Every year, bank executives must find new ways to stretch their marketing budgets. This was heightened in 2020 because of both budget constraints and the extreme effects of COVID-19 on the economy.
Many bank marketers went into 2020 with flat year-over-year budgets, but they were expected to produce greater results than in years past. For example, banks aimed to increase deposit gathering from the previous year while operating on the same budget.
Then the pandemic came. It crippled consumer confidence and the economy, forcing businesses to shut down and making consumers either afraid or unable to spend. Banks have seen fewer new deposit accounts open, but small business and PPP loan applications skyrocketed.
COVID-19 also pushed the need for digital transformation to the forefront, compelling executives to reallocate marketing budgets to support critical digital enhancements.
How these challenges will play out for the rest of 2020 and into the future remains uncertain, but executives who use their marketing resources and budgets strategically will be better prepared for 2021. One way to improve budget efficiency and generate results? Smarter targeting.
The advantages of improved targeting
Targeting a specific audience connects you with the people most likely to form relationships with your bank. Efficient targeting prevents you from wasting resources on campaigns that might not reach the right audience. Once you define your bank’s audience, you can devote resources to attracting new customers and expanding relationships with existing ones.
Taking the time to understand your true audience can be a challenge, but it’s the best way to make the most of limited marketing budgets. Here are three steps to get you started:
Leverage look-alike models to expand relationships with current customers. It’s important to identify your best, most profitable customers and understand the trends in their habits. What are their values? What products or services do they use? What was the order of purchasing those products or services? Use that information to create a look-alike model to identify which of your other customers resemble your top patrons.
This process will allow you to focus your budget on easier growth avenues, like converting existing customers to join the ranks of your best customers. According to a study by Signal Mind, investing in current customers is six to seven times cheaper than acquiring new customers.
Conduct data appends to acquire new customers. Look-alike models can also help identify which prospects will most likely turn into customers so you can target fewer people with greater returns. In addition, this type of data append and analysis helps uncover market opportunities.
My company, BKM Marketing, took a snapshot of one bank’s free checking customers to gather demographic and behavioral information. We discovered that two key attributes — age and income — were instrumental in defining its free checking customers. We then used those attributes as data points to test and develop a targeted acquisition strategy for specific campaign marketing. Similarly, you can use existing customer data to identify and target your bank’s best audience and then center your budget accordingly.
Analyze previous campaigns. Budget optimization of future campaigns goes beyond looking at how well your current targeting works; it often means diving deeper into past data to determine future predictors of success. For example, how does geography play a role in targeting and attracting new customers? Are you able to identify opportunities based on where the greatest number of new customers come from? Are there segments that drive more deposit growth? If this is the case, identifying look-alikes could mean targeting fewer people (which amounts to less spend) for equal or greater deposit gathering.
For many banks, tighter spending should translate into sharper targeting in 2021 and beyond. Spend time and resources to identify your true audience. Then, you can connect with the right consumers efficiently and see greater results.
Megan Allinson brings over 15 years of strategic marketing experience to BKM Marketing. As the integrated marketing director, Allinson partners with clients to develop and execute their marketing communication plans and strategies to deliver against identified business and marketing challenges and objectives.