Counteracting impersonality of instant tellers

DM is repersonalizing bankingThe financial services sector lost touch with its customers in the 1980s. It is no surprise it is embracing direct marketing techniques to get personal in the 1990s.Direct marketing makes customers feel important - one at a time.The...

DM is repersonalizing banking

The financial services sector lost touch with its customers in the 1980s. It is no surprise it is embracing direct marketing techniques to get personal in the 1990s.

Direct marketing makes customers feel important – one at a time.

The days when bank tellers were familiar with each customer on a first-name basis began to vanish with the advent of the automated teller machine.

Fast, efficient and impersonal, the bank machine is quietly revolutionizing the way Canadians carry out their financial affairs.

And this, in turn, has changed the way banks do business.

As atms proliferate, the problem of explaining and selling products to customers with whom they rarely meet, takes on new dimensions.

With more than 10,000 atms at 7,000 branches, the financial community has turned to telemarketing as a new key access point to banking services.

Witness the cibc’s LinkUp, or the Canada Trust EasyLine.

Primary focus

The primary focus is automated branch services such as account transfers, opening new accounts, paying bills and applying for loans or mortgages in the convenience of your home, car or office.

You can also renew gics, buy rrsps and obtain credit card application approvals (which are 10% higher than direct mail with telemarketing.)

Both the banks’ and the trust companies’ services work on the principles of voice mail or audiotext.

Customers key through menus using their touch tone keypad telephone. And, yes, operators are available, should the customer need help along the way.

But, where is all this heading? What does the future offer?

Emerging channels

New emerging channels of distribution including videotex, interactive tv and proliferations of pc-based services such as American Compuserve, Prodigy, Genie and America-On-Line link individuals in perhaps the most direct way yet devised.

Converging of technologies such as cable, computer and telecommunications provide a gateway to future financial services delivery.

What began with the automated teller machine and telebanking will continue to evolve to the point where, according to u.s. futurist Faith Popcorn, ‘home delivery services will take on new importance in the ’90s.’

Banking by phone

Imagine banking by telephone – followed half an hour later by a specialized courier delivery of your cash – right to your door.

The real loser in this process may be Canada Post, as more people shift bill paying to electronic impulses, and business promotes direct deposit banking for pay cheques.

Even Revenue Canada got into the act with electronic tax returns this year.

Other branches in the financial services sector are rapidly adopting aggressive direct marketing strategies using sophisticated database marketing techniques for prospecting leads.

Mutual funds

Standard Life and agf (Asian Growth Fund) are prime examples in the competitive mutual funds arena.

Standard Life Assurance recently launched a mutual funds product using direct marketing techniques including a 100,000-piece mailing to potential investors.

Call-to-action focussed on a 1-800 telephone number, 24 hours per day, seven days a week.

Investors were encouraged to call for professional information provided by existing investment management division staff.

Direct approach

The direct approach met the needs of consumers who are increasingly pressed for time.

At agf, database segmentation yields dividends as a mass marketing tool to reach consumers by financial life cycle, propensity to risk, income, occupation, affinity groups, buying patterns and historical relationships.

Strategies that zero in on a target appeal to both large and small budget players, in effect, creating a level playing field of opportunities.

And in the sleepy recesses of giant insurance companies, maverick direct marketers are conjuring highly segmented mailings to up-sell ‘the sleeping giant’ – that is, the immense files of policyholders with single products – who have never seen an agent since their original policy was written.

Manipulate databases

Transamerica, Seaboard Life, Prudential and others are realizing it is far easier to manipulate databases than it is to hire, train and maintain an agent sales force to go belly button to belly button with the consumer.

Offers include cross-selling companion products such as mortgage insurance to term life policyholders, disability insurance to life policyholders, rrsp and rrif products to policyholders and policy upgrades to term life customers.

Seaboard Life Insurance in Vancouver has done an effective job of up-selling term policyholders with ‘Benefit Increase Option’ mailings to policyowners in good standing.

Obviously, they realize it is important to maintain a relationship with the customer after the original policy is written.

Retention is a crucial element to the well-being of the insurance industry because a policy does not become profitable until year five to seven. A 5% boost in retention yields a 25% increase in profit.

An investment

In fact, relationship marketing is not a cost, it is an investment. We all know it takes five times more money to acquire a new customer than to retain an old one.

The good news is consumers can expect more dialogue from their insurer, mutual funds marketer and bank or trust company as they discover new ways to care for the true interests of the consumer.

Peter Watson is president of London, Ont.-based Response Generators, a relationship agency which specializes in high-touch integrated direct marketing programs.