Neglecting the Other Three Ps in Financial Services Marketing

As we find ourselves in the aftermath of the housing bubble, as well as the financial crisis and the economic downturn that followed, it is important that we as marketers examine our role in what has happened and learn from any mistakes we may have made. This type of critical self-analysis can be difficult, but if we want to grow from our experiences and make ourselves better marketers, it is a vital exercise.

 

 

All of the causes and contributing factors of the housing bubble, crisis and downturn can be debated ad nauseam, but I think one thing is clear: people engaged in financial activities, such as obtaining mortgages, selling and buying financial instruments, etc. that they either did not or did not want to fully understand. And despite warnings of the contrary, many of these people held an irrational opinion that the markets would somehow fail to follow the pattern of ups and downs that they always have in the past. Some may have acted out of greed, some out of fear and some just because it seemed like the prudent thing to do at the time.

I believe that most marketers (not all, but that’s another topic) acted and continue to act ethically and honestly, and based on that opinion I started thinking of what lessons could be gleaned from the events over the last few years. As I sat to reflect, I kept coming back to a common theme: the Marketing Mix (Product, Price, Place and Promotion). This invaluable tool/structure that marketers have come to rely upon hasn’t necessarily failed us, but instead we have failed to properly utilize it. And in fact, I think we are continuing down that road even today.

If you look at the amount of focus placed on Product, Price, Place and Promotion, you quickly see that the majority has been placed upon Promotion while Product, Price and Place have seen little attention. Why? The simple answer may be because in many ways Promotion is the easiest to execute, especially in the digital age, and many times the most exciting. Product, Price and Place are just as important components in the mix, however, so I will address all four and discuss some lessons we can learn.

Product

The common sound bite we hear is that financial products and services are too complex. I agree that some products are complex, but are they any harder to explain to consumers than how an email marketing application works? Or the features and benefits of a high-end music system? Or the workings of a consumer satellite TV system? Any of these products can be seen as “complex,” but the difference is education and support.

If you have ever tried to purchase a complex product or service, you would agree that a well-educated salesperson is worth his weight in gold. And by “well-educated” I don’t necessarily mean that he has a high-level degree from a top school or other impressive credentials, but rather that he know the products and services he is selling inside and out. Nothing instills confidence, pride and customer satisfaction like the opportunity to ask a salesperson real questions and get real answers before, during and after a sale. And nothing creates hesitation, ambivalence and customer dissatisfaction as a discussion with a salesperson who has neither knowledge about nor interest in the products or services he is selling. Marketers sometimes forget this simple lesson and fail to consider ourselves salespeople. In essence, however, that is exactly what we are. Even if we don’t have front-line interaction with customers, it is our responsibility to know our products and services and also ensure that our sales force is equipped with training and support that allows them to fully understand our products and services. By doing so you help the salesperson achieve his goals and also create better-informed and happier customers.

In the world of financial services, this has become stuff of legend as tales of brokers and agents peddling products of which they had no clear understanding abound. Terms like mortgage-backed securities (MBS) and mortgage programs such as low/no-documentation mortgages and adjustable-rate mortgages (ARMs) have now become a common part of our lexicon, but just a few years ago most people would have been hard pressed to explain what these were or how they functioned. Some people selling these products were more concerned with making a sale than educating themselves about the products, and most consumers were far too eager and/or ignorant of what they should know about the products to take the time to ask the important questions. A well-educated salesperson would have been able to determine if a particular product was right for a particular customer’s situation. While I believe that ultimately choice and the responsibility of that choice fall upon the consumer, the salesperson should play an important role in educating the consumer about his options, risks and obligations.

And as marketers, we are responsible for ensuring that our salespeople fulfill that role. I believe the sales force should fall under Marketing’s management, but even if we are in an organization where the sales force is managed in a separate division or group, we can support the sales force by creating training sessions that educate them about our products. And once that initial training is complete, follow-up sessions are needed to keep the sales force up to date and let them know about enhancements and changes. In addition, support materials in the way of clear, easy-to-read product sheets, reference materials, customer handouts, etc. should be created and updated to support the sales force and their efforts.

 

Price

I often hear from marketers that price is one of the most difficult parts of the marketing mix for them to control. It’s just common sense that if it costs $XX to develop, produce, distribute, etc. a product or service, it follows that a company could not continue to sell below that price for any length of time and remain in business—let alone make a profit—even if offering it at below cost has strategic value. (Of course I’m assuming a simplified and traditional business model where there is only one product or service. I am also ignoring any joint efforts/investments with distributors or retailers, as well as any other revenue streams such as subscriptions, advertising revenue, etc.) Marketers may not be able to control all aspects of the costs, but a marketer can control price in a couple of ways.

First, while there is a lower limit to what we can charge for a product or service and remain in business, we do have control over the collection of features included in an offering that drives the cost and therefore the price. By customizing features to the needs of different segments, we can offer our products and services at different price points. I actually believe that the financial services industry has done this pretty well. Just take a look at the plethora of products and services available. If you plan on staying in a home for four or five years, a 30-year fixed rate mortgage with a higher interest rate may not make sense. Instead a five-year ARM may be exactly what you need. Or if you are an older consumer looking to buy a home to take advantage of tax benefits but not necessarily interested in capturing long-term value and equity, a zero-down, interest-only loan may be the right way to go. It’s through this mix of features that we are able to satisfy the real needs of our targeted audiences at the appropriate price.

If anything, consumers are bombarded with too many offerings, which makes choosing difficult for consumers. The key for marketers is targeting specific offerings to the right consumers, which brings me to my second point on price. Given the array of products available to consumers, it is imperative that marketers step into an advisor role where we strive to marry the right product with the right consumer. This needs to be done in terms of cost, as well as features. During the housing bubble there were many consumers who took out ARMs without fully realizing what their monthly mortgage payments could be once interest rates rose from their historic lows. Again, I don’t think brokers necessarily hid the costs of the products they were selling, but instead assumed that consumers were fully aware of those costs and that they fully understood the risks and financial ramifications associated with them. From a legalistic standpoint consumers were advised of the risks in the documentation they had to sign to obtain those mortgages, and a case can be made that greed, unrealistic expectation and willful ignorance drove consumer behavior. But having a legal defense doesn’t necessarily translate to good business practices, and we could have done a better job of making those risks better known. Now I know this seems counterintuitive to marketers. Basically it sounds like I am suggesting that financial services marketers should have highlighted/promoted the possible negative aspects of their offerings. But what I’m actually saying is that when reviewing the suit of available offerings with a consumer, we should provide the possible outcomes of each and then allow the consumer to make the best choice for himself. The worst situation, of course, would be one in which the marketer is forced to dictate what offering is best for a consumer and deny a consumer his freedom of choice.

 

Place

Once you have a great product or service that is priced right for your targeted consumers, the next step is to make that product available to those target audiences. In the years leading up to the housing bubble burst, many financial services companies migrated much of their sales efforts from traditional broker-based to web-based. And as they migrated to new websites and landing pages, search engine optimization (SEO) and search engine marketing (SEM) proved to be some of their best tools in pairing prospects with offerings. It goes without saying that the web is an invaluable tool that makes education and commerce incredibly easy, but it tends to allow individuals to become too narrow in their searches, and/or inundates them with so much information that a consumer may end up delaying a decision or making a knee-jerk choice out of frustration.

Search is an incredibly efficient tool for marketers. It directs consumers who are already interested in the attributes of your product or service to find you from almost anywhere in the world. But it has potential pitfalls for consumers who are looking for a clear overall picture, especially if they are looking for the pros and cons. If a consumer Googles something like “cheap mortgage rates,” he will be delivered a page of results that correspond to that search: some paid results and some organic results. One factor that causes pages to show up organically is that their content relates to the search terms. Most likely there are also other pages with similar content/keywords linking to those pages, which drives page rank (PR). And it can be assumed that advertisers paying to have their ads show up as results when certain keywords are entered have pages that relate to those search terms. And most likely they also link to similar pages and content. So what you end up with is a deep funnel of pages and sites with similar content, keywords and subject matter that parrot each other’s messages. Instead of giving the consumer a range of information, search has basically boxed in the consumer to similar-sounding information that reinforces what they were looking for in the first place. While this “feature” of search is great when the consumer is already well educated about your product or service and knows exactly what he is looking for, it can also force an uneducated consumer down a funnel that fails to include any diverse points of view or information that may differ from their initial assumptions.

So what’s a possible mitigation strategy? Well, one is similar to the strategy I mentioned under “Price”: Provide robust information and educate your consumers about your product or service, instead of engaging in a perceived one-sided “hard sell.” Thereby you allow consumers to make their own decisions, and you have empowered consumers to make better choices. To do this, when creating your marketing materials, especially online materials, keep all your pertinent information upfront, and don’t try to bury any potentially negative aspect of your offerings. Your consumers may not care about those features as much as you think they do, or they may be willing to forego a certain feature in order to ensure that they obtain others. Regardless, you will gain respect and trust from consumers by the fact that you are upfront with them.

Another strategy is to treat landing pages as portals where visitors can survey your suite of products and services instead of solely relying on individual product-/service-specific landing pages. More general/broader keywords and ads should direct visitors to your suite of products, where you can help guide visitors to more details contained in product-/service-specific landing pages. So you should still keep the more specific landing pages, but modify your keywords, ads and content for visitors who are looking specifically for that content. The real key here is the usability and intuitiveness of your landing pages to ensure visitors are being funneled to offerings that match their needs. I’m a huge fan of usability testing, but if you don’t have the budget for a full-blown usability test, the simple exercise of placing paper design comps in front of a test subject with a defined task (get the latest 15-year fixed mortgage rate, open a business checking account, etc.) will warn you of any major problems and allow you to address them before you start development. Some people claim this can be done at the wireframe stage. While I agree it can warn of missing information or links, I don’t think wireframe tests provide a true sense of a site’s usability since the design is very important and draws users’ eyes and clicks.

As you can read between the lines, I’m an advocate for comparison charts. In fact, it has been found that allowing consumers to compare products in one view, even when potentially negative information about one or more products is included, drives more conversions. Again, this is difficult for some marketers to do as they have been conditioned to only speak about the positive aspects of their products and feel they may potentially scare prospects off from making any decision. Quite honestly, this is an antiquated view. If there is negative information about your product or service, a consumer can Google it in about half a second, no matter how consistently you avoid talking about it. If you don’t believe me, try Googling “*your company/product/service* sucks.” Hopefully nothing too scary comes up, but you may be surprised at what you find. By talking about these issues head-on, however, you get a chance to diffuse them and it allows you to address them on your own terms.

The other problem is the sheer amount of information available. Hundreds of thousands, if not millions, of pages about financial services products and services are available to a consumer. One could say that access to the information is a good thing for the consumer, but at a certain point it simply becomes too much to digest and the consumer experiences information fatigue. Tired of looking at the same information bundled in different packages, the consumer finally settles on a decision simply because he is tired of researching. This obviously won’t necessarily end in the best possible decision. There aren’t enough hours in the day for each consumer to research every possible product or service available to them, so many consumers turn to financial advisors (FAs). But the outlook isn’t much better for FAs. I attended a Journal of Financial Advertising and Marketing (JFAM) conference late last year, where Daniel Rothman, the Director of Research (Americas) at the Financial Times presented some research he did on how financial advisors spend their time. As you can see from the below, most of their time is spent in activities other than research. In fact, only 12% of their time is dedicated to research and picking investments.

 

 

If FAs don’t have time to do the research (and they get paid pretty well to research and make recommendations!), how can we expect that the average consumer has the time to do the research? The glib response is that the FAs should spend more time doing research and provide that consolidated information to their clients, but as we’ve seen there is just too much information for them to humanly wade through. As the graph above shows FAs aren’t spending their time relaxing or playing golf, but rather servicing their accounts in ways other than performing research. Expecting the FAs to allocate more of their time to research also stops us from seizing upon an opportunity to position our products and services as we want. Instead of forcing FAs and consumers to search for information and hope they stumble upon our own materials that position our products and services as want them positioned (pros, cons and all), it’s a good idea for us to make our materials available in digestible chunks to consumers, as well as to FAs, who can spend the time to look through them and possibly pass them along to their customers.

While it is important to segment your audiences, I’ve seen a lot of companies take this too far as they don’t realize the fluid nature of information in the digital age. As soon as information is distributed to one audience, you can safely assume that it will be shared with other audiences. So instead of attempting to cordon off information, free that information and make it easily available. Make sure your offering pages print legibly and beautifully, and/or make printable PDFs of your offering sheets available on those pages. That way if a visitor (consumer or FA) wants to print either to review later or wants to email the PDF to a family member, friend or client, he can do so easily and quickly. This may sound counterintuitive to marketers who track pageviews as a metric, but getting the information out there is more important than a few clicks of the mouse.

To make getting to and sharing your pages easier, make your URLs easy to remember and don’t rely on long, nonsensical URL strings. We’ve all seen these strings that look something like “www.domain.com/Webpage/template_product.aspx?fileType=prsrel&categoryID=123.” If your site is designed in a manner that these types of URLs are created, make use of redirects and extensions like “www.domain.com/products” to drive traffic as people are more likely to remember those.

I’ve also seen many sites (especially news sites) with functionality that allows visitors to “forward this article.” While this is a step in the right direction, I wonder about its effectiveness as visitors may be hesitant to provide the site owner the email address of the person they want to forward the article or page to, as well as hesitation that their own email address would somehow be added to some marketing database. Whether this is a valid concern or not, it may cause visitors to not use the functionality, especially when cutting and pasting the URL is just as easy.

I could provide more tips and ideas on how to get your products in the right place for your consumers, but the main idea is that we should make the content and information available in usable bits and easily accessible in the manner that best facilitates the consumer’s behavior. Merely throwing more information up on the web isn’t the answer.

 

Promotion

I mentioned earlier that Promotion is the easiest part of the marketing mix to execute, and many times the most exciting. And because of this we have seen the lion’s share of focus on Promotion. The reason I say this is because of the ever-expanding set of tools that we have to distribute content. We have email, banner ads, RSS feeds, Twitter, Facebook, YouTube, microsites, iTunes, Digg, press releases, etc. The list can go on and on. Consumers are bombarded with hundreds if not thousands of messages that demand their attention every day. And because of the constant bombardment, marketers have been forced to rely on louder, more nontraditional methods of reaching their audiences, who quickly learn to ignore promotional messages in whatever form in which they come.

Social media and Web 2.0 technologies are great tactical ways to get important messages out, but I have seen many companies that are allowing tactics to dictate strategy, instead of the other way around. By doing this they risk alienating their audiences, who have turned to social media as forms of interaction and two-way communications with their friends and network of friends. True social media is about conversation, but there is a component of traditional word-or-mouth (WOM) advertising that marketers can take advantage of. But when that becomes too much like a forced corporate message and resembles spam, the WOM benefits can quickly dry up or turn negative.

Some savvy financial marketers pounced on new ways to promote their latest products and offers using new and easy-to-use tools, like Google Adsense, banners, RSS feeds, etc, as well as the social media and Web 2.0 scene. While many of the tools they currently use weren’t available as the housing bubble began, they did rely on Promotion and the tools that made Promotion much easier and “sexier?” as the housing bubble continued to swell and eventually burst. They used these tools to blast their messages to anyone and everyone, with the emphasis on distribution rather than communication and dialogue. Instead of listening to consumers, they spoke to them. With the rise of this one-way communication, the focus on the right mix of Product, Price, Placement and Promotion went out the window as Promotion became the main focus regardless of its comparative strategic value. The favored metrics of the day were click-through rates (CTRs), conversion rates, pageviews, time on site and retweets, rather than on true customer education, engagement and satisfaction.

And I see the trend continuing today. We all get emails, tweets, etc. just about every day about new social media seminars or whitepapers, or articles telling us how “important” it is for us to reach consumers through a different venue. But what value is this adding for the customer? If a message is of true value to the consumer, the right tactic or tactics should be used. Simply blasting snippets from press releases will not result in true education about your products or services, which are key to sales. Not all marketers are guilty of this, but I see many so engulfed with making tactical decisions that strategic considerations get lost. When pressed to describe how a particular tactic supports the sales process, I often find that some marketers are unaware of what their sales process is or do not consider the sales process when deciding to employ a particular tactic! Instead they have a belief that if they promote their offerings enough, it will eventually lead to sales. Now this idea is true in some sense, but it is neither a smart nor strategic use of money and resources.

Conclusion

I hope you found this interesting and useful. If you have any topics you would like to see featured, feel free to send me an email! And please visit http://www.johnmossmarketing.com to view other articles about marketing and branding.