Financial Firms Geared for Marketing Boom
Meridien Research, Newton, MA, published a research brief in December outlining the top 10 IT initiatives for retail financial services providers. Among the challenges Meridien lists are:
• Solving the real-time, multichannel delivery puzzle.
• Enhanced front-office selling solutions that integrate customer analysis in real time.
• Back-office applications that support multiproducts and multichannels.
• Optimized campaign management that supports multichannel outbound and inbound needs.
"Between mid-February and the end of March, we expect many large institutions will begin to take the handcuffs off their advanced technology groups and strategic planners," the Meridien report notes. "Business managers will be asked to tighten their focus on achievable initiatives."
FSMA changes the way corporate America must view marketing. Customers are often inundated with multiple offers from different business units within a company, leading to customer confusion and lost business opportunity. When marketing to large customer databases, the number of potential product, customer and channel combinations can be in the trillions - each with its own cost and profit implications.
To grow their business, financial services institutions must overcome the limitations of divisional approaches to customer relationship management and adopt an enterprisewide approach to marketing that focuses on the individual customer. The increased volume of potential customers and product and service offerings combined with multiple distribution channels will require firms to optimize their marketing efforts, not simply target customers with ever-higher volumes of solicitations. Targeting is not optimization.
FSMA replaces the 66-year-old law governing financial institutions created by the Glass-Steagall Act. Some in the industry claim its passage will have little effect on the daily operations of the financial services firms it targets - banks, investment firms, private insurance companies, etc. Loopholes in the existing law and progressively lax enforcement from federal regulators make the change mostly a formality.
The true issue, however, is not the type of companies that will be created. The issue is one of differentiation: These conglomerates, with their added offerings and business divisions, face the problem of determining which combination of offers to send to each prospect to maximize return on marketing investment.
"We expect significant consolidation to occur following the enactment of FSMA," said Geoff Bobroff, president of Bobroff Consulting Inc., East Greenwich, RI. "To achieve the expected payback for the transactions, the new enterprise will need to cross-market new customers as well as offer new products and services. An effective marketing initiative will need to be unique, well-positioned and designed to access all types of customers using all forms of access - representatives, toll-free numbers and the Web."
"We should expect a bit more direct marketing activity as these institutions test new service offerings and market segments," said Bill Bradway, research director at Meridien Research. "To succeed, companies will have to optimize service offerings to achieve their business objectives and meet the needs of their customers."
The multidimensional (customer/product/channel) optimization problem is the pre-eminent issue afflicting traditional outbound marketing efforts and Web-enabled e-commerce applications. Just as optimization technology revolutionized the supply chain, airline and investment management industries, marketing optimization technology rewrites the rules for efficient customer management and empowers businesses to create massive wealth from their marketing efforts.
Optimization technology takes marketing automation software and eCRM to a new level by enabling businesses to match the optimal product with the optimal customer to achieve optimal financial results before committing marketing resources - something that cannot be achieved with one-dimensional modeling or personalization technologies.
With optimization technology, businesses can now solve the multi-offer problem and more effectively allocate marketing resources and enhance revenue and the bottom line.
Enterprise marketing optimization technology will ensure that the FSMA provides an income windfall for financial services firms and other companies. This technology applies financial and behavioral analytics, as well as business goals and constraints, to the multi-offer problems of marketers to identify the offer the customer is most likely to respond to. These offers are then presented to consumers either through direct mail, phone sales, or in real time on the Web.
The result is intelligent, service-oriented marketing in which customers feel they are recipients of a useful suggestion instead of the target of a campaign.