The Financial Services Marketing Handbook

THE FINANCIAL SERVICES MARKETING HANDBOOK Since 1996, Bloomberg Press has published books for fi nancial professionals, as well as books of general interest in investing, economics, current affairs, and policy affect- ing investors and business people. Titles are written by well-known practitioners, BLOOMBERG NEWS® reporters and columnists, and other leading authorities and journalists. Bloomberg Press books have been translated into more than 20 languages. For a list of available titles, please visit our web site at www.wiley.com/go/ bloombergpress. THE FINANCIAL SERVICES MARKETING HANDBOOK Tactics and Techniques That Produce Results Second Edition Evelyn Ehrlich and Duke Fanelli Copyright © 2012 by Evelyn Ehrlich and Duke Fanelli. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. 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Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifi cally disclaim any implied warranties of merchantability or fi tness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profi t or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993, or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. Library of Congress Cataloging-in-Publication Data: Ehrlich, Evelyn, 1950– The fi nancial services marketing handbook : tactics and techniques that produce results / Evelyn Ehrlich and Duke Fanelli. — 2nd ed. p. cm. Includes bibliographical references and index. ISBN 978-1-118-06571-6 (cloth); ISBN 978-1-118-25570-4 (ebk); ISBN 978-1-118-23636-9 (ebk); ISBN 978-1-118-22240-9 (ebk) 1. Financial services industry—United States—Marketing. 2. Financial planners—Marketing. 3. Customer relations. 4. Financial services industry—Computer network resources. I. Fanelli, Duke, 1954– II. Title. HG181.E38 2012 332.1068'8—dc23 2011041422 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 Contents Preface ix Acknowledgments xi INTRODUCTION The Unique Challenges of Marketing Financial Services 1 Products or Services? 2 Psychology of Money 6 Third-Party Relationships 7 How End Users Select a Financial Services Provider 8 Legal and Regulatory Constraints 13 SECTION ONE: STRATEGIC MARKET PLANNING CHAPTER 1 Segmentation 19 The End of Undifferentiated Markets 20 Methods of Segmentation 23 Finding Your Target Segments 29 CHAPTER 2 Positioning and Branding 33 Positioning Strategy and Differentiation 33 Creating a Distinctive Brand Identity 37 CHAPTER 3 The Market Plan 45 Researching Your Plan 46 The Elements of the Plan 48 v vi Contents SECTION TWO: MARKETING TACTICS CHAPTER 4 Advertising 61 Media Selection 62 The Role of Your Ad Agency 63 Creating Effective Creative 65 Measuring Advertising Effectiveness 71 CHAPTER 5 Public Relations 75 Third-Party Endorsement 76 The Tools of Public Relations 77 Media Relations 79 Public Relations for Every Budget 82 Measurement 85 CHAPTER 6 Sponsorship and Event Marketing 87 What Is the Value of Sponsorships? 87 Cause Marketing 89 Activating a Sponsorship Program 91 Measuring the Effectiveness of Sponsorship 94 CHAPTER 7 Interactive Marketing 97 Techniques and Goals of Direct Methods 97 E-mail Marketing Considerations 98 Improving Response Rates 100 Mobile Marketing 104 CHAPTER 8 Social Media Marketing 107 Social Media Concerns 108 Effective Social Media Engagement 110 Social Networks as Marketing Channels 118 CHAPTER 9 Personal Selling 123 Traditional Relationships between Sales and Marketing 124 Bottom-Up Marketing 126 Changes in the Sales Distribution Model 130 Marketing Support Across the Sales Cycle 132 Contents vii CHAPTER 10 Trade Shows and Seminars 135 Trade Shows 135 Seminars 139 CHAPTER 11 Relationship Marketing 145 Why Customer Retention Matters 146 Methods of Relationship Building 147 Loyalty Programs 152 Conclusion 157 Appendix: Applying Marketing Principles to Sales Practice 160 Building Your Plan 162 Practice Examples 164 About the Authors 191 Index 192 Preface When we wrote the fi rst edition of The Financial Services Marketing Handbook, our goal was to help codify fi nancial marketing theory and practice as a training tool for both students and practitioners. We have been gratifi ed by the response to the fi rst edition, published in 2004 by Bloomberg Press: It has been adopted as a course text in undergraduate and graduate programs at major universities; distributed in bulk as a training tool for corporate programs; well-reviewed in the trade press; used for presentations at national and international fi nancial conferences; and translated into various languages, including Chinese and Indonesian. A lot has changed since the fi rst edition was published in 2004. For one, many of the companies cited as examples in the earlier edition no longer exist. The names of the fallen are, in some respects, a history of the 2008 fi nancial crisis: Bear Stearns, Lehman Brothers, Countrywide, Washington Mutual, Wachovia. Some of these fi rms (Washington Mutual, Wachovia among them) were marketing leaders whose marketing savvy couldn’t overcome bad business practices. It was not the lack of marketing awareness that caused the fi nancial crash of 2008—if anything, some of these companies were too good at marketing bad securities. But the state of fi nancial marketing has become more diffi cult with the crisis—there is less trust in fi nancial institutions and more defections from long-standing relationships. Marketers cannot manufacture trust. It inheres to the product or service and grows from a company-wide commitment to serving customer needs. In addition to the impact of the crisis on many fi nancial brands, another major change has occurred in the last decade in the tools of marketing. When the fi rst edition came out, the Internet was only a few years old and many practitioners viewed online marketing as an optional, rather than a core, practice. Today, online media are integral to any marketing campaign and are, therefore, integrated into the chapters on various tactical approaches—from public relations to face-to-face selling, from advertising to event sponsorship. We have added a sub-chapter on mobile and smartphone marketing and created a new chapter focusing specifi cally on the social media—blogging, social networks, and other modalities sometimes referred to as Web 2.0. This chapter may date just as rapidly as the earlier Internet chapter it replaced. Web 3.0 and 4.0 are in the wings and fi nancial marketers will need to fi gure out how to harness these tools, while coming to grips with a new paradigm in which we no longer control the conver- sation but rather respond to what the market says. In a way, though, the rise of the social web takes marketers back to fi rst principles: Listen to customers, learn what their needs are, respond with products and services that ix x Preface meet those needs. The basic principles of marketing have not changed. Segmentation, positioning and strategic planning are more important than ever. Financial marketers have to do more with less and need more than ever to prioritize strategic and tactical goals and measure results. “Seat of the pants” marketing continues to be the default mode for many fi nancial companies but if the last decade has taught us anything, it is that bad marketing decisions have serious consequences. Our hope is that this new edition of The Financial Services Marketing Handbook will help fi nancial marketers make better decisions by reviewing core principles and learning from the successes and failures of others. Evelyn Ehrlich Duke Fanelli March 2012 Acknowledgments Many people helped us by giving their time, knowledge, and support: We would especially like to thank Renee Harris of New York University’s Center for Marketing; Bill Wreaks; the editor of the fi rst edition, Jared Kieling; Laura Walsh and Judy Howarth at Wiley; and all our colleagues and clients who have educated and supported us over the course of our (collective) 50 years in fi nancial services marketing. Duke Fanelli co-authored this book based on a desire to share, demystify, and make useful the many tools at the disposal of the fi nancial services marketer and practitioner. His contributions to this book would not have been possible without his wife Donna’s unyielding support, enthusiasm, and encouragement for all his life’s endeavors, and his children Michael, Carina, and Alicia who provide daily inspiration.

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