New data suggests financial services companies are embracing new forms of digital marketing, explains Russell King, head of financial marketing at Ve Interactive
When you think about business sectors that are up to date with the latest trends in marketing, financial services are rarely top of the list. However, is this perception really fair?
Financial institutions around the world have faced significant challenges in their marketing efforts, now more than ever – strict regulation governs how financial services providers advertise themselves, and this has often stymied their marketing efforts.
However data from Ve Interactive suggests that financial services are resisting the trend and becoming more effective at certain digital marketing techniques. Methods such as on-site messaging and retargeting emails can have a powerful effect on abandonment rates – that is, the percentage of prospects who sign up for a service but fail to complete the process – while also making marketing communications more targeted.
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Ve has over 12,000 clients on its books from a wide range of countries and sectors, including travel, sports and education, as well as financial services. How does financial services’ digital marketing performance measure up against these other sectors?
Overall online abandonment rate for financial services in 2015 clocked in at 59%, a strong reduction on 2014’s figure of 69%. This 2015 figure might seem quite a high proportion of abandonments until you compare it to other sectors: automotive companies experienced an abandonment rate of 78%, health and pharmaceuticals 73%, and the education sector experienced a very high 88% abandonment rate.
The charities sector was the only one to match the performance of financial services in persuading people to spend money within the same time period, having also experienced an abandonment rate of 59%. This is no small feat: most people do not typically get a buzz from shopping for financial services, whereas charities can leverage emotions to generate donations. The fact that financial services and charities had equal abandonment rates in 2015 is therefore impressive, and may be a product of firms across the finance sector investing more in their website structure and delivering a better onsite user experience.
On-site messages are also a key online marketing tactic, and financial services have been using them particularly effectively. When financial services customers were presented with an on-site overlay displaying a helpful message, such as “before you leave, save your information and return to it later”, an impressive 68% of consumers ‘approved’ it, meaning they either assented to the activity or performed some other kind of action which indicated agreement with the message. Financial services bagged the highest approval rating of all services measured in 2015, with health and pharmaceutical companies coming in second with 55%, and they also saw significant improvements to the conversion rate of these overlays between 2014 and 2015, from 17% to 38%.
Re-engagement emails are another key tool in the digital marketer’s arsenal. These are emails sent to previous site visitors, and tend to invite them to pick their activity up where they left off. Clearly this would be a useful mechanism for financial services, where application forms can be often long and difficult to complete in one sitting. Financial services have improved their email remarketing offering over the past few years: in 2014 the aggregate ratio of re-engagement emails sent to conversions secured was more than double the number required in 2015. However there’s still room for improvement: 2015’s 45:1 ratio for financial services was bested by the education sector, which achieved a 20:1 ratio.
There are two key factors that are at play here which can help explain the improvement that the financial sector has seen to their digital marketing efforts. First, the past few years have seen big changes to financial services’ target audience, and the changing makeup of financial services companies as a whole.
Today’s youthful generation, the Millennials, are considered ‘digital natives’, and so firms looking to cash in on this growing demographic are having to boost the efficacy of their digital marketing practices. In the past, financial services haven’t exactly been given a good grade for their digital marketing practices: a study by Scratch found that 53% of the sample thought their bank offered nothing different from others, and that 22% believed they didn’t need a bank anyway. 73% of those surveyed thought they’d be more excited about new financial services offerings from the likes of Google, Amazon or PayPal than their own banks.
Deloitte predicts that Millennial spending power in 2020 will double from where it was in 2015, with estimates ranging from $19 to $24 trillion – financial services may therefore be paying increased attention to this generation which is fast acquiring wealth that will need managing.
The rise in influence of Millennials is reflected in the makeup of the financial services industry itself. There’s a new grouping of ‘fintech’ companies which aim to use technology to upend the traditional financial services industry, and these companies have been receiving significant funding recently: investment has risen tenfold from $1.9 billion to $19 billion in just five years from 2010 to 2015. Companies like MarketInvoice, Funding Circle and TransferWise have all been built from the ground up for the digital world, and their digital marketing efficacy may be showing through in the statistics.
Overall the data tells a clear story, that financial services companies have improved their marketing substantially over the past year, and this is something to be celebrated. It’s really promising to see financial services tackle digital marketing head on and see such encouraging results.