NAFCU Management Development Institute Branding Advertising and Marketing Todd Werner Group Vice President Marketing and Sales by syk59282

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									                             NAFCU
                             Management Development Institute




Branding, Advertising and Marketing
Todd Werner
Group Vice President, Marketing and Sales
November 5, 2008




                                                           1
      What is a logo?

Have you seen these images before…




                                     2
15
The Impact of a Brand




                        16
The Impact of a Brand




                        17
Branding



           18
The traditional view of branding
“It’s what companies say in advertising, logos, and promotion”

   a name              a logo                  a tagline


Coca-Cola                                 “The Real Thing”


                                             “Just Do It”
   Nike


                                           “The Ultimate
   BMW                                    Driving Machine”


                                                             19
Branding


A BRAND is a PROMISE.
A brand is a promise. It is the expectations that reside in each
customer’s mind about your products, services, and your Credit
Union. Branding is making an emotional connection with the
member. It is the process of executing and managing the things
that make people feel the way they do about your brand.

Branding is NOT a corporate image package, a product, or
advertising campaign.

People fall in love with brands. They trust them, develop strong
loyalties to them, buy them, and believe in their superiority.




                                                                   20
Branding


   “Brands are belief systems … once you look at a brand as a
   belief system: it automatically gains all the advantages that
   companies strive for: trust, vibrancy, relevance, a sense of
   values, community, leadership, vision, empathy,
   commitment, and more.”
   - Patrick Hanlon, Primal Branding



   “Believing is belonging. When you are able to create
   brands that people believe in, you also create
   groups of people who feel that they belong … we all
   want to belong to something that is larger than
   ourselves.”


                                                                   21
Branding
 Branding IQ
 1.   A brand is a Benefit Chain
 2.   Strong brands command 9% more of a price premium
 3.   Branding can add 37% to a firm’s market capitalization
 4.   Successful brands start at the Executive Suite
 5.   The customer is most effective vehicle for promoting your brand
 6.   Branding does not increase the cost of sales
 7.   The value of the brand is a real number you can put on your balance sheet
 8.   Communications play 50% in building a brand

 Branding Laws
 1.   The Law of the Word: A brand should strive to own a word in the mind of the customer. Example: It
      can be said that Mercedes owns the word "prestige" in the mind of the customer. Example: Kleenex
      tissues. Even with "Scotts" brand tissues, most people call them "Kleenex.” FedEx "owns" overnight.
      Others include Q-Tips, Band Aide, and Xerox.
 2.   The Law of Singularity: The most important aspect of a brand is its single-mindedness. Brand is a
      singular idea of concept that you can own inside the mind of the prospect.

 Branding Imperatives
 1.   Discover our Brand: Acknowledge that we live in a branded world.
 2.   Build our Brand: Seize every opportunity to position our company in our client’s mind.
 3.   Communicate our Brand: Communicate a strong brand idea over and over again. Identify touch
      points – places in which a client/customer interfaces with the product or service.
 4.   Leverage our Brand: Use brand identity to create sensory magnets to attract and retain clients.


                                                                                                            22
  Branding


“I have learned, based on my experience, that everything is dominated by
the market. So whenever we are struck with any obstacles or difficulties, I
always say to myself: ‘Listen to the market, listen to the voice of the
customer.’ That’s the fundamental essence of marketing. Always, we have
to come back to the basics. Because branding, image, or love marks are
determined by the customer, not us. We really cannot determine anything.
The customer does that. That is essence.”

– Yoshio Ishizaka, EVP Toyota Corporation




                                                                              23
                                                                      INTEGRATED
Branding                                                              Product Design
                                                                         Delivery

“Where do we start?”                                                   CREATIVE
                                                                   Personality Attributes



                                                                       STRATEGIC
 THREE KEYS TO BRANDING                                                  Vision
 1. A good brand is strategically based: Brand Essence.                  Mission
                                                                         Values
 2. A good brand is creatively distinctive: Brand Meaning.
 3. A good brand is seamlessly integrated: Brand Communications.




 1. Brand Essence

 We must answer the questions:
 Who are we, where are we going, and what is the one thing that sets us apart
    and makes us unique?

 Mission:         What do we do? Who do we do it for?
 Vision:          Where are we going? Why do we want to get there?
 Values:          What do we hold sacred? Who are we?
 Discovery Stage: Questionnaires and interviews with employees and
                  customers.


                                                                                            24
“A product is something made in a factory; a brand is something
that is bought by the customer. A product can be copied by a
competitor; a brand is unique. A product can be quickly outdated; a
successful brand is timeless.”

– Stephen King, WPP Group, London




                                                                      25
2. Brand Meaning
We are seeking to make a connection with the member/consumer.
It will have to be relevant; it will have to be emotional; it will have to create an experience.
Creative branding will require: The Story, the Promise, the Graphics.

The Story:
Love marks, Kevin Roberts: “Stories feed Love marks. They are how we explain the world to ourselves and give
value to the things we love. We all know how a great story at the right moment can change our minds or release
that vital ‘oh-now-I-get-it’… Stories have huge value in business because they look in the right direction…at people.
You cannot tell a story without characters and emotion and sensory detail. Even the dumbest road-crossing-chicken
jokes have it. And they capture us faster than the most elaborately produced annual report.”

The Promise:
We need to ask two basic questions in order to obtain the promise:
     -     What is the one thing you want people to take away when they see your credit union name?
     -     What is the promise you want to make to the member/consumer that will connect you emotionally?
We need to follow two keys to developing a promise statement:
     1.    Keep it simple
     2.    Keep it truthful

The Graphics:
Logos, Visuals, Copy.




                                                                                                                 26
“Brand is really about how the phone is answered, how
customers are greeted. The questions we ask when they
open a service with us, and if they feel we’re genuinely
interested in meeting their needs.”

– Larry Magnesen, Fifth Third Bank




                                                           27
3. Brand Communications

Internal:
Seven keys to Internal Branding:
1.   CEO must be the brand champion
2.   We must make it fun. We must create an experience for our own employees
3.   We must communicate clearly and often. Newsletters, meetings, intranet, etc
4.   Encourage ownership and give true empowerment
5.   Provide actions steps
6.   Educate our people
7.   Reward brand champions


External:
Design products/services to communicate your brand.
Evaluate delivery channels and touch points for your target market and make sure they are
     integrated
1.   Electronic Media: Internet, e-mail
2.   Mass media: TV, newspaper, radio, billboard
3.   Alternative Advertising: Events, sales meetings, tradeshows, symposiums, etc
4.   Environmental: CU signage, lobby, office graphics
5.   Collateral: CU brochures, sales material
6.   Customer Service: Training, tools, support, empowerment
7.   Equip employees for customer service


                                                                                            28
The Modern Approach to Branding
“It’s a Managerial Lens for Decisions and Actions”

                               Finance

                                          Human
                                         Resources

                                                 Sales


             Business    Brand                   Marketing
             Strategy
                                              Operations


                                          Distribution

                                 R&D

                                                             29
Branding Summary


In Banking, Brand Matters More Than Ever
•   A brand is the manifestation of who we are, what we stand for, and why people
    might prefer to do business with us

•   A brand takes on the foundational importance of doctrine, and serves as the
    organizing principal for operations and culture

•   It is a critical business asset, affecting sales velocity in the short-term and
    competitive advantage in the long-term

•   It extends beyond the Marketing Department into every element of an
    organization – it must be owned by everyone




                                                                                      30
    Branding Summary

•    Start with the customer – ground your decisions in what they value

•    Earn the relationship – deliver the experience consistently and repeatedly

•    Make brand everyone’s job – we need engaged and well-prepared workforces

•    Success requires:

           Thoughtful choices

           Adaptability in a rapidly changing environment

           Management and financial commitment

           Patience to understand that improvements will come in increments




                                                                                  31
Advertising



              32
Advertising




          Advertising is a form of
             Communication!




                                     33
Advertising




         Advertising Rule #1:

              K.I.S.S.


                                34
Advertising




         Advertising Fact:
   Consumers see over 3,000 (direct/indirect)
        marketing messages each day
         Source: The right to remain silent, peppers and Rogers, 2004




                                                                        35
Advertising
How much is spent on advertising each year…

Rank/Category                              Total $$ spent across all media
#1 - Automotive
(Ford, GM, Toyota & Local Dealers)         $19.6 Billion
#2 - Retail, Department
and Discount Stores                        $13.938 Billion
(Wal-Mart, Macy’s, Target)
#3 - Movies, media
and advertising                            $6.828 Billion
(AOL/Time Warner. Walt Disney, Miramax)
#4 - Food, beverages
and confectionery                          $6.420 Billion
(McDonald’s, Coca-Cola, M&M/Mars)
#5 - Pharmaceutical                        $7.51 Billion
(Johnson & Johnson, Pfizer, Merck & Co.)
                                                        Source - www.AdAge.com




                                                                                 36
Advertising
How much is spent on advertising each year…




            How on earth can we compete?

                                              37
    Advertising
    How on earth can we compete?

•   The advertising plan must deliver multiple contacts across all mediums for
    members and prospective members to remember it

          It must be integrated across all: T.V. Radio, Print, Online, Direct Mail,
          Outdoor, Grassroots, On-site, etc.

          Reach and frequency must be consistent

           •   A message MUST be seen 6 – 7 times before an individual remembers it

           •   Don’t change your message on whim; brand advertising builds equity over time and the
               clock starts every time you make a change

          Deliver the brand promise though your service delivery

           •   Train and make the front-line and managers aware of the advertising campaigns

          Carefully measure your Return on Marketing Investment


                                                                                                      38
 Campaign
Measurement


              39
Correctly Measuring Direct Marketing

  •   Avoids simple metrics
  •   Includes precisely measured campaign results
  •   Forecasts future behavior
  •   Tracks growth, attrition and charge offs
  •   Calculates
           Return on marketing investment

           Profit contribution over the life of accounts acquired –
           shareholder lifetime value




                                                                      40
Avoids Simple Metrics Alone


 • Response rate

 • Cost of acquired accounts

 • Number of acquired accounts

 • Balances acquired




                                 41
Response Rate


• Merely the top of the funnel

• Fails to recognize the value contributed from acquired
  accounts

• Assumes all accounts yield and average contribution

• Fails to properly support champion/challenger testing




                                                           42
Cost of Acquired Accounts


• Fails to provide insights on differential profitability of
  acquired accounts

• Seeks to provide a metric for measurement against other
  channels – yet falls into the trap of average performance



 Failure to examine profitability blinds the marketer to true
 performance and leads to poor decision- making



                                                                43
Case Study – The Postal Route Targeting Approach to
Deposit Acquisition

•   Targeting – drop all HH in postal routes near to branches

•   Tailoring – mail the same creative/offer to all

•   Premiums – offer cash or the latest premium manufactured
    overseas
         The grill / emergency road repair kit / toaster / blender /
         smoothie maker


•   Measurement – often claim credit for all new accounts opened in
    tracking period




                                                                       44
What’s wrong with Postal Route? Everything!


•   No targeting – is it likely that all HH near a branch have the same
    likelihood of profitable response?

•   No tailoring – is it likely that all HH are going to have the same
    needs and attitudes and behaviors related to deposits (or any
    financial service?)

•   Incomplete measurement
          Little effort to match responders to mail stimulus
          No use of Control (non-mailed) population to measure “walk-
          in” population baseline
          No tracking of account attrition over time



                                                                          45
Case Study - Historic Response Rates to
PO Route Deposit Mail Drops 2002 - 2006



                         First PO
                         Box Type Drop




Data Source: Actual client statistics
                                          46
Components of Proper DM Measurement

 •   Match respondents to mail file

 •   Create a Control that mimics mail file composition

 •   Scale up Control results to size of mail file

 •   Track response, accounts opened, balances

 •   Apply internally agreed pre-tax margins and account life
     estimates – subtract Control

 •   Calculate predicted lifetime value

 •   Track campaign performance over time – attrition, growth and
     charge offs


                                                                    47
Components of DM Success

•   Sophisticated segmentation

•   Targeting and response models

•   Creative tailored to segments

•   Measurement of results on LTV basis

•   Champion/challenger testing

•   Measurement against control




                                          48
 Sophisticated Segmentation

                                         Total U.S.
                                      population with a
                                      deposit account




Self-Directed      Conservative        Demanding          Insecure Debt
                     Branch              Advice                              Disengaged
 Diversifiers                                              Dependents
                     Bankers            Seekers

 U.S. incidence:    U.S. incidence:    U.S. incidence:     U.S. incidence:   U.S. incidence:
       ~15%               ~25%               ~20%                ~20%             ~20%




                                                                                         49
   Targeting and Response Models
   Segmentation de-averages the Gains Chart and enables finely tuned targeting



        Predicted
        response
        decile                                                     Aggregate
                     S1        S2        S3        S4        S5      view
            1
                    1.22%     1.03%    1.12%     0.58%    0.27%     0.66%
            2
BAU                 0.97%     0.67%    0.71%     0.42%    0.20%     0.46%
            3                                                       0.47%
mail        4       1.04%     0.66%    0.79%     0.42%    0.19%
 file               0.84%     0.48%    0.73%     0.36%    0.18%     0.40%
            5                                    0.35%    0.16%     0.45%
                    0.79%     0.41%    0.61%
            6                 0.31%              0.24%    0.11%     0.40%
                    0.65%              0.51%
            7       0.56%     0.27%    0.48%     0.22%              0.36%
                                                          0.10%
            8       0.51%     0.26%    0.45%     0.24%    0.08%     0.37%
            9       0.45%     0.23%    0.40%     0.18%    0.06%     0.37%
           10       0.42%     0.20%    0.30%     0.15%    0.04%     0.30%
          Total     0.75%     0.38%    0.54%     0.38%    0.19%     0.42%

                            Mail more                Don’t mail

                                                                                 50
Creative Tailored to Segments




                                51
Measurement of results on LTV basis

•   Match account openings to mail file by name and address

•   Track response, accounts boarded and balances

•   Apply internally agreed net income per dollar of balances acquired and
    account life

•   Calculate discounted value over expected Life Time Value (LTV)

•   Subtract cost of campaign




                                                                        52
Champion/Challenger Testing

 •   Tweak offers based on research, competition, customer feedback

 •   Create appropriate test cells within segments

 •   Monitor and compare results – at the segment and branch level

 •   Adopt new champion creative

 •   Modify response models, mail volumes based on profit generated
     per mail piece

 •   Iterate process


                                                                      53
Measurement Against Control


•   Create hold-out non-stimulated population of appropriate size

•   Monitor and scale up results to mail size

•   Subtract control performance from campaign results

•   Measure control-adjusted profit and LTV




                                                                    54
                                                                      Susquehanna Bank case study:
                                                                      February 2007 customer mailing


Susquehanna Bank Performance to Date - Deposits

     February 2007 – present: Gross Performance

              Total drops / mail volume:                 3 / 1.1 mm

              Total accounts opened:                     ~9,600

              Total balances generated:                  ~$202 mm

              Average balance:                           ~$21,000

              Checking accounts generated:               ~3,400

              Average checking balance:                  ~$2,500




    Note: A fourth mailing is being dropped in October




                                                                                              55
                                                                       Susquehanna Bank case study:
Customer Response by Segment                                           February 2007 customer mailing




  Conservative Branch Bankers have the highest cross-sell rate and deliver
  lush deposit balances



                                        5.90%


                    3.80%
                                                            3.40%
    Customer
    response
       rate



                                                                                     …
                   Self-Directed    Conservative          Insecure Debt
                    Diversifier                             Dependent
                                    Branch Banker
 Average deposit
                     $31,000             $27,000             $15,000
 balance:

                                                                                               56
                                                                       Susquehanna Bank case study:
    Response Optimization                                              May and August 2007 prospect
                                                                                 mailings



     Prospect response rates improve with each mail cycle as response
     models are refined
     Response to Checking Lead Offer




                                                         0.65%

                                                                                    38% lift
                                0.47%                    0.25%                     in overall
                                                                                   response
MMDA/CD/Savings
 response rate                  0.20%                                               48% lift
                                                                                  in checking
                                                                                   response
 Checking only                                           0.40%
 response rate                  0.27%


                         NetGain! “generic”     First generation “custom”
                          targeting models    Susquehanna targeting models

                                                                                               57
Net of Control Measurement                                                      Susquehanna Bank case
                                                                                        study:
                                                                                  August 2007 mailing


The DM campaign is generating significant incremental deposit accounts
and balances above “walk-in” business.


                           Customers                          Prospects
                   3.25%                    2.25%



 Response
 rate – all
  deposit                          1.00%
 products                                              0.50%                     0.35%
                                                                    0.15%
                   Mailed      Unmailed        Net      Mailed     Unmailed         Net
                 population      control     impact   population     control      impact
                               population                          population


 Incremental balances generated:             $60mm                               $15mm
 Return on marketing investment:            1,500%                               150%


                                                                                                  58
                                                              Susquehanna Bank case study:
                                                              February and May 2007 mailings
Checking Account and Household Retention

 Households acquired using NetGain! have opened more net new accounts.


 To date, households acquired in the February and May 2007 mailings have
 demonstrated:

  • No decline in number of active checking accounts

  • 5% lift in total active accounts

  • 12% lift in total household deposit balances




                                                                                      59
Marketing



            60
Marketing


•   What is Marketing?

•   Research

•   Segmentation

•   Marketing Mix and the four P’s

•   Marketing Plan Outline




                                     61
Marketing



 Marketing is an organizational function and a set of processes for
  creating, communicating and delivering value to customers and
   for managing customer relationships in ways that benefit the
                 organization and its stakeholders.
                             - AMA




                                                                      62
Marketing


Helps to accomplish the following:

•   1% increase in customer satisfaction leads to a 3% increase in market cap

•   2% increase in customer/member loyalty leads to a 10% cost reduction

•   5% increase in customer retention increases customer lifetime value by 25%

•   50% of customers will pay 20 – 25% more for a brand they are loyal to

•   Getting a new customer/member costs 7 to10 times more than keeping an
    existing customer/member




                                                                                 63
RESEARCH



           64
Why do research?

Research can provide an organization…

1. A generation of ideas for marketing action including the identification
   of marketing problems and opportunities
2. The evaluation of marketing actions
3. The comparison of performance vs. objectives
4. The development of an understanding of marketing phenomena and
   processes

Research is not a substitute for managers making decisions, but it is a
  valuable tool for making more informed and better decisions.




                                                                             65
What Does Research Do?

Research is the link between consumer or business needs and marketers’
  services.

Research provides guidance for marketing planning, problem solving and the
  ability to monitor a company’s progress in meeting strategic objectives—
         Planning—what kinds of people buy/are likely to buy our products and
         services? Are markets for our products increasing or decreasing? Are
         there new promising markets for our products and services? Are the
         channels of distribution for our products and services changing?

         Problem Solving— What are the components of the products we should be
         offering? What price should we be charging? Where and by whom should
         we be selling our products? How much should we spend to advertise and
         promote our products?

         Monitoring—What is our market share? Are customers satisfied with our
         products? How are we perceived by our target audience?



                                                                                 66
Types of Research

Qualitative – In-depth interviews that are used for exploratory purposes,
  generating ideas, screening down ideas, better defining ideas or concepts
        Focus Groups
        In depth Interviews
        Online
        Teleconference


Quantitative –research that is projectable to the general market of interest
        Online Survey
        Telephone Interviews
        Mall/ Central Location Test
        Mail


Combination of Qualitative/Quantitative




                                                                               67
Segmentation



               68
Segmentation
•   What is it?
          The division of a market into different homogeneous groups of
          consumers


•   Allows marketers to tailor the marketing mix to specific target markets;
    rather than offering the same marketing mix to vastly different
    customers

•   Market segments need to be:
          Measurable
          Accessible by communication and distribution channels
          Different in its response to a marketing mix
          Durable (not changing too quickly)
          Substantial enough to be profitable


                                                                               69
Consumer Market Segmentation

•   The four primary bases on which to segment a consumer market
     1. Geographic segmentation is based on regional variables such as
        region, climate, population density and population growth rate

     2. Demographic segmentation is based on variables such as age,
        gender, ethnicity, education occupation, income and family status

     3. Psychographic segmentation is based on variables such as values,
        attitudes and lifestyle

     4. Behavioral segmentation is based on variables such as usage rate
        and patterns, price sensitivity, brand loyalty, and benefits sought

•   Segmentation is built upon market research, market trends, and managerial
    judgment; they are summarized by profiles, often given descriptive names.
    From this attractiveness can be evaluated and target segments selected.

                                                                                70
Illustrative Segmentation Approach


                   OBJECTIVES

                     Acquire


                    Cross Sell

                      Retain




                                     71
The key to member acquisition and growth…




   Advanced Segmentation

                                                                         d
    Beyond demographic                                                rte r
                                                                     o o
                                                                   ep avi




                                     Attitudes/Beliefs
                                                                 R h
                                                              al/ /Be
                                                            tu e
    Beyond “lifestyle”                                    Ac sag
                                                           U

    Simultaneous clustering of
    needs, attitudes and behaviors

                                                         Needs




                                                                              72
73
Lending Tree Video




                     74
Needs, Attitudes and Behaviors



    Demographics

    Behaviors

    Lifestyle

    They inform and do not drive selection




                                             75
1. Survey based insights

Category - specific questions
Factors consumers use to determine product /
   brand selection
        Required product features - needs
        Beliefs and attitudes about providers
        Actual/reported product use
        Channel orientation
        Alternate provider receptivity
Scalar responses that enable sophisticated
  statistical analysis and clustering




                                                76
2. Advanced statistical analysis


  •   Screen out non-informing questions
  •   Apply advanced clustering
  •   Test and refine




                                                  al/
                                                tu rted                 Population
                                Beliefs       Ac po e
                                                      g
                                              Re Usa            grp1       grp2         grp3



                                                          FP1     FP2     FP3     FP4     FP5

                                                                  Improved
                                          Required              segmentation
                                          features               structures


                                                                                               77
3. Typing algorithms enable segment scoring




                         Append external data from third parties
                         to customer and prospect files

                         Develop segment-typing algorithms to
                         yield 30% to 50% typing accuracy – a
                         100% to 250+% boost over random




                                                                78
Cracked the code for household-level marketing…




                                 WHY


                                                  79
 Deposits are the “profit stars” of
 retail banking income…and paying dividends


                       Other
                                                                                                               Other
                                         13%                                                                                  10%



                                                                                                                            Core deposit
                                    Core deposit                                                                                90%
                                        87%
                                                                                                                            Small Biz
                                          Consumer
Note: Core deposits includes checking, savings, MMDA, and CDs; all other for consumer includes loans (8%) and securities,
      trust, and insurance (5%)Source: FMCG analysis of; U.S. government data and benchmarks 2000


                                                                                                                                           80
                                                                                                                                                 Intentionally incomplete
   The Deposits category is comprised of five Financial PersonalitiesSM. Allows financial
   institutions to prioritize targets based on alignment with their value proposition and strategic
   focus to provide a critical marketing advantage.

                                                                                    Total U.S. population with
                                                                                        a deposit account


                             Self-Directed                 Conservative                    Demanding                    Insecure Debt
                              Diversifiers                Branch Bankers                  Advice Seekers                 Dependents                   Disengaged

                         Average total deposit           Average total deposit         Average total deposit         Average total deposit        Average total deposit
                        balance1/index: $45K/147       balance1/index: $51K/166       balance1/index: $34K/109      balance1/index: $8K/25       balance1/index : $23K/73
                         U.S. incidence: ~15%           U.S. incidence: ~25%           U.S. incidence: ~20%         U.S. incidence: ~20%          U.S. incidence: ~20%
  Dimensions
                                                                                        Values access via both
  Engagement              Strongly favors remote         Strongly favors face-to-
                                                                                      remote and “brick & mortar”
   preference                   channels                    face interactions
                                                                                              channels




                                                                                                                                                           no strong marketing “hot buttons”
                                                                                                                                                           Neutral across most dimensions;
                                                                                                                    Suspicious of banks; don’t
Loyalty and trust                                        Tends to be loyal and         Most loyal and trusting of
                                                                                                                     know whom to trust for
                                                           trusting of bank                      bank
                                                                                                                       financial planning

Decision-making                                                                        Most likely to seek advice
style and advice        Averse to advice from bank
                                                                                               from bank

                                                        Somewhat rate sensitive       Looks for competitive rates   Fee-sensitive; least rate-
Price sensitivity
                                                         but less likely to shop               and fees                    sensitive
                                                                around

Confidence and              Very confident and                                                                        Not very confident or
  knowledge                  knowledgeable                                                                              knowledgeable


 Discipline and                    Disciplined in approach to finances                                              Financially undisciplined
    control
                                  …



                                                                  …



                                                                                                …




                                                                                                                              …



                                                                                                                                                          …
                    1   Self reported total balances in checking, savings, CDs, and money market accounts



                                                                                                                                                                                               81
        Deposit Financial Personality® Segmentation
        Framework




                                                      Total U.S. population with a deposit account



                                                  Conservative                 Demanding    Insecure
                        Self-Directed
                                                    Branch                       Advice       Debt      Disengaged
                         Diversifiers
                                                    Bankers                     Seekers    Dependents




1   Self reported total balances in checking, savings, CDs, and money market accounts

                                                                                                                     82
                 Total U.S. population with a deposit account



                Conservative    Demanding        Insecure
Self-Directed
                  Branch          Advice           Debt         Disengaged
 Diversifiers
                  Bankers        Seekers        Dependents




                               Self-Directed Diversifier
                                Avg. balance2/index:
                                       $46K/147

                                    Incidence: ~15%



                                                                             83
Self-Directed Diversifier




• Favors remote channels
• Not loyal to one FI
• Adverse to advise from
 a FI

• Uses bank primarily as a
 utility for Transactions




                             84
                 Total U.S. population with a deposit account



                Conservative    Demanding        Insecure
Self-Directed
                  Branch          Advice           Debt         Disengaged
 Diversifiers
                  Bankers        Seekers        Dependents




                                        Conservative Branch Banker

                                               Avg. balance2/index:
                                                    $51K/166

                                                  Incidence: ~25%


                                                                             85
Conservative Branch Banker




  • Strongly prefers face-
    to-face interaction

  • Does not seek advice
    from FI

  • Disciplined in
    approach to finances

  • Values broader FI
    relationship




                             86
                    Total U.S. population with a deposit account



                   Conservative    Demanding        Insecure
   Self-Directed
                     Branch          Advice           Debt         Disengaged
    Diversifiers
                     Bankers        Seekers        Dependents




Insecure Debt Dependent

  Avg. balance2/index:
        $8K/25

   Incidence: ~20%


                                                                                87
Insecure Debt Dependent



 • Suspicious of FI’s; don’t
   know who to trust

 • Unlikely to maintain
   higher minimum
   balances to avoid fees or
   get higher rates

 • Fee sensitive; less rate
   sensitive

 • Financially undisciplined




                               88
                                                       Case study: Credit Union - FL

Case Study – 2007 Campaign
Segment based targeting/tailoring is being employed at a Florida Credit
Union

Generating superior returns on marketing investment (ROMI) for Prospects
and Customers

 Performance Metric                       Aggregate

 Account Response Rate                    .84%

 Cost per acct. acquired                  $120

 Total Balances                           $7,430,000

 Average Balance                          $8,808

 ROMI                                     185%


                                                                                       89
                                                               Q3 2007 Mail Drop



Bank: Northeastern Bank

Product alignment:
       Premium checking product sent to Self Directed Diversifiers and
       Conservative Branch Bankers
       Free checking product sent to remaining 3 Financial Personality
       segments
       High Yield money market account sent to Self Directed
       Diversifiers
       CD offer sent to Conservative Branch Bankers

Campaign Tactics:
       Visible Senior Management support
       Employee Training – program and sales
       Checking and High Yield product segmentation
       Calling campaign with Financial Personality segment talking
       points
Results:
                                                                                   90
 Case Study                                     • 1.24% Campaign Response Rate

                                                • Over $89.0M in deposits

                                                • Positive year one cash flow

                                                • Average deposit of $23,600

                                                                  $27,900
            $33,700                                                1409%
            1261%                         $23,700
                            $25,700
                                           1169%
Campaign                     1094%                   $12,300
 ROMI                                                 768%
 1118%


              Self-       Conservative   Demanding    Insecure    Disengaged
            Directed        Branch         Advice       Debt
           Diversifiers     Bankers       Seekers    Dependents



                                                                                91
                                                          NE Bank case study:
Checking Account and Household Retention                 February and May 2007
                                                                mailings




  Households acquired using NAB’s have opened more net new
  accounts.

  To date, households acquired in the February and May 2007
  mailings have demonstrated:

   • No decline in number of active checking accounts

   • 5% lift in total active accounts

   • 12% lift in total household deposit balances



                                                                           92
Summary of segmentation ‘best practices’


•   Survey based insights on consumer needs, attitudes and behaviors –
    by individual product
•   Tools that use external data to quickly and cheaply type consumers
    into segments (the targeting)
•   Tailored messages to most attractive segments
•   Constant testing of champion creative and offers
•   Broad channel deployment – DM, phone, Internet
•   Use of LTV (profits) and ROMI as measures of success
•   Segmentations are available now!


                 Show me you understand me!


                                                                         93
Segment - Women
•   By 2010, women are         Nearly 2/3rds of Women manage
    expected to control        their money entirely on their own
    $1.0 trillion, or 60% of
    the country’s wealth –
    Business week and Gallup


•   Women purchase or
    influence the
    purchase of 85% of all
    consumer goods –
    including stocks,
    computers,
    automobiles and
    health insurance –
    Marketresearch.com


                                                                   AARP 2007
                                                                         94
Marketing Mix and
    the 4 P’s


                    95
Marketing


•   The major
    marketing             Place            Product
    management
    decisions can be
    classified into one
    of these four                 Target
    categories                    Market

•   These variables
    are controlled by
    the marketing         Price            Promotion
    manger to best
    satisfy members in
    the target market

                                                       96
    Marketing                                                                  Place            Product



•    Product is the physical product or service offered to the member.                 Target
                                                                                       Market
     Product decisions include aspects such as function, appearance,
     packaging, service, etc.
                                                                               Price            Promotion


•    Pricing decisions should take into account profit margins and
     probable pricing response from competitors. Price not only includes
     list price but, also discounts, like relationship pricing

•    Place decisions are those associated with channels distribution the
     serve as a means for getting the product to the target customers.
     The distribution system performs transactional, logistical and
     facilitating functions. Distribution decisions include market coverage,
     channel member selection, logistics and levels of service

•    Promotion decisions are those related to communicating and selling
     to potential members. Since these cost can be large in proportion to
     the product price, a break-even analysis should be conducted when
     making promotion decisions. It is useful to know the value of the
     customer in order to determine whether additional members are
     worth the cost of acquiring them. Promotion decisions involve
     advertising, public relations, media types, etc.
                                                                                                     97
    Marketing Audit                                                           Place            Product



•    The initial step to define what is necessary to succeed and                      Target
                                                                                      Market
     identifes gaps in the in the marketing process
                                                                              Price            Promotion
•    Provides insight to competitive landscape and products

•    Assists in identifying areas of opportunity

•    How does it work:

           Usually conducted by an independent firm, it analyzes the CU’s
           objectives, strategies and execution of those strategies

           A road map is provided back outlining areas to improve marketing
           performance internally and externally

•    Mystery shop the competition and review branch layout,
     customer flow, marketing materials, staff/customer interaction

           Identify areas of weakness and strength




                                                                                                    98
Marketing Plan



                 99
Marketing Plan Outline
I.     Executive Summary
       I.    A high-level summary of the marketing plan
II.    The Challenge
       I.    Brief description of product to be marketed and associated goals, such as sales figures and
             strategic goals.
III.   Situational Analysis
       I.    Company Analysis
             I.     Goals
             II.    Focus
             III.   Culture
             IV.    Strengths
             V.     Weaknesses
             VI.    Market Share
       II.   Customer Analysis
             I.     Number
             II.    Type
             III.   Value Drivers
             IV.    Decision process
             V.     Concentration of customer base for particular products




                                                                                                           100
Marketing Plan Outline
III. Situational Analysis
    III. Competitor Analysis
         I.     Market position
         II.    Strengths
         III.   Weaknesses
         IV.    Market share
    IV. Collaborators
         I.     Subsidiaries, joint ventures, and distributors, etc.
    V.   Climate
         I.     Macro-environmental PEST analysis:
                 I.     Political and legal environment
                 II.    Economic environment
                 III.   Social and cultural environment
                 IV.    Technological environment
    VI. SWOT Analysis
         I.     A SWOT analysis of the business environment can be performed by organizing the
                environmental factors as follows:
                 I.     The CU’s internal attributes can be classed as strengths and weaknesses
                 II.    The external environment presents opportunities and threats




                                                                                                  101
Marketing Plan Outline

IV. Market Segmentation
     I.   Present a description of the market segmentation as follows:
          •   Segment 1
               I.     Description
               II.    Percent of sales
               III.   What they want
               IV.    How they use the product
               V.     Support requirements
               VI.    How to reach them
               VII.   Price sensitivity
          •   Segment 2
               –      Same as above

V.   Alternative Marketing Strategies
          List and discuss the alternatives that were considered before arriving at the recommended
               strategy . Alternatives might include discontinuing a product, re-branding, etc




                                                                                                      102
Marketing Plan Outline
VI.   Selected Marketing Strategy
      I.   Discuss why the strategy was selected, then the marketing mix decisions (4 P’s) of
           product, price, place (distribution) and promotion
           •   Product – the product decisions should consider the product’s advantages and how they will be
               leveraged. Product decisions should include:
                I.     Brand name
                II.    Quality
                III.   Scope of product line
                IV.    Packaging
           •   Price – Discuss price strategy, expected volume, and decisions for the following pricing:
                I.     List price
                II.    Discounts (relationship pricing)
                III.   Bundling
                IV.    Payment terms and financing options
           •   Distribution (Place)
                I.     Channels – in-branch, direct, etc.
                II.    Motivating the channel/front-line
                III.   Criteria for success
                IV.    Branch locations (stand alone or on-site)
                V.     Logistics (full service or basic service)
               Promotion
                I.     Advertising – how much and which media (Mass, Print, DM, Outdoor, Web, etc.)
                II.    Public relations
                III.   Promotional Programs
                IV.    Budget; determine break-even point for any additional spending
                V.     Projected results of the promotional programs




                                                                                                               103
Marketing Plan Outline

VII. Short and Long term Projections for Revenue and Expense
    I.   The selected strategy’s immediate effects, expected long-term results, and
         any special actions required to achieve them. This section may include
         forecasts of revenues and expenses as well as the result of break-even
         analysis. Consider all the marketing expenses from advertising to
         incentives.


VIII. Conclusion
    I.   Summarize all the above


IX. Appendix
    I.   Exhibits
         I.   Calculations of market size, share of market, commissions, profit margins (spreads),
              break-even analyses, etc.




                                                                                                     104
Marketing Resources

• The Market Planning Guide: Creating a Plan to Successfully Market
  Your Business, Products, or Service (Paperback) by David H. Bangs

• First Manhattan Consulting Group – white papers
    • www.fmcg.com

• Marketing by the Dashboard
  Light: How to Get More Insight, Foresight, and Accountability from Your
  Marketing Investments by Pat LaPointe




                                                                            105
Appendix




           106
Why Most Marketing Communications Efforts Perform Poorly


 Do You Have World-Class Marketing Communications that are Likely to
 Generate a Positive ROI?


 Targeted Do your marketing communications focus on a well defined target customer        Yes?   No?
 that was selected based on profit related criteria?
 Well Positioned: Are your marketing communications implemented to support the            Yes?   No?
 most motivating positioning strategy available for the brand?
 Integrated Are your marketing communications conceived and implemented as a part         Yes?   No?
 of a harder-working integrated campaign?
 Growth Focused: Are your marketing communications specifically designed for either
 customer acquisition, customer retention, or customer development (increasing share of
                                                                                          Yes?   No?
 requirements)?
 ROI Driven: Are your marketing communications utilizing implementation methods           Yes?   No?
 proven to increase marketing ROI?
 Measured: Are your marketing communications performance measurement systems              Yes?   No?
 designed to indicate causality and corrective action?

     If you have one or several no’s, it may be appropriate to take a closer look at
                      your marketing communications practices
                                                                                                 107
Key Steps in a World-Class Marketing Communications
Implementation Process
       Analytic Process for All Marketing Communications Efforts

                                            s    n
                                        n es tio
                                    a re era l
                                   w sid ria




                                                  at
                                                pe
                                  A n         T
                                    Co




                                             Re
                                   What Am I
 What Do I          What is      Trying to do to        How Do I        How Do I
 Need To             My            My Target           Successfully     Measure
  Know?             Goal?          Customer?           Implement?     Performance?

 Identifying       Establish          Focusing             Action       Individual
   relevant       quantifiable       marketing         planning and     action and
facts for the        and             activity on          project         overall
   planned        measurable        acquisition,       management       campaign
activity and       goals and        retention, or        for better     marketing
 converting       budgets for         customer         performance     performance
  them into     each marketing      development                         measures
   insights         action          (higher % of
                                   requirements)

                                                                              108
         The Goal of an Integrated Marketing Campaign is to Move
         Target Customers and Prospects Up the Adoption Process
                                                Make it easier    To reinforce        Provide an
                                                      for              the         incentive get a
                                                your prospect     reasons for      larger share of
                                   Stimulate
                                                 target to try       repeat       your customer’s
          Make suspects            prospects
                                                     your        purchasing of   requirements with
           aware of your          curiosity for
Marketing                                          product             the           the product
          product (brand)             your
 Goals                                             (brand)          product
                                product (brand)                                        (brand)
                                                                    (brand)




         Unaware            Aware          Consider          Try            Repeat           Loyal

                          Customer Acquisition Management                Customer Retention Management

     Example of an Integrated Campaign Architecture to Move Target Customers up the Adoption Process
A) Advertising
B) PR
C) Direct Marketing
D) Promotions
E) Events, Sponsorships
F) OnlineMarketing
G) Channel Marketing

                                                                                                     109
   Here are Some Definitions to Help Identify and Segment your
   Customers and Prospects


              Unaware      Aware       Consider        Try          Repeat          Loyal


 What        Prospects    Prospects    Prospects     Customers     Customers      Customers
              that have    that have     that are     that have     that use         that
  Are           never     only heard    willing to      had at        your        exclusively
 They?         heard of     of your     give your     least one     product,       use your
             your brand      brand     brand a try   experience      but not       product
                                                      with your    exclusively
                                                        brand




Potential                                “I have                    “I have
                            “I have                   “I had a                   “Every car
 Quotes                                   never      Ford that    owned two
 from a                    heard of     owned a                    Fords in      this family
             “Huh?”        Ford, but                 my folks                     will every
                                       Ford, but     gave me      my lifetime
                          have never   would like                 and would      buy will be
                           had one”                    years                       a Ford”
Customer                                to learn       back”       consider
(Prospect)                               more”                     another”


                                                                                         110
 What World-Class Looks Like for Each Key Marketing
 Communications Activity
                                                                               Target What
    Strategic                  What do I                   What is               Step in                  How do I                     How do I
   Marketing                    need to                     My                  Adoption                 Implement                     Measure
Services Tool Set               know?                      Goal?                Process?                Successfully?                Performance?
                                Positioning                 Goals to             Choose between               Message                Customer effects,
                                Insights &                  inform,                acquisition,             development,               market effects,
A) Advertising                   Message                  persuade, or             retention or           copy strategy, and          financial effects
   Management                   Guidelines                  remind                    loyalty              media targeting
                            Positioning Insights -      Brand, Product,          Explicit role of           Press, event,              Ad equivalency, # of
                                                                                                                                       positive messages,
B) PR                         what messages           Investor Relations,        PR within an               editorial, and             target impressions,
                             communicate best          and Public Affairs         integrated                    media
   Management                  through PR?                  Goals                marketing mix                targeting
                                                                                                                                           positioning
                                                                                                                                         communication

C) Direct                   Customer database     Acquisition rates,             Focus individual        List Maintenance &              RFM, lifetime
   Marketing                variables linked to response rates, ROI,          offers on acquisition,     Segmentation, offer          customer value, trial
                            purchase likelihood    target customer             retention, or loyalty        Development &            rates, response rates,
   Management                                        penetration              (dialogue marketing)     Fulfillment Management           conversion rates
                            Target & positioning        Response rates,        Programs focused        Redemption forecasting,          Response Rates,
D) Promotions                  insights and            redemption rates,       on trial and repeat /       offer design,                 ROI, % sold on
   Management               promotions success            positioning          improving share of        merchandising and              deal, competitive
                                  stories               communication             requirements              integration                  promotion rates
E) Event, Trade Show,          Target habits,     # of impressions, impact   Focus efforts on          Integrating with channels,        # of trials, # of
                           interests, motivations of the medium, in sync       awareness,                negotiating contracts,         impressions, ad
   Affinity, Sponsorship      and openness to        w/ brand strategy,    consideration, trial or       valuing merchandising         equivalency, Direct
                                                       forecasted ROI
   Management                    your brand                                       loyalty                     opportunities              and total ROI
                               Target internet        # of impressions, #     Focus on awareness           Optimizing banners,       Hit count, information
F) Internet                  habits, interests,       of hits, # of actions    or consideration, or      trailers, links, alliances,   requests, qualified
   Marketing                information needs,        generated, revenue        trial, or repeat, or           and response          leads, customer calls,
                            artificial intelligence        generated                   loyalty                  mechanisms            and sales generated
                              Channel needs,           % of sales time,         Focus on specific        Channel contracts,         Channel marking ROI,
G) Channel                       channel              additional support       awareness, trial or     channel implementation          intangibles, extra
   Marketing                  environmental            goals, customer           repeat activities       guidelines, channel          consideration, # of
                                analysis,               acquisition and       executed through the          performance             leads, # of new sales
                                                      development goals              channel                requirements
                                                                                                                                                  111

								
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