For all their talk about CRM, banks are not as advanced as you might think.
When asked to name their most important activity in driving marketing initiatives,, 43% said it was acquiring customers. Another 30% cited cross-selling, and only 9% said retention.
The trouble with focusing on acquisition is that it inevitably leads to churn, said Kimberly Collins, research director with Gartner. And that means customers have to be replaced, starting the cycle all over again.
Then there's their media usage. Direct mail is used for marketing by 93% and the Internet by 80%, according to Gartner. Another 63% market through their local branches, and 59% through their contact centers. But only 39% use e-mail.
"E-mail is unexploited," Collins said, during a session at Gartner's CRM Spring Summit in Chicago.
And some customers are receiving conflicting messages. "The channels are increasing, but they are not being put together," Collins continued.
The good news is that the smart banks are increasingly using segmentation to pursue events-based marketing.
Fifth Third Bank had avoided investing in CRM, and it showed: For every 10 new accounts, it opened, nine were closing. So it started an events-based program, using Harte Hanks' daily deposit monitor.
That program now delivers 3,000 leads a day. Each week, the branches get 5,000 hot leads and the contact center receives 2,000. The bank has cut new account attrition by 50% and has added $25 added to bottom line for each contact with customers.
Similarly, Union Bank of Norway found that its online channels were creating distance with its customers. In 1997, it started an events-based marketing program—in stages.
First, the firm created a loyalty program designed to garner lifestyle and lifestage information. A direct mailing generated a 70% response rate, and produced 120,000 loyalty members. (out of a total customer base of 1 million).
Two years later, the firm used the information it had gleaned to send offers by direct mail. The average response rate was 16%. And it has now moved into event-based marketing, using 15 triggers. It pulled response rates of 60% during a pilot program at a single branch (which has since been rolled out).
Just how far have banks gone in embracing this discipline? They've probably done better than some financial services firms in seeking both breadth and depth of wallet.
In 1999, 50% of the banks did monthly events triggering, according to a Gartner survey. Last year, 73% did it on a weekly or daily basis.
But don't look for real-time triggering. Only 8% expect to be doing that in 2005.
It's the same with the routing of leads. Four years ago, 40% did it monthly. Last year, 35% did it within 24 to 48 hours. Only 15% expect to have real-time routing by 2005.
In 1999, single event marketing was performed by 69%. By 2002, 58% had moved to event series.
Want to know what kind of predictive modeling they do? You asked for it. Sixty-nine percent use linear regression and 56% rely on cluster algorithms. Finally, 19% use neural networking and 18% subscribe to ravesian modeling.
