When it comes to marketing bank products, email remains king. It is not only the preferred marketing channel of every age group, but it is the most effective as well. Of course, no one wants an irrelevant message that clogs up their day, so a bad email message also has the power to inspire the greatest backlash. In this article, we look at the data on email’s effectiveness and highlight ways banks can better hyper-personalize their message to take their email marketing to the next level.
The Use of Email
Email is by far the most prevalent form of consumer advertising. A recent study published last month by the marketing firms Toluna and Movable Ink show that 79% of households receive email marketing compared to the next most common channel of social media where 49% see some form of the marketing message.
No real surprise there, but what might surprise bankers is the effectiveness of email. 37% of the households report that they pay attention to email, which is substantially more than the next most effective channel for banks which is direct mail at 29%.
How To Improve Your Email
In past articles, we already discussed the importance of the subject line (HERE) where we used a lending example, so we won’t go into detail of the importance and effectiveness of subject lines. However, outside of subject lines, customers and prospects want a reason to act on a marketing message.
Waiving fees, providing gifts, or upgrading account status are all popular trends right now when it comes to deposit marketing. Of course, for high-value products, such as a health savings account, the $500 matching contribution has shown to be the most effective. Offer that incentive, email satisfaction rockets up and banks get more than triple the response rate.
In addition to an incentive, the next most important attribute in bank email marketing is to make sure the product is relevant. While almost no one will opt out, complain or express negative satisfaction with a $500 gift from the bank, market student loans to retirees and you are likely to lose a large chunk of your list.
Interestingly, a strong design or witty copy helps but only has a slight impact on conversion rates if your product is relevant enough and/or you have a motivating incentive for your call-to-action.
What Not To Do
While the reverse of the above are high on the list of things not to do (not having a strong copy, a promotion, marketing an irrelevant product, etc.), the two other things to add is getting your personalization wrong and/or sending too many emails.
The Return on Investment – Deposit Example
Assuming you have a database of prospect emails, the average community bank email marketing campaign takes about ten hours to craft, create, test and refine. In addition, add the expense of graphic design tools like Adobe and an email application such as Constant Contact, Mail Chimp or others, and you have a cost going to market a health savings account. This is a long duration account and while the first year average balance at banks is a little over $550, the lifetime balance of an average account is just over $3,800. Using today’s forward interest rate curve, that comes out to a value of approximately $917. That means you only need to land only one account to pay for the campaign effort.
The good news is that health savings accounts have one of the best response rates of any deposit product, and so you are likely to get a conversion rate of about 4.6%. For every 1,000 emails that go out, you create approximately $42,185 of value just in this product assuming no other cross-selling. This equates to a risk-adjusted return of 57% based on the estimated 8.2 years of typical account life.
In case you were wondering what would happen if you did offer $500 to open and fund a health savings account - your return on investment dramatically drops from 57% to approximately 9%. However, you would end up with more than three times the customers and balances. Thus, before you embark on such a promotion, as we have said before, it is important to define success and be clear on your marketing objectives.
Putting This Into Action
Collecting email addresses from customers, prospects, and “suspects” is one of the most effective marketing efforts your bank can undertake. Using content, events, partnerships, cross-promotions or even purchasing lists can create dramatic value when combined with the right marketing techniques.
Once we get past mid-November, bank email marketing will lose most of its effectiveness as your message is likely to get lost in the wave of holiday promotions and thoughts. Smart banks will set up January, one of the best time to market deposits.
Submitted by Chris Nichols on September 17, 2018