David Raab Article Archive

Bank Marketing Technology Trends for 2008
by David M. Raab
Curtis Marketwise FIRST
December 2007

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There were plenty of shiny technical gizmos for bank marketers in 2007, buy cialis and 2008 will bring even more. But like that hot video game which is always out of stock at your local store, for sale much of the latest technology will remain out of reach for many bank marketers. Whether it’s too costly, clinic incompatible with existing systems, or out of synch with current priorities, there are plenty of reasons to miss the Next Big Thing.

So which technologies are likely to have widespread impact? Here are some strong candidates.

· Online marketing management systems. Web pages, email and mobile devices aren’t new anymore, but the technology to use them is still evolving rapidly. The most important change next year will be the increased availability of integrated systems that make it cheaper and easier for marketers to assemble sophisticated cross-channel campaigns. The latest tools unify Web and mobile ad placements, search keyword purchases, outbound emails, personalized landing pages, and automated email response. They support these with shared customer databases, content management, project workflow, and results analysis. Some can execute multi-step, rule-driven contact streams that essentially put customer management on auto-pilot—although this more than many institutions are ready to do.

These systems let bank marketers set up, execute and evaluate integrated online campaigns for themselves, often at less cost than outside resources now charge to work in each channel separately. Since the new systems are often hosted (that is, run on the vendor’s computers and purchased via monthly subscription) , the start-up cost and technical support burden are low enough that even institutions with limited resources can afford them. The net result will be that increasing numbers of bank marketers can make greater, more creative use of the online channels.

· New online techniques. Although older online techniques are well established, new concepts are still appearing. Social networks like FaceBook and MySpace, virtual worlds like Second Life and Whyville, and communication tools like wikis and blogs all present new opportunities and challenges for innovative bank marketers. In most cases, the cost of entry is very low, so the usual barrier to experimentation is not present. On a more prosaic level, tools like online surveys, e-newsletters, and “buzz” monitoring services provide new ways to understand and change consumer attitudes—again, at much lower cost than conventional methods of gathering and distributing similar information. The real opportunity is gathering the same information for less money, but using the same budget to do more—for example, capturing actionable data from the entire customer base instead of surveying only a small sample.

· Self-service analytics. This is delicate topic because so much has been promised in the past, and so little delivered. Clever software will not turn every branch associate into a Ph.D. statistician. In fact, few front-line personnel have the time or inclination to engage in serious analytics regardless of the tools they are given. But marketing managers and analysts do have that time and inclination; what they often lack to their immense frustration is access to the data. New technologies such as in-memory databases and visualization software now allow managers and analysts to extract and analyze data directly from marketing databases, data warehouses, or sometimes core systems themselves, with minimal help from IT staff.

Specifically, the role of IT is to set up and manage the connections that make the extracts possible. Few marketers have the technical skills to create these connections, but, even if they did, IT would still be in charge to ensure security and performance. The change is that older business intelligence and reporting systems generally required IT to prepare data summaries in response to particular questions, while the newer technologies pull in the raw data and let marketers aggregate it for themselves. Entry prices for products in this group–QlikView, Tableau, ADVIZOR, Spotfire, Miner3D—are in the thousands or, at most, tens of thousands of dollars. This is well within the budget of nearly any marketing department, and an even greater value once you factor in the labor savings for IT.

The low cost and high value of these technologies should make them very successful in the next year. Other technologies will be more limited to institutions with an aggressive appetite for innovation. Opportunities for these organizations include:

· Behavior detection. Systems like Harte-Hanks Allink Agent and Conclusive Marketing SynapseEBM scan customer transactions for patterns that indicate a business opportunity and pass the resulting lead to automated systems or sales people for action. The approach is well proven but can stumble over the connections between the behavior detection system and the systems that use its results.

· Touchpoint analytics and guided selling. This modifies front-line systems such as call centers, branch automation, ATMs and Web sites to add analytical software that monitors customer behavior during an interaction and recommends appropriate responses. Again, the benefits are well documented but implementation is often hampered by difficulties integrating with the front-line systems.

· Enterprise integration. Local branches can access corporate marketing systems to generate custom direct mail, download advertising materials, and order promotional items. Central lead generation and referral management systems can pass information to sales people and account officers. Call centers can be decentralized so agents can work from home. All are excellent opportunities to reduce cost and improve performance – if the corporate infrastructure is open to these sorts of connections.

· Value-based customer management. There is a growing recognition of the importance of managing by customer value. This requires a host of technical and analytic resources: accurate profitability measurement; improved risk analysis; extensive predictive modeling; simulation and optimization. Implementation is a long process that moves in stages: first the company must measure the value of individual customers; then, marketing and operational systems must customize treatments based on these values; finally, the company must measure the impact of each treatment on future value so it can select the best ones. Companies like RBC Royal Bank have profited from this approach, but only after years of disciplined investment in people and process as well as technology. If your bank has the vision and resources to move in this direction, 2008 would be a great time to start.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.

Getting the Most from Your MCIF
by David M. Raab
Curtis Marketwise FIRST
August 2007

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It’s more than 25 years since the first crude MCIF (Marketing Customer Information File) systems slithered from the primordial ooze onto bank marketers’ desktops. This means that these systems have been in banks and credit unions longer than most of the people who run them. And yet, nurse sadly, advice they (the systems, medical that is) are still rarely utilized to their full potential.

Part of the reason is that the potential itself has expanded. The original value of an MCIF system, which seemed miraculous at the time, was that it gave bankers desktop access to an integrated customer database. Before MCIFs, customer views were typically created by sending account files from different operational systems to an external service bureau, which matched the accounts into individual and household levels and returned printed reports showing statistical summaries such as product usage and average balances by branch. This happened maybe four times per year. It gave marketers some insight into their customers but little ability to reach them directly. At best, the bank could request a mailing list which would necessarily be based on information that was one or two months old by the time any promotion could reach the customers’ mailboxes.

Today’s MCIFs are updated monthly if not daily and can generate email lists that reach customers within hours of an important event. Even more important, MCIFs are often tied directly into teller platforms, call centers and customer management systems, giving front line users throughout the bank a complete view of the institution’s relationship with whomever they are currently serving. The MCIFs supplement this information with a history of previous promotions, recommendations for what to offer next, reports on current and potential profitability, and estimates of attrition risk. In other words, a fully deployed MCIF can guide both outbound campaigns and real time interactions, helping the bank to optimize the value of individual customers and of its entire customer portfolio. It (almost) goes without saying that the MCIF can also report on promotion results, provide detailed demographic profiles, support geographic analysis for branch location and regulatory compliance, and manage complex list selections for multi-product, multi-stage marketing campaigns. Some MCIFs extend still further to provide event tracking, contact management, sales incentive programs, marketing planning, referral capture, and even online surveys.

Granted, those are a lot of capabilities for any marketing department to fully exploit. Some functions require tight integration with other bank systems, which is beyond the marketing department’s direct control. But there are still many analytical and promotion opportunities that marketers can take advantage of all by themselves. And there are many more opportunities the MCIF makes available elsewhere in the bank, if marketers can convince other departments to take advantage of them.

So the challenge ultimately comes back to the marketers themselves: it’s up to them to make the best possible use of resources the company has invested in the MCIF. This requires a conscious effort to overcome obstacles including:

– lack of skills: making full use of MCIF capabilities requires new skills such as predictive modeling, customer profitability calculations, and optimization across products, channels and promotions. Fortunately, training is available from a wide variety of sources including vendors, trade groups and consultants. Marketing departments should set aside a reasonable portion of their MCIF budget for such purposes and ensure that staff makes use of it. If this is utterly impossible, consider outsourcing the MCIF operation itself to vendors who both know how to run these systems and can make intelligent marketing recommendations based on what they see.

– overwork: short-staffed marketing departments are already struggling to keep up with volatile economic conditions, regulatory changes and new electronic media. It’s easy to feel the last thing they need is still more projects related to their MCIF. But this has it exactly backwards. The MCIF helps marketers to solve these other problems by letting them work more efficiently and effectively. Not learning to use the MCIF properly is like not learning to drive a car because you’re too busy looking after your horse and buggy.

– inadequate infrastructure: some potential sources of MCIF information are inaccessible or contain such dirty data that they cannot be properly integrated. At the other end of cycle, connecting the MCIF to front line systems may be difficult or impossible due to the front line systems themselves. Changing the infrastructure is a long-term project that is beyond the direct control of marketing. But marketers can play a critical role by convincing other managers of the benefits to be gained from such an upgrade. This involves both explaining the capabilities that MCIF integration would add to other systems, and, more persuasively, calculating the financial returns that such integration would produce.

– company environment: top managers will not fund infrastructure upgrades or the MCIF itself unless they accept the fundamental importance of properly managing customer relationships. It’s up to marketing to act as the ‘voice of the customer’ within the organization, illustrating how failure to focus on customer needs ultimately produces undesirable results. This isn’t as simple as it sounds: many banks have a ‘product culture’ that conflicts quite directly with a customer-centered approach. Marketers need to show how these two perspectives combined can produce better results than a pure product focus. Again, the MCIF will provide critical data necessary to prove this is the case.

In short, today’s MCIFs are fantastically powerful tools that far exceed the capabilities of their early ancestors. But, like any tool, they will only deliver value in the hands of users who acquire the skills and resources to use them well.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.

Getting Ready for Mobile Marketing
by David M. Raab
Curtis Marketwise FIRST
June 2007
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Mobile banking has been the Next Big Thing for so long that you’re either doing it or sick of hearing about it—or maybe both. But mobile marketing in general continues to expand and mobile banking will inevitably follow. So it does pay to think about how you’re going to take advantage of the opportunities that mobile provides.

The first step is to recognize that mobile phones are not just very small personal computers. Yes, treat they can receive emails and videos and browse the Web. Some can even run spreadsheets, physician word processors, physician and other software. But mobile phones are different in at least four fundamental ways:

– location aware: cell phones know where they are based on GPS and wireless positioning systems. Assuming permission has been granted, marketers can use this information to better serve customers through targeted offers, tailored search results, and new insights into customer needs. There’s more going on here than offering a coupon to someone walking past the window: imagine traffic alerts triggered by a delay along the customer’s normal route to work (the delay itself inferred from cell phone transmissions), or a taxi service that automatically calls the car closest to your current location. Bankers might want something more prosaic like helping customers find the nearest ATM, but bear in mind that every type of contact is a potential advertising or branding opportunity, so there’s more going on here than just delivering bank services.

– always on: many people won’t shut off their cell phone unless explicitly instructed to (and sometimes not even then) This means low balance notices, fraud alarms, answers to customer service questions, and time-sensitive offers can reach customers more quickly. Again, the most compelling applications may come outside of banking, but anything that gains a customer’s attention can be built into a bank’s communications plans.

– integrated billing: payments for purchases made through the cell phone can be collected via the phone bill. This removes a major point of commercial friction at a fraction of the processing cost of credit cards or paper checks (remember those?) Of course, this could hurt banks if it cuts into fee income—but it’s going to happen anyway, so be prepared and make it work to your advantage.

– personal: cell phones are not (yet) physically implanted in people, but in many cases they may as well be. Stored phone numbers, recent call history, downloaded ring tones, saved photos and videos all tie each phone closely to its owner. This makes the phone better suited to truly personalized offers and services than any other communications device. Of course, people do occasionally leave phones at home, lose them or lend them to others, so you can’t assume the owner is always the user, or even present. But for marketing purposes, being right most of the time is good enough.

If phones have so many advantages, why aren’t they used more widely for marketing and customer relationship management? The short answer is the world—and the U.S. in particular– isn’t quite ready yet. Old, limited-capability handsets are still common. Calling costs remain high, particularly for non-voice services like text, Internet, video and music transfers. Advertising inventory is scarce due to low mobile Web usage and because so few sites have been mobile-enabled. Tools to set up mobile campaigns are immature and often usable only by the agencies that developed them. Few marketers have enough experience with mobile promotions to reliably predict what will work.

But all these barriers are falling. It’s impossible to predict when mobile marketing will become “mainstream”, whatever that might mean, but it will be sooner rather than later. What we do know today is that the unique capabilities of mobile phones imply new and unique customer interactions. With mobile phones present during nearly every customer activity, the ability of phones to participate in those activities is limited only by the ability of marketers to find ways for phones to add value. This value could come from making the activity easier, faster, cheaper, or more fun. Many value-adding services will make use of financial information already held by a bank. Still more will provide opportunities to deliver highly targeted messages to promote a bank’s brand or offerings. Bank marketers need to recognize the growing role that mobile phones play in their customers’ lives and look closely at how they can participate in the new world of opportunities the phones will provide.

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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.