The topic of 'digital transformation' has received considerable attention for several years. First came the predictions-then the strategy recommendations. To paraphrase Altimeter Group, businesses were warned that in order to effectively compete in an ever-changing digital economy, they must invest in technologies, business models, and processes to drive new value for customers and employees.
The takeaway: Organizations that embrace digital transformation would rise to the top; those that fail to do so would be supplanted.
In many cases, that's exactly what happened (and continues to happen). Amazon, Uber, FitbitÃ¢ÂÂ¦it's simple to spot the brands that get the concept. Not coincidentally, they are the same companies that acknowledge we now live in a customer-centric world. Yes, they put in place the requisite technologies, business models and processes-but it was to meet the changing requirements of their customers.
So what does this mean for financial services companies?
As I covered in the first installment of this Digital Marketing for Financial Services series, banks, wealth managers and insurers have quite a bit of work to do. The good news is that it's not too late undertake digital transformation initiatives, and in the coming weeks, we'll provide strategic recommendations and actual plays to put you on the right digital path.
To start, let's take a look at the first phase of the customer lifecycle-acquisition.
More than any other phase, the ways FSIs acquire customers have seen the greatest volatility. This too is driven by the level of control shifting to consumers. Where brands once managed how perception was created and messages disseminated, the model has flipped.
Historically, the corporate model has been structured so that a war chest of money was set aside and dedicated to advertising and media. FSIs invested in promoting the brand with catchy phrases, gripping value propositions, or entertaining advertisements. Meanwhile, most consumers were inclined to do business as usual. Banks were often chosen because of their location, insurance companies were maintained because staying was the easy choice, and financial advisors selected because of peer or family recommendations.
We did business with the same financial services brands year after year-whether we loved them or not-because, well, it's what we knew.
That was so yesterday. Now, technology has put exponential control squarely in the hands of each and every one of us as we determine the brands we choose to work with. Make no mistake; expectations of that relationship are at an all-time high. We're acutely aware of the ability of a brand to engage with us in every channel because we experience it EVERY DAY.
Disruptors without legacy infrastructure that are built with the customer experience first are showing up in droves. "Robo-advisors" such as Betterment and Wealthfront offer straight-forward algorithm driven financial planning programs that threaten the traditional advisor/client relationship. The unbundling of banking is growing with firms such as PayPal, Simple and many others. These firms are gaining traction without large advertising budgets; they are establishing themselves because they're embracing consumer lifestyles and leveraging technology in an increasingly complex decisioning environment.
Of course, this doesn't mean that more traditional FSIs should toss in the towel. Far from it. They just need to recognize the direction the world is heading and get on board.
In the graphic below, I describe my view of the three fundamental pillars of marketing that have been and will always be: Drivers, Destinations and Dialogue. You ask me to do something, you send me to a location, and try to generate a dialogue once I'm there. The issue is that while this worked for some period of time, it is inherently upside down now that the owner of control and subsequent expectations have changed.
The real issue is that the vast majority of funding in this model is in the Drivers and Destinations buckets, and while critically important, brands are under-funding the Dialogue pillar in the form available people, process and platforms. As such, they are unable to deliver on those expectations when consumers do provide you with a personal entry into their fractured financial lives.
When you underwhelm consumers by failing to deliver on heightened expectations promised by your brand, you've set an expectation for how the relationship will progress. And it's not good. If it moves forward, they will be more prone to listen to alternatives if it suits their needs. Because the reality is consumers care first and foremost about their money--they care far less about your brand.
We fix this by reallocating a portion of your media budget in the Drivers pillar of our equation into a "war chest" that allows for trial and agility without having to revisit a locked and loaded media plan. Flexible dollars can be reinvested as we see both revenue lift and savings, and as new opportunities present themselves we can be in the dialogue as desired. Don't abandon traditional media funding entirely, but re-imagine HOW you leverage platforms available to you today.
I'm bullish about using social and digital advertising. They are highly effective, measurable, and provide a tangible path to action. It has been estimated that in 2016 Google and Facebook will garner $.85 of every net new $1.00 in advertising. The trick today is natively tying it into your CRM platform in order to maintain data security in a closed loop environment. Predictively intelligent and contextually relevant content without overspending to show an ad to an existing customer, and being a part of the dialogue rather than trying to force your way in with a potentially unwanted message.
Interested in learning more? See how digital marketing can provide 1-to-1 experiences throughout the financial services customer lifecycle. Sign up for Any Journey is Possible, and you'll receive a series of cross-channel communications powered by Marketing Cloud. Experience the possibilities first hand! You'll see emails, ads, mobile messages, recommendations, and more that a customer would see.
As a Master Business Consultant within the Salesforce Marketing Cloud, Matt delivers transformational strategies focused on unlocking the moments of value that exist between customers and their journey with your Financial Institution's sales, service and marketing efforts. He has 23 years experience leading digital in consultancies, agencies and technology companies.. He relishes spending time with his wife and two sons, traveling, writing and producing an art show. @mclement