Out with the old and in with the new?

The plethora of channels now available to marketing professionals in the financial services industry presents both opportunities and challenges. Understanding which tactics to use for which audience and how new channels can complement traditional channels is no mean feat. And the increased regulatory framework governing the way in which companies communicate with their prospects further exacerbates this challenge.

Effectively integrating new and traditional channels to support strategy, achieve ROI quickly and comply with regulatory guidelines is a challenge that involves a commitment to a change in practices, a culture shift, re-alignment of marketing tactics and a leap of faith. Rome wasn’t built in a day and achieving the optimum marketing strategy takes some time to get right. But through making incremental steps, it can be achieved and rewards come in the form of reduced costs, improved targeting and demonstrable ROI both in the short and the long term. 

The legacy
For many in the financial services industry – particularly the asset management community – marketing is still comprised primarily of traditional channels including direct mail and face to face appointments.  

The personal nature of this sector means that there are plenty of opportunities to capture data on customers that can be used to enhance marketing and provide better targeted communications and offers. However in many cases, these opportunities are not exploited and potentially valuable information goes to waste. And of course face-to-face marketing is incredibly expensive, so demonstrating any kind of tangible ROI is rare.

Latest figures from the Office of National Statistics show that internet usage in the UK has reached a penetration of 64 percent. This explosion in the use of e-mail and the internet means that many organisations in other sectors have relinquished direct mail in favour of the electronic (e-mail) kind.

Clearly in target markets for asset management companies, this figure is significantly higher, and failure to acknowledge the importance of this new medium is an opportunity missed. 

Slow progress
But although the financial services sector has dipped a toe in the water, it is lagging behind other sectors when it comes to e-mail marketing. And while the retail financial services sector is starting to exploit these new channels, the asset management community is making relatively slow progress.

Culture and a reticence to change the way things have always been done is the primary reason for this. And the legislative environment – the Data Protection Act in particular – emerging around direct marketing has added to the confusion and many marketing professionals have tended to shy away from exploring new methods. 

However, as pressure to reduce costs and demonstrate greater accountability mounts, this year will see a turning point. The need to be able to prove ROI on marketing spend has never been greater and in line with this, tactics that can deliver both a short term, measurable ROI and visibly improve longer term marketing strategy will become paramount.

Evaluation – the holy grail
Evaluation is often neglected as if it is done properly, it can be expensive and absorb valuable resources. But through using new channels such as e-mail marketing and the internet, evaluation is carried out by default. As e-mails and actions resulting from e-mails are tracked, reports on how a particular communication has affected behaviour can quickly be produced and the campaign’s success can be evaluated in a matter of days.

For example, a new ISA product could be e-mailed to a 1000 customers. The system could track that 270 of those accessed the website for more details and that 124 requested a callback to open an account. Capturing this kind of information simply isn’t possible through other channels.

Cutting costs but not corners
The cost of e-mail marketing is much cheaper than direct mail and a relative drop in the ocean compared with face-to-face marketing. And while e-mail cannot become the sole channel for a marketing programme, it can replace traditional direct mail – a proportion of it at least – and sit alongside other channels to deliver short-term value.

And in the longer term, regular use of this channel means that a far superior level of data can be captured to ensure the appropriateness of wider marketing activities and hone targeting.

Feet first
Although it is a step in the right direction, a toe in the water isn’t enough for asset management companies to improve accountability, reduce costs and enhance marketing strategy.

Incremental steps that slowly introduce an e-mail marketing programme are fundamental if asset management companies are to maintain a competitive edge and prosper in the challenging years ahead.

Mark Carlile is UK Managing Director and Vice President Eastern Europe/Middle East & Africa, CDC Software.