s ability to produce strong results is significantly impacted by the quality of all data.
Be a data advocate
Lead with data. Be prepared with data-driven logic, and plans to improve the focus on the data. The value in the data and the confidence in your recommendations.
Leveraging data for decision making
Know what levers that matter most to decision making and understanding and communicate these factors in relation to all marketing recommendations.
Understand the C-Level data
understanding and sharing data that the sales team finds useful in decision making and helping them to prioritize time and effort through the customer and through customer profitability data. This will amplify the value of the data and role of marketing
Add value through data
Tapping into your many database sources to provide proactive answers to businesses questions, like how to best cross-sell, what product to offer in the current environment, or how to reduce attrition based on customer transactional patterns
Be a student of your data
Marketing decisions that affect rate such as offering a premium rate to attract deposits or even creation of a new higher rate product must be made only through good financial data and collaboration, typically through the
Asset and Liability Committee (ALCO)
When the marketing plans and the marketing budget are presented for approval, they must determine:
- marketing initiatives that will be needed to achieve the bank’s objectives and goals for the upcoming year
- Marketing dollars that re justified to achieve the bank’s objectives and goals
Senior Management
Loan growth and attracting new loan customers may be an area of weakness or just reflect an average marketplace for generating loans. If you know that your bank is in constant need of loans, you can tailor your approach to the market, your promotion, and other activities to help ease the problem or assist in loan growth.
Loan to deposit ratio
Deposits brought into the bank through marketing efforts must be put to use on the asset side of the balance sheet. New loans must be funded from the liability side.
Rate setting
The marketing staff must obtain rate information from the manager of bank investments and then must demonstrate that the difference between the cost of funds and the use of those funds is sufficient to generate a reasonable margin of profit for the bank.
Example of Rate setting
- comparative operating statistics
- comparative market shares
- comparison of marketing strategies (products, pricing, advertising, and promotional activities, service delivery, community involvement, and selling efforts)
- promotional activities, service delivery, community involvement, and selling efforts)
- comparison of product offerings (identification of product gaps or overlaps)
4 categories of information that should constitute the analysis of the bank’s competitive environment:
Marketers should compare the bank’s condition and income statements with those of its principal commercial banking competitors. Provides insight for product decisions, track the impact of market conditions on competitor success. Performance information on every FDIC insured institution may be obtained from call reports and income statements filed with the FDIC.
Uniform Bank Performance Report (UBPR)
enacted by Congress in 1977. The intention of the law and its subsequent regulations has been to encourage banks to meet the credit needs of the communities in which we operate, including low and moderate income (LMI) areas, consistent with the safe and sound operation of such institutions (and not simply generate deposits). The this record of a bank is considered in applications for future mergers and acquisitions or new deposit facilities. Likewise, this must be a consideration when any deposit-taking activity might be impacted such as a branch or ATM closure.
The Community Reinvestment Act (CRA)
must also be a consideration in general marketing activities as it is critical that targeting does not inadvertently filter out certain geographic areas based purely on location. This includes several tests that banks must pass to demonstrate compliance, varying a bit by asset size. One way to qualify for this credit is through the capture of qualifying volunteer hours including time spent on financial literacy programs, fundraising activities, and board memberships. Tracking qualifying donations or community investments, loan programs or volunteer hours can be a bit complex, but the capture of these credits is critical to your bank’s growth opportunities.
The Community Reinvestment Act (CRA)
- sharing of information about the institution’s lending services
- information regarding the community’s credit needs
- informing community members how to get or use credit
- Assisting in providing credit services or information to the community or an investment, deposit, membership share, or grant that has as its primary purpose community development
CRA qualified charitable donations must include:
- Equity investment in a small business venture capital company
- Investment or grant to a CDC
- Investment in a mortgage backed security targeted to low–or moderate-income borrowers
- Investment in bonds with a primary purpose consistent with community development
- Deposit or membership share in a community development financial institution (CDFI)
- Investment in a CRA mutual fund that has targeted investments within the fund to the bank’s AA
- Grants or donations
Common investment strategies for CRA
- Target should be consistent, or at least compatible with the bank’s goals and image. Example: Bank leading wholesale bank cannot suddenly target retail installment loans.
- Seek markets that are consistent with its resources. Example: If a certain market segment can only be reached through mass media advertising and the bank cannot afford the expenditure, then the project is doomed.
- Firm should seek markets that will generate not only sufficient volume, but also profitable volume. Example: Bank targets cost- conscious checking by offering free checking, but lose money on 80% of them, the bank balances this out by offering overdraft protection.
- Firm should seek a target market for which the number and size of competitors is small. Example: Aiming at a saturated market requires winning customers away from the competition.
Target Marketing
When marketing collaborates with the lines of business to build marketing plans, it is important that the process intentionally aligns the bank's resources to address the needs and preferences of the identified target markets. -Align Products and Services -Align sales & service approach -Align delivery channels- Align promotional approach and messaging
Target Marketing
can be onboarding, how you are selling a service, it can be a service this and how you are providing customer service to a particular client. One thing that is often overlooked is the sales cycle.
Journey
Home-buying experience and research phase and discovery phase with who to work with. That starts with a household conversation with a spouse, to an online search, and maybe waiting 6 months before they decide to do anything else again and maybe revisiting a financial institution that they saw 6 months previously. It is a long process, but the buying process period is sometimes very short.
Customer Journey Example
classifying the market in behavioral terms according to lifecycle, lifestyle, or personality profile. Example: “young professional on the fast track” as a prime market this for debit and credit card sales.
Psychographic Segmentation
The passing of generations through different stages of need (borrowing, saving, access, preservation, etc.). Example: Baby Boomer generation is mostly retiring, the need to replace their borrowing with borrowing by a younger generation is important. A way to communicate to different groups of customers in a way that is most efficient and effective by understanding the influences that shape their lives.
Generational Segmentation
Segmentation HELOC Example: would receive the most standard marketing email and landing page as you no very little else about their intent.
Segment 1: Customers with No HELOC
Segmentation HELOC Example: (Customer who have not drawn from their line of credit) could receive a slightly altered version that includes messaging about taking advantage of the credit they have.
Segment 2: Customer with no Draw on HELOC (dormant HELOC)
Segmentation HELOC Example: (customers with an active HELOC) should probably not receive this campaign.
Segment 3: Customer with active HELOC
(customers or prospects who clicked a HELOC-related content) might need retargeting and opportunities to fill out a form or contact a banker.
Segment 4: Customer who view HELOC product page or click HELOC article from an email
Specific, Measurable, Attainable, Realistic and Timely Based
SMART Goals
- Essential to defining the organization’s competitive advantage
- Involves making some key decisions related to whether you will compete on price or some dimension of value
- Involves deciding whether your strategic targets will be a broad target or narrow target(s)
- Must be communicated so it is totally understood by everyone in the organization
- Must be aligned to all aspects of the organization to support and deliver the competitive advantage
Competitive Marketing Strategy
-No more than 3-5
-Typically 3 years
-Involves action steps related to different lines of business and their goals
-Can involve the infrastructure provided by support areas
Ex. Create a Customer Centric/Customer Experience throughout ABC Bank
Key Strategic Objectives/Goals
helps you turn data into information that gives insight into your existing and prospective customers. These insights should be then turned into actions that align with your competitive strategy. helps you store, organize, access and analyze all of your data in once place. a relational database that allows you to analyze all of the relevant variables associated with your market segmentation and strategy.
MCIF
where a person stands in their family, their life stage determines their financial needs. Factors determining a life stage are: age and income.
Example: Head of household between 35-54 with household income between $50k - $100k.
Life stage segmentation
determine which of the segments has the greatest revenue potential for establishing, deepening, and broadening relationships with those households. Those with the greatest potential will be termed as high priority market segments for existing and prospective customers.
Prioritize market segments
identified so the bank can target them for the service establishing and deepening, broadening relationships within the households in those segments.
needs and preferences of the different segments
After you identify and understand the unique needs of the market segments you develop this so that you can effectively communicate to the customer contact employees who the existing and perspective customers are and what makes them unique.
Personas
Which step is this part of in the market segmentation approach?
Identify and define market segments
Step 1
Which step is this part of in the market segmentation approach?
Prioritize market segments
Step 2
Which step is this part of in the market segmentation approach?
Identify and understand the unique needs of market segments
Step 3
Which step is this part of in the market segmentation approach?
Create personas
Step 4
the aggregating of people into groups (segments) that have common needs and will respond similarly to a marketing action. to identify a specific group and then pursue it with a tailored mix of product, pricing, promotion, and distribution.
Market Segementation
Homogeneity (common needs within segment)
Distinction (unique from other groups)
Response (similar response to marketing)
Identify Different Segment Markets
- Fully understand each individual customer’s needs and preferences and anticipate future customer needs
- Target the right offer, product, or service to the right customer, at the right time, through the right channel
- Avoid irrelevant, untargeted cross-sell offers that will weaken the banker’s relationship with the customer
- Deliver value with each interaction to improve trust and build long-term relationships
- effectively and efficiently allocate scarce resources
Benefits of Market Segmentation
marketing collaborates with the head of each line of business either one on one or with the head of line of business plus one or 2 other leaders in that line of business. Together they build marketing plans on the identified target markets for that line of business. Marketing facilitates the leaders in each of the lines of business through the marketing planning process.
Marketing Planning: Consumer Banking Line of Business
Ideally there would be 8-12 employees on the marketing planning group. Example: If the group is focused on the consumer market, there would be representation on the planning group from the different lines of business that serve the segments in the consumer market. Examples of segments in the consumer market would be retail banking, mortgage banking, and wealth management. This representation would typically involve employees from different level of responsibility that would include those lines of business. This planning group would build marketing plans to build the opportunities with the identified target markets related to the consumer banking.
Bank Wide Marketing Planning Group Focused on Consumer Markets
8-12 employees on the group, employee representation across all the lines of business. This group builds marketing plans focused on the identified target markets for each of the lines of business served by the bank. This type is typically done with smaller community banks.
Bank Wide Marketing Planning Group Focused on Consumer Markets & Business Markets
there are often gaps to the need of preferences of the target market, and what the bank has available and understanding the needs and preferences your target market should be followed by a GAP analysis.
Align products & Services
will surface where you should be focusing on your product enhancement and product development efforts.
GAP analysis
often determined in conjunction with the agreed upon competitive strategy. During the development of the competitive strategy, what typically comes to surface is what the this approach would be. Many banks’ relationship this emerges with they are trying to build relationships with their competitive strategy.
Align sales & service approach
should be customized to the target market. The customization would include messaging, type of channel the target market prefers, personalization, etc.
Promotional Approach and Messaging
- Content - newsletters, blogs, white papers, eBooks, webinars, events
- Public Relations Activities
- Email Marketing
- Social Marketing
- Personnel Training or sales incentives
- Product development/enhancements
- Promotional/pricing campaign
- Direct mail
- Customer Onboarding/Re-boarding (cross-sell)
- Paid Media - Traditional (radio, newspaper, magazine, TV)
- Outdoor-Billboards
- Website and SEO
Marketing Tactics
First part of marketing planning involves conducting what? and answers the question “where are we now?”
Situation analysis
typically include the following areas:
• Analysis of the Economic Market Environment and Trends
• Analysis of Industry Trends
• Analysis of the Total Competitive Environment
• Analysis of Financial Service Customers
• Summary of Strengths, Weaknesses, Opportunities, and Threats (SWOT)
situation analysis
This category defines a particular group with specific wants and needs that your plan is focused on (i.e. age, income, education, behaviors or type of business, annual sales, life stage of the business, etc.)
Target Market
This category states the overall purpose of the plan
Objectives
This category specifically quantifies what the plan will accomplish. The this typically quantify the dollars that will be generated from customer acquisition, customer retention, and expansion of the customer relationship.
Goals
This category contains a general paragraph that tells how the plan will accomplish the objectives and goals for this plan. Every marketing plan should reflect the bank’s agreed upon overall competitive this. This individual …in the marketing plan will be showing what they are going to do to accomplish the objectives and goals for this specific plan.
Strategy
This category states very specifically what has to be done in order to implement the plan. This …section should address human engagement and digital engagement …. Along with any infrastructure …necessary to connect with the target market. They must include the target market or individuals that will be responsible for each individual …and by what completion date.
Tactics
This category establishes very definitely who will be directly responsible and … for the success of this marketing plan. The … person must be identified by name, a specific name. Ex. Jane Smith, etc. Preferably there will only be one person accountable for each marketing plan never more than 2 people
Accountability
This category specifically states the identifiable … associated with the tactics in this plan. mean to be able to do that tactic, there must be dollars put in the marketing budget and those dollars must be approved to be able to move forward.
Hard Dollar costs
These tactics would be those tactics which are in the marketing plan but they can be accomplished without putting any more dollars into the marketing budget.
Soft dollar tactics
- Advertising (including branding) and Content Marketing
- Sales Promotions
- Marketing Research
- Training in Sales and Customer Service
- Public Relations
Marketing Budget Broad Categories
Some banks base their budget on the size of their assets. For example: A bank may decide to spend amount equal to 1/10th of 1% of it’s total assets on marketing. If you were a $1b bank, 1/10th of 1% of your assets would mean that you would spend $1m on marketing. This methodology is not based on what the bank needs to do from a marketing standpoint to be successful in the upcoming year
Marketing Budget: Percentage Method
This method involves the bank determining what its competitors are spending on marketing and following their lead. Bank strategies may be different from its competitors. If the bank uses this methodology, it is the essentially letting its competitors determine it’s budget.
Marketing Budget: Competitive Parity Method
A bank simply increases its marketing budget by a certain percentage each year. This percentage may be on the rate of inflation, the growth rate of the bank, etc. This method does not factor in the specific marketing tasks and or initiatives that will need to happen in order to achieve the bank’s objectives and goals.
Marketing Budget: Incremental Method
The bank bases its marking budget off of what it will cost to achieve the marketing’s objectives/goals it has defined for the organization. This methodology is much more complex compared to the others to implement, but over time this is a very effective approach to marketing planning and budgeting.
Marketing Budget: Objective and Task Method
Step 1: Setting Objectives/Goals – Identifying the quantifiable goals you want to achieve. The goals typically quantify the revenue that will be generated from the tactics in the marketing plan.
Step 2: Identifying Tasks/Tactics – Identify tasks needed to accomplish those objectives/goals. These tasks/tactics will relate to customer acquisition, customer retention, and the expansion of the customer relationship.
Step 3: Estimating Costs – Determining how much money is needed to achieve the objectives/goals and then allocating that amount of money to the marketing budget. These will be the hard dollar costs associated with each of the tactics in the marketing plan.
Objective and Task Method
- Vendor Risk Rating
- Company History & Reputation
- Financial Profile of the Company
- Information Security Profile
- Technology Considerations
- Risk Rating Summary
Marketing Due Diligence
- Most banks have a peer group of banks that they monitor and compare their performance to identify what the … landscape looks like and how to respond
- They also utilize market share reports and various third-party tools and resources for additional benchmarking and competitive analysis
Competition
- Staying abreast of this is crucial in the development of a marketing strategy and newly available marketing tactics, tools, and techniques
- Becoming resourceful and identifying trusted and reputable sources for information are imperative to your ongoing development as a bank marketer and staying at the forefront of understanding what’s happening in the bank industry
- By conducting research and analyzing various these, you can identify potential gaps and opportunities in your organizational or marketing strategy
Industry Trends
- Understand your customer and target audience these.
- Develop a sound marketing strategy to retain, attract, and acquire your desired audience.
- Define the appropriate tactics in which to engage and convert your desired audience
Customer Insights and Preference
Demographics- Age, geography, sex, marital status, employed/income, homeowner
Product- checking, savings or loan customer, mobile/online banking user, insurance or investments, low/high balances, debit/credit card user
Channel - branch, online, website, mobile, desktop, email, SMS, direct mail, paper, phone
Customer Insights and Preference - Examples
They are called this because they are the ratios that are generally on your call report, how bank stock investors hold you accountable, how your board of directors measures the contribution of the management team and the performance of the financial institution.
Bank Ratios and Balance Sheet
Net income/average total assets
Return on Average Assets
Net income/average total equity – many shareholder based financial institutions prefer this method because it shows how you are giving returns to their shareholder equity.
Return on Average Equity
Net interest income/ average earning assets. This depends on your bank’s strategy or the size of your financial institution.
Net Interest Margin
Interest & Dividend Income/Average Earning Assets
Yield on Earning Assets
Interest Expense/Average interest bearing liabilities & non interest bearing deposits. If you have a much higher proportion of non-interest bearing deposits, then would have a lower cost of funds.
Cost of Funds
Operating expense/net interest income + non interest income. Only top of the house ratio that is balance sheet only that is reported in board reports or to your investors. It’s basically how much does it cost in operating expense to generate $1 of revenue. Your efficiency ratio will be driven by your bank’s strategy.
Efficiency Ratio
Operating Expense/Average Assets. Also referred to as non-interest expense to average assets. Depends on your strategy and scale.
Expense Ratio
are the loans, investment securities, cash, buildings, intangibles (good will), ALLL(allowance for loans and lease losses)
Assets
the debts of borrowings of the bank. Deposits,-a debt that they own to the depositor, FHLB(Federal Home Loan Bank) borrowings, other debt. Includes interest bearing and non interest bearing.
Liabilities
with interest-based payments tied to them, all deposits that bear interest
interest bearing liabilities
without interest-based payments tied to them DDA and other liabilities.
Non interest bearing liabilities
a contra asset. It is basically a negative asset account that is your rainy day fund for potential credit losses.
ALLL
increase interest income, reduce interest expense, reduce risks and therefore provision and capital allocation, increase fees, or reduce operating expense
5 ways to improve profits
- Connect to Strategic Objectives
- Map to Strategic Goals
- KPIs or Balanced Scorecard
Strategic Reporting
- ROI
- Dollar returned per marketing dollar spent
Campaign Reporting
Diversify loan portfolio to mitigate risk and increase net interest margin
Sample Strategic Objective
Increase NIM 10 basis points next fiscal year
Sample Strategic Goal
new customers, new checking accounts, increase in loan volume, increase in deposit volume, increase in fee income, ROI, customer retention, customer satisfaction/ net promoter score, cross-sell ratio, leads generated, downloads (eBook, whitepaper, template), Likes shares followers (social campaign), CTR, Click to open rate (CTOR)
Measurements of Success
- determine how much you have to spend
- determine your marketing mix (look at tactical spend)
- match with ALCO, senior management and organizational goals
- Measure and control
- adjust
Marketing Budget
- product and services pricing
- target audience for products and services
- what are your KPIs?
- Internal and external audiences
- segmentation and measurement
Strategic goals for department/business lines
- Avoid UDAAP
- Compliance check-offs and tracking
- Contracts, licensing and IP rights
Regulatory Limitations
- Measures the banks liquidity by comparing the bank’s total loans (assets) to the bank’s total deposits (liabilities)
- The ratio is expressed in percentage
- Used to asses a bank’s liquidity (as well as deposit borrowings to cover loans above a bank’s deposit levels)
Loan-to-deposit ratio
loans/deposits
Loan-to-deposit ratio
an interest rate average used to determine leading bank interest rates
LIBOR
interest rate in which banks charge one another to borrow short-term money and is set by the Federal Reserve Board
Fed Funds Rate
interest rate commercial banks charge their most creditworthy corporate customers. Often serves as starting place for other rate pricing and is based off of the Fed Funds overnight rate.
Prime Rate
Discover objectives and process, define, deliver externally and internally, develop
brand
knowledgeable, multidimensional and consistent. They are mission-based, passionate and driven. They are social and participatory. They inspire trust and confidence. They highlight experience over product. They create a community and sense of belonging. They become a meaningful part of our life.
Great Branding
website, mobile app, blog, social channels, branches/ATMs
Owned Media
Shares, mentions, reviews, media coverage, guests posts, influencers (free)
Earned Media
Pay-per-click, display ads, social ads, retargeting, paid influencers
Paid Media
the practice of always delivering messages aligned with the core brand values in the same tone, presenting the brand logo in a similar way, and repeating the same colors throughout your visual brand elements
Brand consistency
a gut feeling about a product, service, or organization
brand
represents the values, services, ideas, and personality of an organization. Designed to increase recognition and build perceptions of the organization in its marketplace
brand identity
- Identify your stakeholders.
- Determine who will communicate with each stakeholder.
- Communicate in advance.
- Establish frequency of communication.
- Create email templates, memo templates, and sign templates in advance.
- Identify one place that will house all information.
- Include an individual from the marketing or communications area on the crisis management team.
effective communication
Any written or verbal communication expressing dissatisfaction with your bank products, or services. May be shared with a regulatory agency, possible violation of law. Risk to the bank by reputational, financial, limit ability to expand.
Complaint
- Should be considered a primary monitoring mechanism in the bank
- Early indicator of problems or even violations
- Communications can focus management on what comes from this themselves-validation, training and remediation
Complaint Management Program
- Systematic process to ensure resolution of complaints
- Clearly defines what is a complaint
- Outlines the way your bank accepts complaints
- Details the way a complaint is handled
- Provides time frames for resolution
- Identifies method of customer communication and feedback
Complaint Management Policy
- Complaint - sent or forwarded to a central person or response team
- Acknowledge - should be acknowledged within 24 hrs of receipts
- Investigation - should be researched with all relevant parties
- Resolution - action to resolve should be completed within 14 days
- Communication - provide info regarding the outcome of the investigation and resolution
Complaint Management Process
- Responsible for the development, implementation and coordination of … programs to ensure the bank meets the needs of the community and attains … compliance goals
- Advises the board of directors and management of emerging … issues to ensure objectives are maintained
CRA Officer
- Research, analyzing and interpreting CRA regulations and statues
- Coordination and documentation of lending, investment and service activities from a CRA perspective
- Data collection, reporting, and disclosure requirements in compliance with CRA
- Maintaining relevant CRA reports, policies and files, including CRA Public Files
- Training to employees, management and Board
- Establishing or participating with community based, charitable, and non-profit organizations
- Identify opportunities for CRA Investments, Donations and Community Development loans and Services
- Handle complaint(s) that impact the Bank’s CRA performance and assist in issuing a response to the complaint
Duties of CRA Officer
To truly provide reinvestment into a community there must be a performance context
- The bank must have knowledge about the local markets, the needs of the community, and opportunities that exist within the local network of resources and organizations
- Development of a plan should include:
- Public comment on the plan
- A defined period for the plan
- Measurable goals for performance
- Definition of what constitutes satisfactory or outstanding performance
CRA Context Plan
- Depend on the size of the bank
- Lending, corporate charitable giving and sponsorships, educational programming, community development, volunteer opportunities
CRA Requirements
- Loan-to-deposit ratio responsible to credit needs
- Percentage of lending activity in an institution’s assessment area
- Geographic distribution of loans, including low-and moderate-income (LMI) areas
- Record of lending/lending related activity to: borrowers of different income levels, businesses and farms of different sizes
- response to complaints
Minimum CRA Requirements
- Provided in a school where the majority of students are low-and moderate-income (LMI)
- Delivered through a program primarily targeted to LMI individuals
- Provided in a predominantly and LMI area and is marketed to those with access to that location
- Part of an initiative to revitalize or stabilize a middle-income distressed or undeserved area or to promote recovery in a disaster area by providing financial support.
Financial Education CRA credit qualities
Defined as service that: has community development as its primary purpose, is related to the provision of financial services, has not been considered in the evaluation of the bank’s retail banking services
Community Development
Prohibits discrimination through: Equal Credit Opportunity Act (ECOA), Fair Housing Act (FHA)
Fair Lending
Divided into 5 titles: employment, public services, public accommodations (physical buildings applied to customers and employees), telecommunications (accessible ATM/ITMs, website audio and video), misc.
American Disabilities Act (ADA)
- Reliance on these does not absolve the bank of responsibility
- Revise contract language with these to reflect your organization’s policy on accessibility and what accessibility requirements your organization has adopted.
- Services and content are often carved out in agreements to allow for time to evaluate new and alternative solutions
- A reasonable commitment for most parties is that when evaluating, purchasing, or renewing these solutions, accessibility will be evaluated as part of the process
Third-Party Vendors
- Limit Strategic, reputation, cyber, operation, and financial risk
- Incorporates the following: planning, risk assessment, due diligence and … selection, contract negotiation, ongoing monitoring, termination, oversight & accountability, documentation & reporting, independent reviews
Vendor Risk Management
- Can be a vetting process for vendors
- Can decrease third-party risk for the bank
- Should identify “red flags” or weaknesses in potential vendors
RFP Process
scope, performance standards, reports or work product, time/deadline, compensation, confidentiality, audit
Contract Review
- Risk based approach
- Provides information needed to address qualitative and quantitative aspects of potential third parties to determine if a relationship would help achieve the financial institution’s strategic and financial goals and mitigate identified risks
- Perform at least annually and when considering a renewal of a contract
Due Diligence
- Vendor risk rating
- Company history & reputation
- Financial profile of the company
- Information security profile
- Technology considerations
- Risk rating summary
Marketing Due Diligence
- Arises from the potential of unenforceable contracts which can disrupt or otherwise negatively affect the operations or condition of a banking organization
- Appropriate review of third-party contracts should occur prior to finalization
- Reliance on vendors does NOT relieve the bank from potential liability or its responsibility to ensure that outsourced activities are conducted in a safe and sound manner and in compliance with applicable laws
Legal Review Process
- Risk to the bank
- Simplicity - Keep it simple
- Transparency - Make it clear
- Honesty-No tricks or traps
- Research - Test for the best
- Helpfulness - Help people help themselves
Unfair, deceptive, or abusive acts or practices (UDAAP)
- Governs all registered broker-dealer firms and registered brokers in the US
- Examines firms for compliance with those rules
- Fosters market transparency
- Educates investors
FINRA
Enforces antitrust and consumer protection laws concerning banks, insurance companies, non-profits, transportation and communications common carriers, air carriers, and some other entites
FTC
- Develop & Communicate accurate info
- Enable the institution to reflect the fundamental value of the company
- Represent the company to … and represent … to the company
- Provide financial information to these people (retail & institutional) in a timely and accurate way
- Provide non-financial data that supports company valuations
- Observe the rules of securities commissions and stock exchanges
- Present investor feedback to company management and the board
- Build receptive capital markets for future financing at favorable terms
Investor Relations
limited with a unified risk management program that identifies, measures, monitors, and controls the risks related to social media
Brand Risk
- Create clear and concise communications that positively and accurately reflect the bank, the board of directors and management
- Decreases risk exposure
- Limits reputational risk
Knowledge to Action
- Key stakeholders are involved and consulted on a major transformation which involves cross-divisional collaboration and organized effort
- Encompasses all activities needed to achieve specified goals and tasks within the specified time
Project Management
- Identify applicable acts, regulations, directives, standards
- Identify applicable requirements as they relate to the advertising
- Monitor for changes or deviations from the messaging
- Determine applicability of changes
- Collaborate with the team and subject matter experts
- Document the compliance reviews
Compliance
- requires financial institutions to have measures in place to keep customer information secure
Safeguards Rule
- Detect and report suspicious activity
- money laundering
- terrorist financing
- securities fraud and market manipulation
- Suspicious activity reports
- Currency transaction reporting
BSA & AML
The use of location data to deliver targeted marketing
- Target specific audiences (segmentation)
- Advertise where people are today
- Websites, Social media
- Use an omni-channel approach
- Location
- Timing
Geotargeting
- continuing to … people after they leave the locations that are geotargets
- serves ads based on prior connection
- cookie-based technology that uses simple code to anonymously drive messaging to targets across the Web
- Important to limit compliance risk
Targeting and retargeting
Regularly scheduled reviews can ensure continued regulatory compliance
- validate that your website content complies with federal consumer protection regulations
- reduces the risk of examination compliance findings
Website Maintenance/recordkeeping
