April 07, 2006

WaMu's Sins of Omission Washington Mutual – “WaMu” – a Seattle based regional bank recently started a war for new depositors that swept me up in its maelstrom. And now I know why people hate banks – all banks. And now I know why banks spend so much money on ineffective efforts to try to convince us that they aren’t thieves, usurers and double-talking sleezeballs. Ninety-seven percent of American adults use a checking account at a bank. I’d guess 96.9 percent are perpetually pissed off about it. I had both “push” and “pull” motivation for switching banks. My old rotten bank –Bank of America –got into the habit of routinely holding my checks for 10-12 days long enough to bounce all my monthly payments and leave me without any ready cash. When I aggressively and persistently inquired about this practice, I got excuses that ranged from the Patriot Act to Banking Regulation CCC to mindless claptrap from a customer service rep with an impenetrable accent probably in Manila or Mumbai. Everyone knows that checks clear electronically in seconds in extremely secure IT environments. Banks batch process cash transfers and do all kinds of sophisticated trafficking, reconciliation, reporting and accounting paperwork every evening. The practice of holding a valid check has nothing really to do with collecting the money. Surely with all the data and technology banks employ they can figure out I’m not funding al Queda and not laundering cash for Columbian drug lords. And while BofA needs to make its monthly nut its hard to imagine that playing the float on my paycheck for 10 days would be a significant contribution. The bottom line is that banks fuck with you because they can. My new rotten bank --WaMu – got a story in the Wall Street Journal on a day after I enjoyed a lively interactive interaction with a human robot. The promise of free checking with free checks and no ATM fees at competitors’ ATMs caught my attention. The hope of a different act momentarily clouded my judgment Evidently I was an easy mark. According to the 2006 Market Pulse Survey released by IBT Enterprises and MCA Works 41% of Americans say that “no amount of money or promotion” would get them to switch banks. They must be the “fire and forget” crowd. Another20 percent would switch for a one percent interest deal, 5% would defect for an iPod and one percent would actually bolt for a toaster; obviously my grandmother’s crowd. They got me for a few free checks and 20 dollars worth of fees. From the moment I crossed the threshold of my branch at West 96th Street and Broadway, I was subject to WaMu’s three sins of omission 1. They Didn’t Grease the Pipeline. WaMu planned a promotion, created and shipped collateral and signage to the branches, pitched the Journal and got free media. They didn’t cue the greeter to expect new customers to walk thru the door. They didn’t train her on the product. They didn’t staff the branch to handle a blip in volume. They didn’t streamline the enrollment process. The net result – I wander in full of hope and promise. In nanoseconds I am brought up short by a clueless greeter who either doesn’t speak the language or is focused exclusively on a demonic image on my forehead. After a healthy amount of pantomime and posturing she fobs me off onto an over wrought clerk who can’t find the sign up kits, isn’t sure which forms to use and doesn’t understand that if I don’t take off my coat and don’t sit down it means I’m in a hurry. She is apologetic but slow. It takes 45 minutes to fill out two forms and process my cash deposit. 2. They Didn’t Disclose Critical Information. As I later learned to my chagrin, WaMu routinely holds the initial deposits of new customers for 11 business days and holds every new deposit during the first month of the new banking relationship. This is supposedly disclosed in the booklet they toss at you, though I can’t find it after searching carefully through the fine print. No live person said anything about it when I was handing over my ID, calling off important numbers or signing in the box. Bingo! I got from the frying pan into the fire in record time. But the kicker is I don’t find out till a week later when they mail me a postcard announcing that they’ve held a 2900 dollar check and then...
Selling Money Using Emotion Financial marketers enjoy huge brand awareness but dramatically less brand loyalty. For some reason it’s been this way for a long time. Why? My guess is myopia Banks, insurance companies, credit card issuers, financial conglomerates and other peddling cash or the promise of future security chronically underestimate the role of emotion in making financial choices and money decisions. The fact that very few financial marketers really connect with their customers might explain the conventional wisdom which favors maintaining multiple relationships to mitigate risk. And yet institutions see a greater share of every consumers’ wallet as the Holy Grail. Too little understanding of perception, persuasion and personal experience among target segments is compounded by too much reliance on product features. The numbers guys cook up the products. They run the numbers often without any understanding of who might use the product and how they think and behave. In most financial institutions a “new” or variation product is easy to craft and if only X percent take the offer, the profit numbers add up quickly. Take rates for the most innovative financial products rarely crack 10% of the targeted universe and many great ideas and cool products have died because the target customer didn’t understand or appreciate the offering. Its no wonder favorability rankings for banks, insurance companies and credit card issuers are generally low. Money is the most intensely emotional topic you can raise with anyone. It presses more buttons than sex, relationships, family members, jobs or pets. Most people are anxious about money and finances. They want their money to go farther and to do a better job of financial planning but never actually get around to doing something about it. Consumers don’t know who to trust on this subject and are intimidated by the complexity of money issues and associated rules or regulations especially because they have little formal education or training on money matters. In most cases people make spur of the moment financial planning decisions on the first day of a new job. They fill out the forms, check a few boxes and never revisit those choices again. Very few ever really understand what they are buying and if the truth be told demographics and psychographics drive most of those choices. To change the current state of affairs and gain a shot at upselling and cross selling millions of exisating customers, financial marketers need to craft messages that resonate with discrete consumer segments. One size doesn’t fit all. Life style and life cycles matter and not all “Soccer Moms” or “Upwardly Mobile Urban Singles” think or act alike. Add to the creative challenge the notion that changing routine, often unconscious, behavior is the most difficult communication objective Cracking the code on financial marketing communications begins by getting inside consumers’ consideration set. The creative process has to be rooted in understanding Attitudes toward and usage of specific financial products. Attitudes about money, lifecycle events and financial resources. Lifestyle issues affecting likely user segments Demographic and psychographics by segment Social networks and the influential role played by Spouses/Partners Language and imagery preferences by segment Channel and media preferences

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

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