by Jason Sherrill February 23, 2010
I liked this innovative approach to showcasing the root fundamentals of the economic theories of Hayek and Keynes. I was also impressed that they shot the video for this on a Canon 7D digital SLR . Give it a look, it'll take you back to all the good memories you have of college econ lectures.
You can learn more at the EconStories website .
by Jason Sherrill February 12, 2010
Lynn Gaertner-Johnston's post today titled When "Customer Service" Letters Undercut Bankers
With software products like our MemberProtect®, we have the ability to store literally thousands of personal attributes of each banking customer. These can be basic attributes, such as name, address and phone number, but also less obvious attributes, such as whether the customer owns a dog, has a vacation home or the color of his hair. Our email delivery platform, as well as most other direct mail or similar platforms, allow you to personalize each communication using these attributes.
Even more importantly, you can use these same attributes to more precisely target your communications and give customers control over what type and frequency of communications they wish to receive from you. Rather than sending a broadcast refinance offer to all of your customers with a generic "Dear Member:" greeting, you can easily target only those members who are homeowners and whose currently mortgage rate is above the refinance rate you're offering. Your message will be more relevant to the recipients so they'll find more value in your communications. This means your members are less likely to consider this and all future messages as spam, and your marketing effectiveness will increase.
Consider these two letters:
Dear Customer:
We're excited to tell you about our new 5.75% 30 year fixed mortgage rate available to you if you own your own home.
To find out if you qualify, please visit www.xyzbank.com
Sincerely,
XYZ Bank Lending Team
Dear Joe:
It's been over two years since you last refinanced your home in Ann Arbor. I worked with you to complete your previous refinance in July 2007. At that time, I was able to offer you a 6.75% rate on your 30 year fixed loan.
I appreciate that you've recommended me to your friends, Tom and Jackie Smith. I value your trust and appreciate your loyalty. I've been watching our rates for you and saw an opportunity to save you money today. I can refinance your current home at a 5.75% interest rate. Based on your current principal balance, your new loan payment would be $775.00 per month on a 30 year fixed rate loan. That is a monthly savings of over $115.00. At this rate, you would recoup your full refinance costs in only 8 months.
Either you or your wife, Sandy, can complete an application on our website at www.xyzbank.com, or just call me at 888-555-5555 and I can complete your application over the phone.
Sincerely,
Lori Pierce
P.S. We can also open a college savings account for your daughter, Julie, and automatically deposit your monthly mortgage loan savings of $115 into that account.
I don't need to tell you which of these two letters would yield a higher conversion rate. It's probably also obvious which one would build more goodwill with Joe and Sandy and make them feel more valued as customers. With the marketing systems we develop for our customers, both of these take the same level of effort to create and cost the same to send. If that is true (and it is), you'd have to scratch your head and wonder why anyone would still send generic form letters?
by Jason Sherrill February 4, 2010
For over 10 years we have worked with banks and credit union managers to design and implement online banking, internet & e-mail marketing, customer service and website solutions. In many instances, prior to our work with the organization, they had few metrics by which they measured their website's return on investment (ROI). To help our prospective clients establish a starting point for measuring ROI, we created an online Bank and Credit Union Website ROI Calculator .
We've identified five key areas where websites offer measurable ROI for financial institutions:
Customer Acquistion and Retention
Small banks and credit unions of all sizes face a significant challenge competing with large banks for new customers. As of December 2005, 55% of consumers who live in households with an annual income of at least $75,000 bank online1 .The quality and quantity of a bank's online services is an important factor that these customers consider when choosing a financial institution. To determine how much to invest in design, programming, support and infrastructure for online services, banks need to consider the value of acquiring or retaining a single customer.
Loan Volume Increases
While it may be hard for most of us under the age of 35 to imagine that some banks still don't offer online loan applications, it's true. Frankly, I'm astonished at the number of bank and credit union managers who I talk to who tell me that online lending is not important to them, followed usually by a statement like, "our customers prefer to do business in person."
The rest of the managers, who do have a clue about what their customers want, are aware that online lending is an important part of their online service offerings. They tell us that they have a difficult time investing in technology and marketing to support online lending because they don't know their ROI value. This is because many of these institutions are not accurately measuring the revenues they earn from online lending.
On average, our clients who offer online loan applications realize at least a 10% increase in loan volume. If they execute a solid marketing strategy to drive customers to their online lending operation, they usually see a 20% to 30% increase in loan applications.
Customer support cost reductions
Like in many industries, customer support and service represents a significant expense for most banks and credit unions. This is the area where most small banks and credit unions are also the furthest behind their large bank counterparts. Less than 10% of the 200 banks and credit unions that I've interviewed over the past two years offer any online customer service channel. Most of the banks have a simple "Contact Us" form on their website, but rarely is there a true inquiry management system and team behind that form. Instead the form results are usually sent via a non-secure email to someone's inbox; then that person follows up with a phone call to address the customer's needs.
This is another area where small financial institutions are not measuring their costs, nor are they aware how they could more efficiently process a portion of these service requests online without ever picking up a phone or, in many cases, even responding to an email. On average, our clients who have implemented our MemberResponse inquiry management system have reduced their inbound telephone support calls by 25%.
Online document delivery, such as check images and e-statements
Fortunately, this is one area where most managers have seen the light and have already or are planning to implement a solution. The ROI is obvious and easily measurable here; number of customers X ($.39 postage + $.65 printing) = net savings.
There is one aspect of online statements where many financial institutions are disappointing customers though, and that is statement retention. With the cost of storage space and CPU cycles at all time lows, it's ridiculous that so many systems still only allow a customer to view a limited statement history, usually six to 12 months. While it's rare that someone may need to view a statement that's three years old, it's usually a situation where the customer needs the information to settle a dispute or provide documentation to a third party. The customer is probably already frustrated dealing with their situation, and that frustration only increases when he learns that he must order a paper copy of the statement rather than being able to access it online.
Reduction of teller assisted transactions
Items to factor into your per-transaction cost include teller office space, reception and waiting areas, teller wages, data processing costs (equipment and software), grounds maintenance, insurance and other applicable items specific to your financial institution. Our clients have calculated their in-branch transaction costs at between $4.50 to $22.00 per transactions. At an average of $10.00 per transaction, even a 10% reduction in teller-assisted transactions can save a significant amount of money for even moderately busy branches.
Bank and credit union website ROI calculator
You can use our ROI calculator to determine a ballpark estimate of your website's return on investment. It's important to note that your website's appearance, usability, perceived security and performance are going to directly affect your ROI. In other words, if you have a website that looks like it was designed by an amateur and works the same way, then don't expect to earn a high ROI. The web development industry is the same as many others; to get top results, you'll need top talent, and for top talent you should expect to pay top dollar.
Resources
1 http://pewresearch.org/obdeck/?ObDeckID=31
by Jason Sherrill February 4, 2010
One of the most popular questions we've fielded from our clients over the past twelve months has been, "How do we use Facebook and Twitter effectively?" While can provide many strategies that vary by client, a real-world example speaks volumes. Ally Bank provides just such an example.
Due to compliance regulations, fear and other factors unique to the financial industry, financial institutions are limited in the ways they can use non-secure channels to interact with customers. This doesn't mean though that the tools should be discarded entirely or just relegated to glorified P.R. and advertising channels.
One effective way to use social networking for banks is to engage customers in two way dialogue. For example, allowing customers to initiate service requests via Twitter provides a no-cost channel to at least get the ball rolling on resolution. While the intimate details can be communicated via telephone, the credit union rep can at least acknowledge the request via Twitter to let the customer know that someone is handling the request. This not only builds goodwill with the customer, but also all of the other people, such as the customer's followers, who are watching the interaction.
Simply opening and using the channel also exposes the company (or brand, if you prefer that term) to potential customers. The network effect increases exponentially the number of visitors who see the positive interactions occurring between the bank and its customers. Likewise, there may be some negative comments posted, but this provides an opportunity for the bank to (a) hear about these complaints, (b) correct the issue, if possible, and (c) build goodwill by acknowledging and publicly responding. The fact is that angry customers will vent to others and often this will take place online. By providing and participating in the channel (such as Twitter), the bank at least will have an opportunity to respond directly within the same channel, effectively getting the "last word."
Take a look at Ally Bank's Twitter page and you'll see examples of everything I've discussed above.
Good job, Ally Bank.
- A weblog by InetSolution about technology for banks, credit unions and e-commerce
