• Customer engagement – repeated and satisfying interactions that strengthen the emotional connection a consumer has with a brand (or product, or company) — is a necessary path to establishing customer loyalty and strong customer relationships.
• PFM will evolve to become a platform for customer engagement for banks and credit unions.

Given these opinions, how could I not love a site called Engagement Banking, recently launched by SapientNitro, Geezeo, and Brett King?

Officially titled “Banking on the Future: A New Era of Engagement Banking,” there’s a ton of great content — not just text, but video and graphics, as well — on the site. Because of the way the site is designed, I can’t link directly to any single piece, but three of my favorite sections included:

• Building a better dashboard
• Close encounters of the banking kind
• I think, therefore I twitter

[Side note: Ironically, the last sentence is not symmetrical. There a lot of people who twitter, but who clearly don't think]

As much as I love the site, I do have a nit to pick. The following 2×2 graphic is taken from the site:

I doubt there’s anybody who loves 2×2 graphics more than I do, and if I were designing one, I’d put my idea in the upper right hand corner, as well. But here’s my problem:

Convenience banking, transactional banking, and relationship banking are not inferior to engagement banking. They’re a part of engagement banking.

Engagement banking is — or should be — about improving convenience, transactional effectiveness, and relationship building. In fact, the ability to deliver on convenience is directly related to a firm’s ability to scale cost-effectively.

My little nit hardly impacts the overall value that people will get out of this site. But I would encourage SapientNitro, Geezeo, and Brett to rethink this chart. Their ability to communicate a new concept (engagement banking) — and get it to stick — will depend on how well people in the industry can distinguish the new idea from what came before it. As it stands, I think they’ve created an artificial distinction between four labels.

“Credit unions are gaining members, however share growth is coming primarily from existing members.”

There’s a word in that headline that hit me upside the head: However.

Using that word in the headline implies that the news, if not bad, is something less than desirable.

Wrong!

There is nothing that CUs should be hoping more for — or working harder for — in 2010 than deepening the relationships they have with existing members — relationships that may very well be in the early stages of development as CUs benefited from the flight to safety that occurred throughout 2009.

I know that there are a lot of credit unions fixated (obsessed would be a good word here) with lowering the average of their member base, leading to a focus on member acquisition. Here’s the reality of the situation: They can’t move the average significantly in a single year. My point is that while it’s all well and fine to launch programs designed to acquire Gen Y members, CUs can’t ignore the cross-sell opportunities they have with Gen Xers and Boomers.

As the CreditUnions.com post indicated in one of its slides, the best loan growth opportunities in the first half of 2010 were in credit cards and business loans. I could be wrong here, but I’d bet those credit card and business loan opportunities weren’t driven by Gen Yers.

I suspect — perhaps unfairly and wrongly — that the use of the word “however” in the slide title referred to above is rooted in a credit union marketing mentality that is driven by some inexplicable need to convert the unwashed masses to the credit union religion and movement.

Credit union marketers just can’t seem to accept that maybe a credit union isn’t right for everyone. That maybe not everyone is going to drink the credit union kool-aid.  Instead of lamenting that share growth was driven by existing members in the first half of 2010, CU marketers should be celebrating.

In retrospect, that was a bit harsh and inaccurate. I should have said it was the stupidest market research ever conducted by a financial services firm.

ING Direct surveyed 1,000 American adults about….well, I’m not sure what they were surveyed about, to tell you the truth. It certainly it wasn’t about their financial lives. The study, which the release refers to as the “financial battle of the sexes survey,” found that:

61% of men find a frugal blind date to be both “smart” and “sexy.” This is a little hard to believe, considering that 73% of men don’t know what the word “frugal” means. The other 27% subscribes to the Urban Dictionary’s definition of frugal, which is “sexy, yet surprisingly revealing.” So for these 27%, calling a frugal blind date “sexy” is redundant.

Women are twice as likely (as men) to be upset by a partner who spends too little on them. From this, ING Direct’s CEO concluded “being a saver is smart…transparency about your money habits and low credit card debt can prevent money disagreements and help build long term trust in a relationship.” Oh really? Sounds like the exact opposite to me.

Women are 56% more likely to give up sex than men. I gather from the context of the press release that this was in reference to the genders’ willingness to give up sex in order to reduce debt. Some comments worth noting:

1. Men aren’t willing to give up sex for anything, so any percentage greater than zero makes women “more likely” than men.
2. If there are women willing to give up sex in order to reduce their level of debt, this implies that they’re paying for sex. Really? Women pay for sex? Really? The finding not only implies that there are women who pay for sex, but are paying enough for it that giving up sex would help reduce their level of debt. If you are one of these women — or know of one — please contact me immediately. I can help.

Women are likely to be more upset about an unfaithful spouse (44%) than losing a job (40%) or accumulating debt (27%). It’s actually comforting to know that for the majority of women — and men, for that matter — love is more important than money. But this finding completely misses the key point here: 56% of women would not be upset about an unfaithful spouse.  Of course, that’s not as bad as the 61% of men who would not be upset about an unfaithful spouse.

Men are also almost twice as confident as women (29% vs. 18%) when it comes to investing in the stock market. That’s a quote directly from the press release. It’s statements like this that make me question the mathematical competency of the parties involved here. Why? Because 29% is nowhere near “twice” as much as 18%. Twice as much is 100% more. That would be 36%. 50% more would be 27%. I’m no PhD in Statistics, but I’ve always thought that 29 was closer to 27 than it is to 36. If you must know, 29 is 61% greater than 18.

———————-

I initially hesitated to publish this post, because I was afraid that calling the research”stupid” might offend ING Direct. But then I realized that they’ll be anything but mad. I’ve played right into their plan.

This study wasn’t designed or intended to be real market research. It was simply a marketing tactic to generate publicity for ING Direct, and get people thinking about savings accounts and investment accounts. And by publishing my “critique” of the study, I’m actually helping the firm achieve its marketing objectives.

You’ll be getting a bill from me for my services, Mr. Kuhlmann.

The battle pits two financial services giants: ING Direct and Discover.

ING Direct has been focused on orange right from its start in North America, even going as far as naming its accounts after the color: Orange Savings Account, Orange CD, Electric Orange Savings, Easy Orange Mortgage (all of which only fueled rumors that ING stands for Induces Nausea and Gas).

Discover may very well have been hanging its branding hat on the color orange for some time now, but it wasn’t until its escape from Morgan Stanley in 2007 that the firm really stepped up its struggle for orange supremacy. Discover has quietly been infusing its web site with orange over the past few years, and, quite frankly, its orange $75 cashback offer is a better deal than ING Direct’s $50 bonus offer — which is in blue, by the way.

With its orange-branded cafes, bouncing orange balls on its web site, and a huge section of its home page dedicated to nothing but the color orange, I would have to say that ING Direct has been winning the battle for orange.

Until now, that is.

Discover has fired a major shot in the war: It announced last week that it will be the title sponsor of the college football Orange Bowl for four years, starting in 2011. Take that ING Direct!

Who’s going to win this battle? My money is on Discover. Here’s why:

ING Direct is focused on cleavage. It recently released the results of what may be the stupidest market research ever conducted. According to the press release “when it comes to attracting men, a low credit card balance could do more than a low cut dress.” The study also found that “women are 56% more likely to give up sex than men.” Bathing suit-clad flash mob dancers in Canada only further my accusation. Sounds to me like the firm is more focused on blue than orange.

Discover is leaner and meaner. Have you ever driven the 28 miles from Chicago to Discover’s headquarters in Riverwoods, IL? I have.  It takes about 3 hours. The worst traffic I’ve seen this side of L.A. You’d be mean too if you had to drive to work there.

Credit cards are patriotic. Maybe you haven’t noticed, but the stimulus package isn’t working. The economy needs another injection of spending. Credit cards — which promote spending — are for patriots. Savings accounts are for socialists.

Anyway, Seth Godin says color is important, so you can be sure this battle will go on for quite some time.

Technorati Tags: Discover, ING Direct

• The Gap. According to the article, “Groupon’s first big national promotional partner was Gap, with a seemingly amazing sounding offer of a $50 gift certificate for a knock-down price of $25.”

• East Coast Aero Club. In an attempt to lure people to take helicopter flying lessons, the firm offered 70% off of a first lesson for just $69 through Groupon. In the first five hours of the offer, 2,600 lessons were sold, which, apparently was “the very limit of what the company could stand.”  (I, alas, responded too slowly and was shut out).

The article concludes that:

“Many promotional incentives through Groupon, its competitor peers, or other systems like Foursquare’s location-based game are run as loss-leaders in the hope of enticing new customers who may then deliver repeat business. But in in era of widespread Net use, when a simple promotional message can run round the country in a matter of hours, the risks for companies using Web coupons is potentially much much larger. Get your popularity-to-loss-leading ratio wrong, and you’ll attract thousands of unwanted new customers.”

This, according to Fast Company, is the “dark side” of web-based savings schemes.

Nonsense.

From The Gap’s perspective, there was no downside here. How Fast Company concludes that a $50 gift certificate for $25 is a “seemingly amazing sounding offer” is beyond me. The Groupon deal: 1) generated immediate revenue (the price of the coupon), and 2) produced a set of highly motivated customers with a vested interest in reaping the benefit of that certificate.

And I’m betting that The Gap didn’t pick up any “unwanted new customers” from this promotion, nor was it trying to. My bet is that the firm saw Groupon has a far more effective way of distributing coupons to its target market than other distribution channels.

The Gap might have an email list, but an email from The Gap competes with emails that consumers get from lots of firms they do business with. Too much noise in that channel. FSIs in the Sunday paper? Direct mail? Sure, those were options, but at a lot higher cost (most likely) than through Groupon.

According to Mashable.com, 441,000 coupons — oops, I mean groupons — were sold. The offer might have crashed Groupon’s servers, but that’s Groupon’s problem, not The Gap’s. And it’s certainly not a systemic problem with web-based savings “schemes”.

While The Gap’s use of Groupon was to effectively distribute a deal to customers, East Coast Aero’s business objective was very different. ECA needed to create awareness for their brand (I live in their area and had no idea they existed). Utilizing Groupon to effectively reach prospects in their market was likely a very effective tactic from a cost and reach perspective.

It’s certainly possible that ECA got the “popularity-to-loss-leading ratio” wrong. But that’s not a dark side of web-based savings tactics (sorry, but I find the word “scheme” to be derogatory). What ECA did wrong was mis-structuring the offer.

More than 2,500 people will now be showing up at ECA’s door in the next few months looking to cash in on their lesson. My bet is that very few of them have any plans on continuing lessons. (I was looking to get in on the deal because I thought it would make a cool Mother’s Day present for my wife).

Did ECA think about the logistics of scheduling 2,600 lessons over the next 6 to 12 months? Does it have a plan for converting first-time flyers into long-term customers? I don’t know. If it doesn’t, then that’s ECA’s problem. But it’s not a “dark side” of web-based savings scheme.

Sorry, Fast Company, but the “risks” of web-based coupons that you’ve identified are simply not there.

A while back I wrote (slightly edited):

“The banking industry has an odd definition of the word on-boarding. Or at least to me it does, considering it’s not a real word in the first place.

To me, the term implies the process by which a firm helps a new customer become a satisfied new customer. To me, the concept implies that simply closing the sale isn’t enough — that some, if not many, customers need help when initially using, establishing, or setting up a product or service.

But, to many banks on-boarding means trying to sell more products to new customers immediately after those customers purchase their first product or service, before some fictitious cross-selling window closes.”

A recent article on BAI’s site called Customer Onboarding: The 90-Day Countdown underscores the industry’s philosophy:

“An invisible clock starts ticking the moment a customer purchases a new product with a financial institution. Research has shown over and over again that by the time the clock has ticked for 90 days – a period of time known as onboarding – the customer’s lifetime value and profitability will have been practically set in stone.”

But what the “research” never seems to explain is why this alleged 90-day window exists. Here’s a theory: It’s the window in which the customer is still in the honeymoon period, and their bank (or credit union) hasn’t done enough to piss them off yet, or fail to live up to the expectations that were set during the evaluation (courting) phase.

There’s a 90-day window because banks have been terrible at building relationships with customers. There’s nothing magical about the 90-day window that causes the cross-selling window to close.

The BAI article does a nice job of explaining why establishing valuable customer experiences following the opening of a new account is important (and recognizes the role of expectations in the the courting phase). But with an industry mindset that associates onboarding with cross-selling, I fear many will fail to realize that onboarding is more about customer engagement than cross-selling.

So I’d like to propose a new term (and process): Honeymooning.

To be clear, honeymooning is not the process by which someone pulls their pants down and shows their butt to their significant other.

Instead, it’s the process that ensures that new customers become engaged with the bank, and that the new customer’s expectations are met.

This implies that actions taken by the bank in the honeymoon period will be oriented more towards driving high-value engagement behavior — e.g., online bill pay enrollment, use of PFM tools and educational material, webinars and seminars the institution puts on — and towards ensuring that new customers have selected the right account or product, than trying to push another product at them.

Dictionary.com refers to a honeymoon as a period characterized by harmony and goodwill. By the way, Dictionary.com doesn’t have a definition for onboarding, and describes on-board as providing or occurring on a vehicle — leading to a perception of “taking one for a ride”. Nice.

In a banking context, honeymooning could  mean waiving any ATM or overdraft fees, or late fees, or other fees that a customer might be asked or forced to pay.

Could that negatively impact revenue at a time when replacing potential lost revenue is a top priority for financial institutions? Absolutely. But if it builds goodwill and trust, it might help to extend that magical window from 90 days to 180 or 360 days.

So email marketers commission studies to show that email is still alive — and, more specifically, how social media and email can not only co-exist, but mutually thrive.

Reminds me of the scene in Monty Python and the Holy Grail where some guy is yelling “Bring out your dead! Bring out your dead!”, and there’s a guy on the stretcher claiming “I’m not dead yet.” That guy is Email.

One recent study found that:

“Roughly half of consumers indicated that they are willing to act as brand advocates in order to connect email content to social networks.”

When asked what sort of marketing information they would consider appropriate to share through social media, 54% of respondents said special offers and promotions, 42% said news on new products, and 32% said support information (e.g., tutorials and product support content).

These respondents are what the marketing community calls “brand advocates.” Or what the rest of us refer to as shameless corporate shills.

I can’t imagine the thought process that leads someone to think “Hey, this email I just got from Staples with the weekly coupons is something I just HAVE TO tweet about or put on my Facebook page!”

There were, however, 37% of North American respondents that said None Of The Above, when asked what information is worth sharing.

I call this group the NOTAries. These are my people.

It’s good to know that not everyone suffers from Twitterhea or redactile dysfunction. I’m sorry to say, though, that it looks like my irritable blog syndrome is acting up again.

The Financial Brand posted an article recently on Gen Y’s Money Woes. An excellent compilation of market research statistics about Gen Yers’ financial situation, presented in The Financial Brand’s always-excellent graphical style.

Looking at the data, however, I might interpret some of the findings to be more euphoric than woeful:

• Fully half of all Gen Yers feel no increased financial stress these days.

• A majority of Gen Yers don’t consider their financial situation to be bad.

• Furthermore, two-thirds of Gen Yers’ finances have not worsened.

• Seven in ten Gen Yers don’t have difficulty managing their spending.

• Nearly three-quarters of Gen Yers have never been turned down for a loan.

• 40% of Gen Yers will graduate with no debt.

• A whopping 89% of Gen Yers don’t expect to be worse off than their parents.

Not so bad, eh? I’ll tell you, I’m no Gen Yer, but man, I feel plenty of financial stress these days with a kid in college that I’m trying to help pay for, and two more that will get there in a few years. And to the 40% of Gen Yers who will graduate without debt I say “congratulations.” I’m no Gen Yer, but man, I sure graduated with a bunch of student loans.

I, too, didn’t expect to be worse off than my parents. And I’m not. Kind of. But they’ve managed to retire, and me….well, I’m not sure I’ll be able to retire as comfortably as they have.

My point here is two-fold: First, that market research statistics are not “truth”, but very open to interpretation.

And second, everybody’s got it bad financially right now.

Personally, I feel a lot more sympathy for Gen Xers who are supposed to be reaching the peak of their earning potential, and the ones most likely to have kids’ college funds they’re trying to saving for, and paying mortgages, etc. If you’re 24, single, and have no kids — you’ve got plenty of time to ride out the bottom of the economic cycle.

Technorati Tags: Gen Y

If you’re over 40, then it’s probably too late for you, and this blog post isn’t going to help you. But continue reading just for kicks. If you’re in your 30s, then this blog post might help you. But no guarantees. If you’re under the age of 25, however, then this blog post might just change your life.

How would you like to triple the number of sexual partners you have?

Silly question, of course you would.

In this blog post, I am going to reveal to you the ONE THING you need to know in order to triple the number of sexual partners you have. And I’m going to tell you this secret for free, out of the goodness of my heart.

Ready?

To triple the number of sexual partners you have, buy an Android phone.

I’m not joking. The numbers don’t lie.

According to research done by very credible sources, 18-year olds who own Android phones have had, to date, one sexual partner. By the time they turn 24, they will average 3 sexual partners. That’s TRIPLE the number they had at 18.

You can’t get that kind of bump (no pun intended) by purchasing an iPhone. Eighteen year old iPhone owners have had, on average, 4 sexual partners. That number only increases to 5 by the time they turn 24.

Here’s the even better news: Between 25 and 40, the number of sexual partners an Android owner has TRIPLES again. iPhone owners will only double the number of sexual partners they have between 25 and 40.

Source: OkCupid

Now I know what some of you are thinking: But Ron, owning an Android phone doesn’t cause an increase in sexual partners.

Fuck you. You’re ruining my blog post.

And I know what others of you are thinking: But Ron, wouldn’t it be better to have the 15 sexual partners that iPhone owners by age 40 than the 9 partners Android owners have?

The answer is no.

iPhone owners are sluts. And you don’t want to be a slut.

Check out the data: Among 30 year old women, those who own iPhones have had, on average, 12 sexual partners. That’s TWICE as many as 30 year old women with Androids have had.

Conclusion: Owning an iPhone makes a woman a promiscuous slut.

Source: OkCupid

This knowledge will scar me for life.

The next time I see a young woman with an iPhone, I know what I’m going to be thinking: How many guys have YOU slept with so far this week, you little floozy?

The signs of this scarring are already appearing. My 20 year-old daughter came up to me and said “Dad, I think we should get iPhones for the family.”  I’m sorry to say that I went ballistic on her: “THERE’S NOT A CHANCE IN HELL THAT YOU OR YOUR SISTERS WILL GET AN iPHONE — NOW, OR EVER!”

I paused, collected my thoughts, and added: “I might get one for your mother, though.”

Overall, though, it’s good to see some credible, scientific research being published in the social media sphere. There is one flaw in the study that I’d like to point out, though, regarding Blackberry owners.

I’m pretty sure that the Blackberry owners lied to the researchers. Everybody knows that people with Blackberrys don’t have sex.

The message from both firms is very similar: We’re living in a world where “competing on analytics” is a strategic imperative. The firms that best utilize data to understand customer needs will be the ones  that survive and thrive.

And, of course, both firms provide “unsurpassed” and “unprecedented” capabilities in helping their clients analyze data to improve acquisition and retention efforts.  Both talked about the analytic models they develop (that no one else can or has) for their clients.

To be honest, I wasn’t as interested in the two vendors’ ability to develop models as I was in what their clients did with the data and analyses that the vendors provided.  When I asked about this, the response was similar: The clients use the data and analyses to improve their targeting and customize their messaging.

That answer wasn’t good enough of me, so I probed further: HOW did their client firms use the data and analyses to improve targeting and messaging?

What I was fishing for was: Did the clients integrate the output of the models and analyses back into customer databases? Did the models and analyses drive customized messaging on the clients’ (predominantly banks and credit card issuers) web sites when the FIs’ customers were accessing accounts? Did the clients use the output to drive targeting and messaging on outbound marketing campaigns through direct mail and email channels?

The responses weren’t nearly as detailed and involved regarding what the clients did with the data/models as they were regarding what the vendors did to create the models and analyses in the first place.

Hmmm.

Marketing departments need to develop a new competency – a sense and respond competency: The ability to sense a customer’s or prospect’s needs and where s/he is in the customer lifecycle, and the ability to respond with the appropriate offer, advice, or guidance.

From my conversations, I’m not sure that the analytics folks understand that there are two sides to the coin.

It’s great that you can analyze your customers’ debit card spending, and identify the trends in their spending, and predict what they will buy. But without the ability to reach those customers with an offer — in a timely manner, and in a channel where they’ll actually see the message — the analytics (or “sensing”) is akin to a tree that falls in the forest where there’s no around to hear it. Did it make noise? Who cares? It doesn’t matter.

Analytics vendors are missing the boat here. They’re so focused on doing the analysis and creating the models, that they’re failing to recognize that FIs (banks and credit unions, in particular) are wrestling with how to develop a new — and sustainable — marketing competency.

Many mid-sized banks, and credit unions of all sizes, would love to improve their use of customer data to make better marketing and business decisions. But they don’t want to simply do one-off projects that create and execute a single campaign. And they don’t want to simply deploy some technology solution. The technology solution might be great at supporting an analytics function and process, but for most of these mid-sized FIs, there is no function or process.

What will happen to the vendors that figure this out and develop a solution that helps FIs create a sustainable analytics — no, make that sense and respond — capability? I’m betting that they’ll be the ones that survive and thrive.