Using E-Mail in Financial ServicesEveryone wants to use e-mail marketing. Just read the trades. It's the "killer app." Click-through rates of 10 percent and higher. Boy, it sounds great! But, like all marketing, what works in one industry may not work well in another.
Such is the case with e-mail marketing and financial services. Don't get me wrong. E-mail marketing does work for many financial services marketers. But to make it work, you must be aware of the issues involved and set your expectations accordingly. Here are a few things to consider about e-mail marketing to both your new prospects and your inhouse file.
Let's start with prospect marketing.
E-mail can be a powerful acquisition tool because it is driven by the very strengths of the Internet -- speed and ease. It moves the consumer directly to your virtual storefront and allows him to make a purchase decision in minutes. In other words, it doesn't take a lot of thinking for a prospect to act on an e-mail ad. It's fast and easy. The whole transaction takes about as long as it takes to order a pizza.
This quick purchase decision process doesn't work with mutual funds, IRAs, home equity loans or online trading services. You can't just broadcast the product offer and have the customer click and buy. The customer needs to think, evaluate and be prepared before he is ready to buy or even click. This is one reason why financial services haven't seen the same kind of customer acquisition response rates from e-mail. Financial services are not typically an impulse purchase.
Another reason is the rising consumer concern about privacy. Financial services require larger amounts of personal information. Netizens are becoming increasingly skittish about privacy, and getting new customers to volunteer volumes of personal information to an unfamiliar organization is difficult.
It is also difficult to make a financial services offer that elicits an immediate "I-want- that!" response. In some e-mail education seminars, financial services firms attending have stated that product-related offers (discounts, free trials, etc.) seem to have little or no effect on response rates.
So, how are financial services firms supposed to make e-mail marketing work? Here are a few things you can do to help boost the effectiveness of e-mail prospect marketing. None is the silver bullet, but all can help:
• Think outside the box on your offer. For example, they pack the seats at Wrigley Field every time they give away free Beanie Baby toys or Barbie Dolls. What either of those things has to do with baseball, I'll never know, but they drive traffic to the ballpark. You can do the same with driving traffic to your financial services Web site. Use a fun impulse offer that attracts your prospect audience even if it bears no logical connection to your product.
• Make the whole process quick and nonthreatening to privacy. Direct mailers of financial services often report that the length of the application is the most determining factor to response rates. Well, the theory holds even more truth in e-mail. When you are selling most financial services, the forms are long, the questions invasive and the process can take hours or even days just to get an offer to the potential client. For the average Internet user, this is the antithesis of e-commerce. I think brevity is king in prospect e-mail marketing.
• Mail to your inhouse opt-in e-mail file. Here we flip the argument a bit. First, brevity is not always king with your house file. More importantly, you need to build a relationship. In financial services, that means trust, credibility and providing the customer with valuable information. Assuming your inhouse file was built via inquiry devices, this audience has already expressed interest in your organization and is ready to learn more. Use e-mail to deliver useful, valuable content with active hyperlinks to draw the reader to your site to get the rest of the information.
• With inhouse file marketing, personalization is king. You need to prove to the user that the information he gave you with his inquiry was used intelligently for his benefit. For example, don't ask for the same information twice, it erodes the user's trust in your ability to deliver your product efficiently.
• Personalization isn't appropriate for all mailings. I typically advise e-mail marketers to avoid personalization in prospect mailing because it often triggers the "How'd they get this information?" type of privacy concern. However, when e-mail marketing to inhouse file leads, you must personalize --- especially in the financial services industry.
Remember, for the consumer, buying financial services online isn't like buying books or pizza, it's more like picking up a date for the senior prom. The parents always ask a lot of questions, it takes longer than expected and expectations are very high. Anything you can do to make buying your product more like pizza -- and less like prom -- will help your marketing bottom line.