1 | ABA BANK MARKETING | NOVEMBER 2012

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Marketingnovember 2012

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By BoB WojtoWicz and todd Staehle

It has become clear that today customers, not marketers, are in control. Conversa-tions are taking place across a wide variety of touch points, and customers are the ones driving the interaction. Understanding what customers are saying, and using that insight to inform interactions in the right channel at the most opportune time is the basis of customer centricity—and this is where banks and other financial institutions must be headed if they are to succeed.

Over the past few years, the struggling economy, stringent regu-lations, low interest rates and changing customer expectations have combined to create a perfect storm for retail banking. Banks of all sizes are quickly redefining who they should be targeting and rethink-

ing how they should be communicating with them. Banks are trying to identify profitable customers and to grow them faster—transforming new customers to best customers as efficiently and cost effectively as they can. They are also striving to engage these customers throughout their individual lifecycles.

Creating Life-Long Customer TiesThe process of customer experience management (CEM) is

similar to onboarding, only it starts with the prospecting phase and extends

forward to include the customer’s entire lifecycle.

2 | ABA BANK MARKETING | NOVEMBER 2012

Achieving customer centricity The journey to customer centricity has been evolving since the 1990s and through the mid-2000s. At that time, the financial companies (card companies, lenders and banks) became experts in predictive modeling and the use of direct mail and telemarket-ing to drive product sales. During this era, financial companies were leading the direct marketing industry.

By the mid-2000s to 2010, product marketing had given birth to targeted marketing—characterized by customer segmentation, lifecycle marketing and the use of multiple channels to reach consumers. Banks began to segment customer audiences and create communication strategies specific to a customer segment. While this was an improvement over product selling, the mul-tichannel tactics were still “pushed” outward to the customer and the customer was expected to buy the product or service. There was little interaction or back and forth dialogue between the customer and the bank.

With the emergence of digital media and social networks, today’s focus is on customer experience management (CEM). CEM is a transition towards managing customer interactions and delivering right-time, personalized solutions back to customers. This new direction has been led largely by industries outside of financial services. Retailers and consumer product companies have fewer internal barriers to deal with when it comes to cre-ating integrated client experiences. Banks have been slower to adopt CEM due to their organizational structure (product and channel silos) and the difficulty of bringing their data together in a timely manner across the enterprise.

These are challenges that banks must overcome in order to successfully differentiate themselves from their competition and satisfy their customers’ financial needs. Achieving CEM requires the ability to:

m Hear and respond to the voice of the customer.m Ensure that strategic and tactical decisions have a customer

component.m Utilize marketing that is both data- and behavior-driven.m Track accountability.

Fifth Third Bank: evolving into CEMFifth Third Bank, Cincinnati, has worked for several years to trans-form the bank’s marketing organization from product centric to customer centric—and is now on the path towards CEM. (Fifth Third calls its CEM approach “customer continuum marketing.”)

The bank partnered in this endeavor with Harte-Hanks.Continuum marketing takes a bank marketer from single-

product to integrated-brand experience: from “one and done” to repeat/multiple purchases; from reactive to top of mind; and from high to low acquisition cost. The guiding principles of leading an organization towards this type of behaviorally driven marketing:

m Delivering personalized messages at every customer touch point.

m Collecting data and transforming it into action-oriented and meaningful insight.

m Predicting data so as to enhance customer relationships.m Creating customer dialogues across the lifespan.m Optimizing relationship value.

Continuum marketing is an evolving process that utilizes all available channels and integrates them over time. Through the process, marketers communicate to customers through the vari-ous stages of their life cycle—from prospecting to new-customer development to ongoing cross-sell to triggers and events.

This approach is similar to the onboarding process, only extended backward and forward to include the entire lifecycle, starting with the prospecting phase. It involves a planned se-quence of outbound communication based upon models and customer/prospect activity performed through inbound chan-nels. Continuum marketing works deliberately to integrate and optimize all channels throughout the customer lifecycle.

As part of implementing a continuum marketing effort, key events are identified, followed by a series of outbound commu-

customer experience management (ceM)

is similar to the onboarding process, only

extended backward and forward to include

the entire lifecycle, starting with the

prospecting phase.

customer experience management (ceM) is a transition

towards managing customer interactions and delivering right-

time, personalized solutions back to customers.

Getting Started with a customer experience Management (ceM) Program

For bank marketers that want to implement a customer experience manage-ment program (called customer continuum marketing by Fifth Third Bank), the best way to start is to target the low-hanging fruit, such as a win-back or cross-sell effort.

Perform data discovery, do an analytics assessment, develop strategy and communications plans and plot out a budget and timeline. Measurement is important, so be sure to zero in on key performance indicators.

Set up a testing infrastructure. Secure buy-in from senior management by demonstrating the impact of measurement, continuous improvement and the overall impact of incremental sales—and engage your marketing team. Remember to learn from your customers at each point of contact. This is a journey, not a “one and done” proposition.

Banks that listen to, and effectively engage, customers will become cus-tomer centric and will benefit from improved customer satisfaction and increased return on their marketing investment.

NOVEMBER 2012 | ABA BANK MARKETING | 3

nications and specific actions that are orchestrated around these events (see the accompanying chart). For example, if a customer were to use a Web tool to help identify the type of equity loan or line product on the bank’s Website, an email communication might be deployed to acknowledge the interest in the product. In the same way, a bank might respond to a request for additional statements with an outbound call or email as a way to initiate a conversation designed to assess changing needs.

How the program works at Fifth ThirdFifth Third Bank operates 15 affiliates covering 12 states and 23 major markets. At the end of 2011, the bank maintained $117 billion in assets with 1,316 banking centers serving four main business units: commercial banking, branch banking, consumer lending and investment advisement.

Starting with a prospecting program, the bank, working with the vendor, developed a plan through which it would deliver relevant, personalized messages every other month to model-selected candidates surrounding the centers in the targeted affiliates. If a new checking or savings account was established, a welcome communication was sent within one week. Within 30 days and through months four and five of the relationships, Fifth Third sent messages monthly to “warm up” new customers for cross-sell of products that include: loans, credit cards, mortgages and investments. After the fifth month, select mature households were offered additional products. Additionally, unsolicited notes of appreciation—designed to surprise and delight—were sent to customers to assist with retention.

As a result of these efforts, the bank has experienced all of the following:

m Better net spend metrics.m Improved retention rates.m Improved long-term customer value metrics.m Sped up cross-sell.

As of May 2012, prospecting efforts have generated incre-mental household growth with every initiative increasing net lift over the control. Customer development efforts have driven a positive net return on investment (ROI) 2.5 to 4 times and substantial net incremental profit. What’s more, retention is up 12 percent and new households are being retained. With regard to customer cross-sell, new efforts are expanding and deepening customer relationships, the positive net ROI is two times what it was previously and net revenue per household has increased.

What’s next for Fifth Third Bank? The team plans to create even more meaningful one-to-one experiences built upon a strong foundation. Over time the team hopes to integrate data faster across the enterprise, link technologies, develop customer preference centers, create integrated “paths to purchase” across any channel the client chooses, expand into business-to-business areas and continue to test and learn. n

About the AuthorS

BoB WojtoWicz is vice president, customer analytics and

marketing research director at Fifth Third Bank (assets: $117

billion), Cincinnati. Contact Wojtowicz at (513) 534-4361 or

email: Robert.wojtowicz@53.com.

todd Staehle is vice president, financial markets for

Harte-Hanks Inc., San Antonio, Texas, a direct and targeted

marketing company. Contact Staehle at (847) 487-0420 or

email: todd_staehle@harte-hanks.com.

Under ceM, a bank might respond to a request for additional

statements with an outbound call or email as a way to initiate

a conversation designed to assess changing needs.

EvEnT

Web activity analysis (on bank’s website)

Checking/savings/investment balance increase

Accelerated loan payment velocity

Direct deposit frequency or amount change

Use of an online tool/calculator

Change of personal preference page

Extra copy of statement request

CHAnnEl

Email, platform systems

Email, direct mail, platform systems

Outbound call or email

Outbound call or email

Email, platform systems

Email

Outbound call or email

ACTion

Offer on product of interest

Relationship needs assessment

Relationship needs assessment

Relationship needs assessment

Offer on product of interest

Acknowledge of change/relationship

Relationship needs assessment

This chart identifies events that will trigger some action by Fifth Third Bank as part of its customer continuum marketing effort.

EvEnTs THAT TriggEr BAnk CoMMuniCATions

Posted with permission of ABA Bank Marketing. 1120 Connecticut Avenue NW, Washington DC 20036. (202) 663-5378.#C15064 Managed by The YGS Group, 800.290.5460. For more information visit www.theYGSgroup.com/content.