Financial Marketing Perspectives

T H I S I S S U E : Online Financial Marketing

Financial Marketers’ New Frontier Banner Ads May be “Out”
but Permission Marketing is “In”

Financial marketers are turning to the Web to add customers and cross-sell their services by employing the power of the latest buzzword: Permission Marketing. Permission Marketing refers to systematic e-mail to those users who have expressed an interest in particular subjects and have agreed to be contacted about those topics. Permission marketing contrasts with spam, which is uninvited, unwel-come and widely viewed as ineffective. One estimate has E-mail Marketing as a $4.8 billion business by 2004, accord-ing to Forrester Research.

The analogy of “dog years” is apt when describing the pace of change on the Web when you consider what marketers have learned about effective web-based marketing campaigns over the last 12 months. Banner ads, those ubiquitous color blocks that invade your field of vision on most websites, imploring you to “click here”, have proven disappointing to advertisers and surfers who roundly ignore them.

So where does Permission Marketing fit in the arsenal of tools that financial marketers use? It is ideal for new account cam-paigns, introductory offers and for broadening the base of one category of investor or another. Analysts predict that marketers will shell out some $3.2 billion of the $4.8 billion total on companies that help marketers to retain their customers with systematic e-mail contact to their existing customers. The balance of $1.6 billion will go to outsourcers helping mar-keters acquire new customers this way.

So who are these vendors and how will financial marketers evaluate the effectiveness of e-mail marketing campaigns?

Wide Variety of Online Service Providers
Online vendors are like eateries: they run the gamut from do-it-yourself takeout joints to full-service restaurants. Everything from the level of service to the way they charge may vary in this burgeoning cottage industry, so take time for some research on e-mail vendors that can execute your permission e-mail strategy. It is not safe to assume that, for example, interactive agencies have strong working knowledge of HTML or that a newsletter vendor can provide you with the most comprehensive list. There are e-mail service bureaus and mailing list managers, online advertis-ing and creative vendors, online newsletter vendors, list brokers and database mappers. Many vendors combine several of these activities.

An e-mail marketing campaign - whether for new accounts or to cross-sell to existing ones - is not the same as a mass mailing. Instead of broadcasting the same message to everyone, effective e-mail marketing permits a company to develop a one-to-one dialogue with a customer or prospect based on the customer’s interest. Employ the trail of data that e-mail provides both to gauge its effectiveness and to finetune your messages as you develop a relationship with the client. E-mail is proliferating, however, so the message must offer value-added information, perhaps, in the form of free offers or special service.

It is typical to evaluate the results of one effort to learn how to effectively deploy new direct marketing dollars for the next one. Direct marketers measure their marketing effectiveness through carefully managing cost per lead and cost per new account. Take a new approach here and remember that you are building online relationships as well and that relationships take time. Forrester warns that marketers need to develop different metrics for evaluating the success of e-mail programs, rather than through the traditional forms of measurement (timing, frequency and monetary value of purchasing).

We recommend a customer acquisition strategy that mines the databases of these permission marketers to discover up to 100,000 individuals at a time with like demographic characteristics based on income and personal interests. E-mail-based marketing strate-gies rely on high numbers and low cost per contact to achieve satisfactory results.

Factoids:

  • PC Usage Goes Mainstream: More than 80% of households with household income above $30,000 now have access to a PC either at work or at home. Forrester Research In your 2001 marketing planning, how are you using the Web to retain customers? Build a new account base?
  • Deleters: Although consumers receive marketers’ e-mail, 32% of e-mail targets delete most marketing messages before even reading them. Source: Online Advertising Forum
  • E-mail: According to an Americangreetings.com survey of 1,000 Internet users, 60% of users prefer reading e-mail to “snail mail”. Thirty-four percent would rather send an e-mail than make a phone call Source: CNNfn.
  • What functionalities are most common on public company websites? According to data from CCBN, a Boston-based IR firm, the most common functionalities offered are news releases, stock quotes, stock chart, SEC filings, Calendar of Events, Financial Reports, Information Request, Analyst Coverage and E-Mail alerts. Source: Business Update by ChaseMellon Financial Group, Summer 2000.

Five Keys to Enhance Your Investment Website
We asked Web Designer, Webmaster and Friend of LederMark, Jon Klein of Abell Designs, Inc., to give us his thoughts on upgrading a company’s online presence. Most companies have websites by now, of course, and are looking for ways to improve.

1 Direct your website to a particular audience
Before you begin, make sure your team agrees about who is going to be using your site. A website is a powerful tool for giving and receiving information. The key to a good web presence is clarity of mission. What do you want your website to do? The goal and purpose drives everything else. A site may have more than one purpose, but be clear about which ones come closest to meeting your objectives for a site.

Is your site provided for…
The Public – Provide general information.
Education Website – Offer access to information and guidance about technical subjects.
Prospective Clients/Customers Website – Consider what prospective customers want to know and in what way they would like to receive it.
Prospective Investor Website – What is the history of the business? Who are its clients? Provide financial information.
Current Clients/Customers Website – To paraphrase Albert Einstein, what do clients really want? Consider what you can offer your clients online after they have bought your product or service. You can offer current pricing, upgrades and tech support, or account and project status.
Your Company Extranet/Intranet Website – Services that can help your employees both in the office and on the road, access to secured client information, phone numbers, product information.
A Website for Your Business Partners, Distributors, Dealers, or Suppliers – You can create a communication web among your dealers and suppliers, allowing for up to date info they need to do business with you.

2 The 2nd key to a great website is navigation
Have you ever arrived at a site to find that it is organized along incomprehensible lines? Chances are it is organized according to corporate structure instead of client needs. Others fail to provide any information about the company (location, principals, public or private). Too much initial information, blinking, and slow loading sites are a big turn off to web surfers. So you need to balance the front-page with class, tact, and content. A Search function is a helpful feature for any website that serves as an information source. Use clear and well known link names, don’t use fancy terms for a “links” page. If you want to have links to other websites, call the icon “Links” or “Sites We Recommend”, not “Other Information”.

3 The 3rd key is design, graphics, and color integration
With the over-abundance of sites on the Web, you can quickly tell the difference between a professional site and, shall we say, a first attempt with MS Frontpage. Even if you need to update the site daily, consider hiring a professional to design the look and navigation for your site.

The use of database-driven sites allows for easy updating of infor-mation. A web designer creates the template and the database back end, the staff adds the Copy, and the updates are immediately online, without the need to wait for a webmaster to code the page.

4 The 4th key is site maintenance
Keeping information current on your site is key to maintaining repeat traffic. If you or an employee plan to keep the site main-tained, make sure that you have the proper access and skills to keep the site maintained. It is also possible to design a site that can have specific sections of the site updated by online forms and database connections. This is something to take into account when selecting a designer and site plan.

5 The 5th key is integrated marketing
Finally, your website is your calling card. Remember to incorporate your website as an integral part of your marketing plan. Make sure your site looks like your other marketing materials, and has the same feel as your customers expect.

We concur and thank the web designers at Abell Designs for these five memorable keys to improving your website. If you would like to see what they can do when teamed up with marketing, visit our site at www.ledermark.com.

The Battle for Online Investors May Not be Won by the Upstarts

Ameritrade and other Internet-based stock brokerages enjoyed meteoric growth in the strong securities markets of the last few years, but this spring’s technology stock correction chilled investors, causing online brokers’ trading volume to slump, reports U.S. Bancorp Piper Jaffray.

With their business plans based on their continued growth, e-brokerages will have to recover from this unexpected setback. Industry veterans know all too well that markets are cyclical. Reduced trading volume and lower stock prices have been part of the past and will be part of the future when you make your living in the securities markets. That may force some brokerages that rely solely on online execution to change their strategies or be acquired.

Ameritrade expects to grow to 2 million accounts by September 2001, according to the Omaha World-Herald. It will not change its deep-discount strategy or its plans to spend $200 million on advertising. Of course, this announcement was made prior to the resignation of CEO Tom Lewis. Its ads are renowned for the char-acter, Stewart, a twenty-something worker who helps empower the boss to trade online. The character was featured in President Clinton’s video for the Washington Correspondents Dinner.

TD Waterhouse, the second largest online brokerage, boasts that it is one of the top three companies in terms of making money on the World Wide Web, and is boosting new accounts by offering its services through cell phones and other wireless devises, reports the Omaha newspaper.

Who will win the Battle?
Reduced growth will be a fact of life for online brokerages as they try to compete for traditional investors, though industry analysts have different predictions about who will succeed. Here is what they say:

Sang Lee, Celent Communications: There will be 14 million online brokerage users by 2003, up from the current 5 million. Full-service brokerages that go online will grab more than 50% of total online assets.

James Punishall, Forrester Research: The market winner will be more middle of the road—a brokerage offering some service and reasonable fees—as dissatisfied investors move from full-service brokerages and new customers are lured by investment advice. (He predicts 75% of discount brokerages on the Internet will be purchased or go out of business in five years.)

Traditional Brokerage Prepare to Pounce Citigroup disclosed recently its annual investment of $400 million a year in a global Internet effort. Its “MyCiti.com” service consoli-dates all of a customer’s financial accounts on one web site. A second service gives Citigroup a valuable entrée to AOL’s 26 million plus subscriber base. Its online brokerage service, known as CitiTrade, will go head-to-head with Charles Schwab in offering trading and research for online investors. Online and direct Internet payments are also in the offing. Citigroup announced it will team up with AOL in a unique partnership that offers Citigroup high-profile exposure on AOL’s various services including America Online, Compuserve and AOL.com. Beginning this fall, Citigroup will roll out a payments system, available to AOL users, that allows for direct online payments from bank accounts to other people or merchants, hoping it will lead to a prominent position for Citicorp as Internet-payments.

This article was distilled from news sources including the Omaha World-Herald and the Wall Street Journal.

About LederMark Communications

LederMark Communications is a marketing strategy and communications consulting firm for financial services firms and firms with a financial audience. Recent assignments include:

  • Investment product pilot and rollout with TV, direct mail, web and CD-ROM execution
  • Marketing audit and integrated communications strategy for an investment company
  • Financial public relations campaign
  • Offsite marketing strategy session
  • Marketing communications for various financial products

Geraldine D. Leder, president, was formerly a Principal and marketing executive with DB Alex. Brown. She managed the corporate and executive service group prior to founding LederMark Communications in 1999. A veteran of marketing and PR for brokerage, mutual funds and investment advisory services, she offers 15 years of experience in investment marketing.

 
     

LederMark Communications, LLC. 502 Washington Avenue, Suite 101, Baltimore, MD 21204
Phone: (443) 279-7901 | info@ledermark.com
©LederMark Communications LLC