Mixed Message Makes E-Mail a Tough Sell for Financial Institutions

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Visit any bank's Web site and the first thing you see is "E-Mail Fraud Alert" or similar messages about phishing and identity theft. What you probably won't see is a way to sign up and opt in to receive legitimate marketing messages from that bank.


Such is the state of e-mail marketing at financial institutions. No wonder branches are making a comeback.


Financial institutions originally were slow to adopt e-mail marketing. Then came some complex and confusing regulations - the Financial Privacy Act, CAN-SPAM - compounded with the growing identity theft problem. Put them all together, and it's almost impossible for financial institutions to formulate a proactive e-mail marketing strategy.


E-mail, with its ability to deliver near real-time, personalized information to consumers, seems like a natural for financial institutions. But even before phishing exploded on the scene, the institutions made it tough on themselves by not embracing e-mail as a marketing channel. One could argue that phishing may not have had so profound an effect had they already begun contacting customers by e-mail.


The good news is that we know financial e-mail works. Five years ago when we started developing e-mail programs for financial institutions, the sales focus was on effectiveness and ROI. This was proven over and over as we saw campaigns get open rates exceeding 60 percent and click-through rates in the mid-teens. ROI was tougher to track, but e-mail's effectiveness was clear. Here are some examples:


· One of our banking clients was promoting aggressive CD rates. The company scheduled ads in the local weekly newspaper announcing the new rates to run on Wednesday. On the preceding Friday, it sent an e-mail alert. That Saturday, the bank was already hearing from customers visiting the branches who told tellers they had planned to "move their money" until they saw the new rates being offered.


· As part of a home equity loan promotion, Lockheed FCU, a top-20 credit union, promoted a free home value service using e-mail. The campaign enjoyed a 68 percent open rate and produced $2.5 million in new equity loans in just 45 days. Campaign ROI exceeded 500 percent.


· A large regional bank e-mailed 70,000 invitations to a customer appreciation event and received more than 1,200 online registrations. This was not a direct sales promotion, so e-mail's low cost made it feasible to contact customers directly. But ROI is not always the point.


When our financial clients send e-mail campaigns, they actually get replies from recipients, saying that they actually appreciated getting e-mail notifications from their bank. When was the last time someone contacted you, gushing about that four-color gatefold they received?


Making it work. Though these are encouraging examples, the landscape has changed drastically in the past year, and it will take focus and dedication to get that momentum back. In response to fraudulent links, some financial institutions no longer include clickable links in their campaigns. It makes campaign ROI tougher to measure, but not impossible.


Regaining customers' trust in e-mail can happen only if the industry's message changes from "Don't trust e-mail" to "Here's what you should expect from our e-mails." This requires a strategic approach from financial institutions that want to enjoy the benefits of effective e-mail marketing. The strategy needs to incorporate sound permission marketing principles as well as multichannel awareness and promotion. This includes:


· Re-establishing trust in the channel.


· Providing a clear, substantial benefit for e-mail signup.


· Balancing promotional with informational content.


· Having consistency in terms of format, frequency and content.


· Committing (or outsourcing) the technical and creative resources to manage the program.


Even if only 30 percent of your customers participate in your e-mail program, they are telling you that this is their preferred communication channel. A well-executed program based on value-oriented content can be positioned as a customer benefit and can be an effective competitive tool.


10 E-mail Tips


· Make clear that you will never use regular e-mail for any account-related communication.


· Consider using a secure page to capture e-mail signups.


· Confirm e-mail signups with a screen message and prompt e-mail acknowledgment. Process and acknowledge opt outs immediately.


· Ask for a name as part of signup so messages can be personalized.


· Encourage recipients to "white list" your sender address.


· Avoid using clickable links. Direct respondents to your Web site or call center.


· Continue the "no account-related messaging" mantra in ongoing campaigns.


· Let customers know that you have an e-mail program and promote its benefits.


· E-mail regularly - eight to 10 times a year - and adopt a consistent format.


· Ensure that your e-mail subscribers receive any special promotions you may be running in other media at least concurrently.


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