Banking has evolved significantly over the past 20 years, but for most financial institutions, marketing efforts haven’t kept pace. Many large-scale businesses have shifted to digital marketing, but banks have yet to do so, and they’re missing out.
Before we get into specifics, let’s define our terms. Digital marketing is an umbrella term for the marketing of products or services using digital technologies, mainly on the Internet, but also including mobile phones, display advertising, and any other digital medium.
Digital marketing techniques include search engine optimisation (SEO), search engine marketing (SEM), blogging, content automation, campaign marketing, social media, social media optimisation, e-mail marketing, display advertising, and e-books.
Without further ado, here are a few industry-specific reasons why banks:
Lifetime Value of Customers
One of the things that I often discuss with my clients is LVC (lifetime value of customers). Digital marketing, especially our method, is designed to maximize LVC. Banking has the highest LVC potential of any other business that I have worked with.
Think of it like this – when a customer loyally patronizes a restaurant, that person might pay $10 to the restaurant every two weeks. We then double that, factoring in referrals. The average length that a customer will patronize a restaurant is five years. So, the restaurant earns $40 per month over five years per dedicated patron.
Now let’s look at this for the banking industry. When a commercial bank locks in a single mortgage, it collects $500-$1,500 per month for 30 years. That’s an astonishing difference between the restaurant example. To state it clearly, the LVC of customers at banks is massive compared to other businesses. This is why we focus so strongly on lead generation. Our job is to turn people into leads and leads into customers because customers are worth it.
Upselling at Banks
Micro-economists have identified four ways to increase revenue:
1. Increase the number of customers.
2. Raise your prices.
3. Increase the frequency of transactions per customer.
4. Increase the average transaction size, or “upselling.”
Let’s look at option 4, returning to our restaurant example. To increase the average transaction size at a burger restaurant, employees “upsell” drinks, desserts, and sides to customers. McDonald’s actually makes their profit by selling drinks and french fries; selling hamburgers just covers their costs.
Now let’s bring this back to banking. Let’s say that a newly-married couple (Jack and Jill) get a mortgage loan from a bank. How can the bank upsell Jack and Jill? Banks can upsell other financial instruments, which includes savings accounts, checking accounts, business loans, credit cards, and investments like mutual funds. This also raises their LVC.
There is no better marketing strategy right now for upselling than digital marketing. Say that a bank has an email list of 3,000 individuals who have mortgages through the bank. Using a simple email campaign, we could notify those 3,000 individuals about a new financial instrument. That’s a relatively cheap option for marketing directly to 3,000 leads. And the best part? They are already banking at that bank.
The Mobile Economy
Mobile devices play a major role in today’s economy. They host voice calling, internet access, social media apps, and email. Even though people spend their lives with their noses buried in their smartphones, banks have yet to capitalize. Marketing efforts need to be where people are, and right now, people are on their mobile devices. In 2018, 77 percent of the internet will be accessed by mobile devices.
Banks have shifted with this change. Most banks now have online and mobile banking options. Naturally, online and mobile marketing would fit well with this new trend in banking. But outside of that, our digital marketing method makes use of platforms found on mobile devices. We use social media to gain traffic, landing pages for lead generation, and retargeting ads and email to follow our customers.
Video and Banking
Here’s another interesting statistic: 80 percent of the internet is currently video consumption. That includes videos viewed on Facebook, YouTube, Instagram, and Netflix. People LOVE watching videos.
It’s also a well-known fact among social media marketers that video is highly effective in web design and ads. We specialize in creating short, fun, and effective videos. The video below is a good example (we use these techniques ourselves, by the way).
While banks are thought of as boring and flat, fun videos like this could shift how younger generations view banks. Millenials are the next generation of home buyers and workers, so appealing to them will be important. These videos can also reflect brand identity.
Reputation Management and Social Media
This is the final reason why digital marketing is ideal for banks. Financial institutions desperately need to protect their reputations. Social media platforms like Facebook, Twitter, and even Snapchat are perfect tools for public relations. Also, the copy on a bank’s website and social media accounts can help develop a brand. Quality branding can help any bank’s reputation.
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