In the year 2020, it’s no longer controversial to say that personalization significantly boosts ROI on marketing spend. Recent research by the Relevancy Group shows that marketers who master personalization tactics see a return of $20 for each dollar spent on personalized campaigns.
While those statistics are compelling, proving marketing ROI is a major challenge in the financial services industry. According to the Financial Brand, 60% of financial executives say measuring marketing ROI is a major challenge.
And that's understandable, as marketing is evolving and our approach to metrics has to keep up.
But how? 🤔
New Marketing, new metrics.
Marketing emphasis is shifting toward customer experience, a strategy in which traditional marketing efficiency metrics such as cost-per-click and cost-per-thousand are less relevant than ever.
Digital marketing technology has evolved; as a result, the buyer’s journey now includes multiple channels and stages. Marketing measurement, with its overreliance on single or even multi-touch attribution models, fails to capture the impact the effect of new personalization and customer experience strategies.
Defining personalization objectives
Consumers expect their financial institutions to not only securely handle their money, but also to understand their needs, goals, and preferences and to provide personalized solutions relevant to their life stage.
At its core, personalization in financial services is all about having timely and relevant conversations with customers that are tailored to the type of relationship they have with your company.
Within the framework of personalization, effective conversations take into account the channel and the context in which the engagement occurs. They also consider the strength of the financial relationship so that messaging is less a one-sided supply of offers and recommendations and more a true exchange of ideas between bank and consumer.
The marketing objective moves away from transactional “dear valued customer” encounters to a personalized advice- and education-centric paradigm of marketing engagement. Measuring the success of efforts to achieve it requires a new approach to ROI.
The Return on Objectives framework
While ROI has been the traditional gold standard for measuring marketing effectiveness, it’s an unreasonable metric for measuring the impact of personalization efforts. Instead, success in personalization activities should be benchmarked as process metrics that, in the end, generate the return on objectives:
- Financial measurement of communication efficiency (cost and speed). While there is room in this objective for financial metrics such as conversion rate and products per customer, the focus is on tracking how efficiently personalized conversations are delivered.
For example, one claim is that by working with audiences, it's easier to get your campaigns out because they don't have to work for everyone and everything. What data can you show for that? Personalized campaigns should have higher response rates, but is it true for you? Make sure your marketing platform does not make obtaining results data a task in itself. That information should be right there, with easy-to-use reports.
- Process metrics that capture the extent to which personalization is employed across campaigns. This measurement tracks the number of personalized conversations by channel and the ability of marketers to create new audiences or segments without IT intervention.
For example, how many email campaigns were executed in a given period? What percentage of those were deeply personalized beyond first name? How many audiences are being used? What aspects are you are currently personalizing (copy, art, CTA, landing page, offer, etc). It is not so much conversion or response rates, but choices you make to improve these rates, so showing correlation between level of personalization and response rate is critical.
- Customer data metrics that measure the source and quality of data available for real-time personalization. This would quantify the integration of available data and how it supports “always on” campaigns.
The first thing to measure is how many "always on" campaigns you have, especially if you had none before. "Always on" campaigns require data to be constantly flowing into your campaign manager without anyone's intervention. You could also measure how many attributes you are personalizing in real-time and how they grow as you mature in your personalization roadmap. You can also measure how many sources of data you are currently integrating into your campaign manager, and/or the data sources not currently integrated.
- Technology metrics that reflect the number of channels and emerging technologies used in personalization. This would measure the consistency of messaging across channels and the adoption of machine learning to improve the reach and effectiveness of conversations.
For example, how many channels do you have today and how many are running personalized campaigns? Are you able to coordinate campaigns between these channels so that a click in one channel affects what the other channel will show? Are you capable of prioritizing across all channels? What technologies are you currently using and how many do you intend to adopt over the short and mid term? Do they integrate seamlessly with each other?
Financial executives are under tremendous pressure to cut or reduce any expense that doesn’t produce a tangible return on spend; marketers are under pressure to create highly personalized multi-channel content and encounters. These are not conflicting goals—because personalized contextual engagement has been proven to increase revenue, retention, and customer lifetime value.
High performing marketers recognize that attribution-based marketing metrics are insufficient for measuring the performance of their personalization efforts. Accurate measurement requires an objectives-based metrics paradigm that goes beyond ROI alone to quantify the ways in which personalization is increasing relevance to your market and driving revenue and sustainable growth.
Beyond the numbers
Personalization has become a strategic tool financial institutions must embrace to provide a better banking experience for their customers. FIs that get it right can effectively compete for new customers and develop more valuable long-term relationships; those that get it wrong risk as much as a 12.5% decline in deposits.
Without a framework to accurately gauge competency and results, banks risk unsustainable investments and campaigns that fail to advance marketing objectives. Because we feel that personalization strategy and execution is an area where marketers would appreciate additional guidance, we are finding Ron Shevlin's Roadmap to Personalization in Banking report incredibly helpful in that sense. If you haven't read it yet, you can get it here.
Ultimately, financial marketing is a numbers game, and measurement is imperative as a tool for interpreting campaign performance. However, personalization metrics can’t be quantified with traditional marketing attribution models, but are better expressed as a measure of progress toward your overall marketing objectives.
Having a product designed specifically for financial institutions can make a huge difference in your personalization journey. Prisma Campaigns is at work at small to mid-sized banks and credit unions, including one of nation's top 10 with real results to show for it. Want to know how we can help you?