ChiefMartec.com puts out a sensational graphic every year that I’ve been following since about 2014. When it first came out in 2011, the graphic contained about 150 marketing technology vendors and the list included Marketo, Eloqua, Oracle, and others. Many of the companies on the 2011 graphic are no longer in business … some were fortunately acquired and became part of something bigger and better, while others just didn’t survive against a sea of competitors.
By the time I found the graphic in 2014, the list had grown to almost 1000 companies and this year, as you can see below, the list now contains over 5,000 companies. And that is just the ones they know about!
Each of the companies on this list believes they have an interesting value proposition, a great story to tell, and a problem to solve for marketers like me. My inbox is flooded daily with new ideas for content, technology to help me create it, and opportunities to get it out into the market in new ways. I often dream of what my job might look like with that solution, but at the end of the day we all have a budget and the pressure of doing more with less.
Actually, after reading the 2017 Financial Marketing Trends report from the Digital Banking Report, I am positive most of you feel that pressure. There are nice to haves, wish I haves, and must haves and often times only the later makes the cut. Many are left understaffed or underbudgeted … or in some cases, both.
Let’s spend some time talking about our priorities and how we can make sure our budget is used to help us accomplish those priorities so we aren’t left feeling like our friend Jerry Maguire when its 2018 planning season.
Top priorities changing … a little
More than half of the financial institutions surveyed in that report cite cross-sell or improving share of wallet as their top marketing priority for 2017. Loan growth is the second most important priority for 45 percent of respondents, while 38 percent want to increase adoption of digital channels.
When you look at the large and regional financial institutions 63 percent rank adoption of digital channel growth above all other priorities this year which is a huge change from the rest of their peers. Just 15 percent of community banks and 14 percent of credit unions are doing the same. Loan growth is the top priority among credit unions while growing relationships takes precedence for community banks.
Additionally, the products that marketers say they’ll focus on this year support the top three priorities. Sixty-seven percent of respondents say they’ll heavily market mobile banking solutions, while 66 percent will emphasize mortgage loans and refinancing.
These unequally shared priorities reflect the market influences that are driving larger financial institutions to look for ways to differentiate themselves, while smaller ones strive to find and take command of valuable niches. However, given data from the report’s examination of marketing budget allocations for 2017, it’s clear that at least some financial institutions are going to struggle to support these objectives because they’ve failed to adequately fund strategies that align with those priorities. Additionally, they lack the skills and expertise on their team in many cases to build and execute on the strategy, we cover this in more detail in our white paper called World-class Marketing for World-Class Financial Institutions.
Misaligned spending and tight budgets
Marketing budgets will increase for virtually every asset size in 2017 (with those between $1 billion and $10 billion in assets anticipating a .4 percent decrease), and 45 percent of financial marketers surveyed view their budgets as “just about right.” Thirty-eight percent say their budget is still too small, and 8 percent say it’s way too small.
Few bank marketers would be likely to turn down more money for their departments, but as important as the size of their budgets is, the way it is used is even more important. While cross-sell and improving relationships were the top priorities cited in the report, they account for only the third largest portion of marketing budget spending among those polled. The majority of respondents (nearly 57 percent) say they will allocate just 10-20 percent of their marketing budgets on up-selling and cross-selling existing customers. No one planned to spend more than 70 percent on cross-selling.
Similarly, customer acquisition came up third or sometimes even lower on the list of priorities, yet it accounts for 32 percent of marketing budgets. Slightly less than a third of respondents plan to spend more than 30 percent on customer acquisition. What’s more, customer experience — key to successfully improving bank/customer relationships — ranked fifth in terms of budget allocation. It feels today like there is a still a gap between where we want to be and where we spend our money.
The report notes that 30 percent of financial institutions are still allocating more than 50 percent of their budgets to offline marketing channels, although online channel use is increasing. Honestly, I am not surprised given the history and success most banks still see in this channel. With the huge priority banks are placing on becoming more digital, the budget allocation still isn’t there today and that is probably a problem. The disparity between what financial institutions say they want to accomplish with their marketing efforts and where they’re spending their money could mean many will continue to struggle to meet their marketing goals for the foreseeable.
One of these years I hope to open this report up and see things starting to line up but that will probably happen around the time something new and better starts to emerge on the scene. We can’t leave behind highly successful direct mail campaigns they are the bread and butter of financial marketing. I think the next year or two should start to see some bigger shifts into the digital channels. If you want to understand more about what your peers are up to, I highly suggest downloading the 2017 State of Financial Marketing from the Digital Banking Report.