Archive for August, 2010
In a previous post, I referred to a market research study commissioned by ING Direct as “the stupidest market research ever conducted.”
In retrospect, that was a bit harsh and inaccurate. I should have said it was the stupidest market research ever conducted by a financial services firm.
ING Direct surveyed 1,000 American adults about….well, I’m not sure what they were surveyed about, to tell you the truth. It certainly it wasn’t about their financial lives. The study, which the release refers to as the “financial battle of the sexes survey,” found that:
61% of men find a frugal blind date to be both “smart” and “sexy.” This is a little hard to believe, considering that 73% of men don’t know what the word “frugal” means. The other 27% subscribes to the Urban Dictionary’s definition of frugal, which is “sexy, yet surprisingly revealing.” So for these 27%, calling a frugal blind date “sexy” is redundant.
Women are twice as likely (as men) to be upset by a partner who spends too little on them. From this, ING Direct’s CEO concluded “being a saver is smart…transparency about your money habits and low credit card debt can prevent money disagreements and help build long term trust in a relationship.” Oh really? Sounds like the exact opposite to me.
Women are 56% more likely to give up sex than men. I gather from the context of the press release that this was in reference to the genders’ willingness to give up sex in order to reduce debt. Some comments worth noting:
- Men aren’t willing to give up sex for anything, so any percentage greater than zero makes women “more likely” than men.
- If there are women willing to give up sex in order to reduce their level of debt, this implies that they’re paying for sex. Really? Women pay for sex? Really? The finding not only implies that there are women who pay for sex, but are paying enough for it that giving up sex would help reduce their level of debt. If you are one of these women — or know of one — please contact me immediately. I can help.
Women are likely to be more upset about an unfaithful spouse (44%) than losing a job (40%) or accumulating debt (27%). It’s actually comforting to know that for the majority of women — and men, for that matter — love is more important than money. But this finding completely misses the key point here: 56% of women would not be upset about an unfaithful spouse. Of course, that’s not as bad as the 61% of men who would not be upset about an unfaithful spouse.
Men are also almost twice as confident as women (29% vs. 18%) when it comes to investing in the stock market. That’s a quote directly from the press release. It’s statements like this that make me question the mathematical competency of the parties involved here. Why? Because 29% is nowhere near “twice” as much as 18%. Twice as much is 100% more. That would be 36%. 50% more would be 27%. I’m no PhD in Statistics, but I’ve always thought that 29 was closer to 27 than it is to 36. If you must know, 29 is 61% greater than 18.
I initially hesitated to publish this post, because I was afraid that calling the research”stupid” might offend ING Direct. But then I realized that they’ll be anything but mad. I’ve played right into their plan.
This study wasn’t designed or intended to be real market research. It was simply a marketing tactic to generate publicity for ING Direct, and get people thinking about savings accounts and investment accounts. And by publishing my “critique” of the study, I’m actually helping the firm achieve its marketing objectives.
You’ll be getting a bill from me for my services, Mr. Kuhlmann.
For the past year and a half, nearly everyone in the financial services industry has been focused on the battles over deposits, overdraft fees, interchange rates, and big banks versus the world. Many, however, have overlooked a battle that has been brewing for some time now: The battle for orange.
The battle pits two financial services giants: ING Direct and Discover.
ING Direct has been focused on orange right from its start in North America, even going as far as naming its accounts after the color: Orange Savings Account, Orange CD, Electric Orange Savings, Easy Orange Mortgage (all of which only fueled rumors that ING stands for Induces Nausea and Gas).
Discover may very well have been hanging its branding hat on the color orange for some time now, but it wasn’t until its escape from Morgan Stanley in 2007 that the firm really stepped up its struggle for orange supremacy. Discover has quietly been infusing its web site with orange over the past few years, and, quite frankly, its orange $75 cashback offer is a better deal than ING Direct’s $50 bonus offer — which is in blue, by the way.
With its orange-branded cafes, bouncing orange balls on its web site, and a huge section of its home page dedicated to nothing but the color orange, I would have to say that ING Direct has been winning the battle for orange.
Until now, that is.
Discover has fired a major shot in the war: It announced last week that it will be the title sponsor of the college football Orange Bowl for four years, starting in 2011. Take that ING Direct!
Who’s going to win this battle? My money is on Discover. Here’s why:
ING Direct is focused on cleavage. It recently released the results of what may be the stupidest market research ever conducted. According to the press release “when it comes to attracting men, a low credit card balance could do more than a low cut dress.” The study also found that “women are 56% more likely to give up sex than men.” Bathing suit-clad flash mob dancers in Canada only further my accusation. Sounds to me like the firm is more focused on blue than orange.
Discover is leaner and meaner. Have you ever driven the 28 miles from Chicago to Discover’s headquarters in Riverwoods, IL? I have. It takes about 3 hours. The worst traffic I’ve seen this side of L.A. You’d be mean too if you had to drive to work there.
Credit cards are patriotic. Maybe you haven’t noticed, but the stimulus package isn’t working. The economy needs another injection of spending. Credit cards — which promote spending — are for patriots. Savings accounts are for socialists.
Anyway, Seth Godin says color is important, so you can be sure this battle will go on for quite some time.
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Fast Company recently ran an article titled The Dark Side of Web-Based Savings Schemes. The article includes a description of the experiences of two companies:
- The Gap. According to the article, “Groupon’s first big national promotional partner was Gap, with a seemingly amazing sounding offer of a $50 gift certificate for a knock-down price of $25.”
- East Coast Aero Club. In an attempt to lure people to take helicopter flying lessons, the firm offered 70% off of a first lesson for just $69 through Groupon. In the first five hours of the offer, 2,600 lessons were sold, which, apparently was “the very limit of what the company could stand.” (I, alas, responded too slowly and was shut out).
The article concludes that:
“Many promotional incentives through Groupon, its competitor peers, or other systems like Foursquare’s location-based game are run as loss-leaders in the hope of enticing new customers who may then deliver repeat business. But in in era of widespread Net use, when a simple promotional message can run round the country in a matter of hours, the risks for companies using Web coupons is potentially much much larger. Get your popularity-to-loss-leading ratio wrong, and you’ll attract thousands of unwanted new customers.”
This, according to Fast Company, is the “dark side” of web-based savings schemes.
From The Gap’s perspective, there was no downside here. How Fast Company concludes that a $50 gift certificate for $25 is a “seemingly amazing sounding offer” is beyond me. The Groupon deal: 1) generated immediate revenue (the price of the coupon), and 2) produced a set of highly motivated customers with a vested interest in reaping the benefit of that certificate.
And I’m betting that The Gap didn’t pick up any “unwanted new customers” from this promotion, nor was it trying to. My bet is that the firm saw Groupon has a far more effective way of distributing coupons to its target market than other distribution channels.
The Gap might have an email list, but an email from The Gap competes with emails that consumers get from lots of firms they do business with. Too much noise in that channel. FSIs in the Sunday paper? Direct mail? Sure, those were options, but at a lot higher cost (most likely) than through Groupon.
According to Mashable.com, 441,000 coupons — oops, I mean groupons — were sold. The offer might have crashed Groupon’s servers, but that’s Groupon’s problem, not The Gap’s. And it’s certainly not a systemic problem with web-based savings “schemes”.
While The Gap’s use of Groupon was to effectively distribute a deal to customers, East Coast Aero’s business objective was very different. ECA needed to create awareness for their brand (I live in their area and had no idea they existed). Utilizing Groupon to effectively reach prospects in their market was likely a very effective tactic from a cost and reach perspective.
It’s certainly possible that ECA got the “popularity-to-loss-leading ratio” wrong. But that’s not a dark side of web-based savings tactics (sorry, but I find the word “scheme” to be derogatory). What ECA did wrong was mis-structuring the offer.
More than 2,500 people will now be showing up at ECA’s door in the next few months looking to cash in on their lesson. My bet is that very few of them have any plans on continuing lessons. (I was looking to get in on the deal because I thought it would make a cool Mother’s Day present for my wife).
Did ECA think about the logistics of scheduling 2,600 lessons over the next 6 to 12 months? Does it have a plan for converting first-time flyers into long-term customers? I don’t know. If it doesn’t, then that’s ECA’s problem. But it’s not a “dark side” of web-based savings scheme.
Sorry, Fast Company, but the “risks” of web-based coupons that you’ve identified are simply not there.
I’m not going to stop fighting this. The banking industry’s misguided view of what onboarding is, that is.
A while back I wrote (slightly edited):
“The banking industry has an odd definition of the word on-boarding. Or at least to me it does, considering it’s not a real word in the first place.
To me, the term implies the process by which a firm helps a new customer become a satisfied new customer. To me, the concept implies that simply closing the sale isn’t enough — that some, if not many, customers need help when initially using, establishing, or setting up a product or service.
But, to many banks on-boarding means trying to sell more products to new customers immediately after those customers purchase their first product or service, before some fictitious cross-selling window closes.”
A recent article on BAI’s site called Customer Onboarding: The 90-Day Countdown underscores the industry’s philosophy:
“An invisible clock starts ticking the moment a customer purchases a new product with a financial institution. Research has shown over and over again that by the time the clock has ticked for 90 days – a period of time known as onboarding – the customer’s lifetime value and profitability will have been practically set in stone.”
But what the “research” never seems to explain is why this alleged 90-day window exists. Here’s a theory: It’s the window in which the customer is still in the honeymoon period, and their bank (or credit union) hasn’t done enough to piss them off yet, or fail to live up to the expectations that were set during the evaluation (courting) phase.
There’s a 90-day window because banks have been terrible at building relationships with customers. There’s nothing magical about the 90-day window that causes the cross-selling window to close.
The BAI article does a nice job of explaining why establishing valuable customer experiences following the opening of a new account is important (and recognizes the role of expectations in the the courting phase). But with an industry mindset that associates onboarding with cross-selling, I fear many will fail to realize that onboarding is more about customer engagement than cross-selling.
So I’d like to propose a new term (and process): Honeymooning.
To be clear, honeymooning is not the process by which someone pulls their pants down and shows their butt to their significant other.
Instead, it’s the process that ensures that new customers become engaged with the bank, and that the new customer’s expectations are met.
This implies that actions taken by the bank in the honeymoon period will be oriented more towards driving high-value engagement behavior — e.g., online bill pay enrollment, use of PFM tools and educational material, webinars and seminars the institution puts on — and towards ensuring that new customers have selected the right account or product, than trying to push another product at them.
Dictionary.com refers to a honeymoon as a period characterized by harmony and goodwill. By the way, Dictionary.com doesn’t have a definition for onboarding, and describes on-board as providing or occurring on a vehicle — leading to a perception of “taking one for a ride”. Nice.
In a banking context, honeymooning could mean waiving any ATM or overdraft fees, or late fees, or other fees that a customer might be asked or forced to pay.
Could that negatively impact revenue at a time when replacing potential lost revenue is a top priority for financial institutions? Absolutely. But if it builds goodwill and trust, it might help to extend that magical window from 90 days to 180 or 360 days.
Email marketers have such an inferiority complex. And with good reason, I guess. After all, all they hear from social media zealots is that email is dead.
So email marketers commission studies to show that email is still alive — and, more specifically, how social media and email can not only co-exist, but mutually thrive.
Reminds me of the scene in Monty Python and the Holy Grail where some guy is yelling “Bring out your dead! Bring out your dead!”, and there’s a guy on the stretcher claiming “I’m not dead yet.” That guy is Email.
One recent study found that:
“Roughly half of consumers indicated that they are willing to act as brand advocates in order to connect email content to social networks.”
When asked what sort of marketing information they would consider appropriate to share through social media, 54% of respondents said special offers and promotions, 42% said news on new products, and 32% said support information (e.g., tutorials and product support content).
These respondents are what the marketing community calls “brand advocates.” Or what the rest of us refer to as shameless corporate shills.
I can’t imagine the thought process that leads someone to think “Hey, this email I just got from Staples with the weekly coupons is something I just HAVE TO tweet about or put on my Facebook page!”
There were, however, 37% of North American respondents that said None Of The Above, when asked what information is worth sharing.
I call this group the NOTAries. These are my people.
Edelman Digital’s Daily Digital Paper
Edelman Digital's Daily Digital Paper