Campaign Leads vs Event Lead Generation

I was in a meeting recently when a guy from another department said that 97% of all Bank leads were generated by ‘his system’ and that only 3% was generated by our EDM software. He went on to say that this demonstrated the relative use and value of each of our systems.

Well, it must be said that this certainly put us in our place. We were told in no uncertain terms that our stuff was a minor player in the Bank’s marketing system.

Over the next couple of days, we did a little digging and found out some interesting facts.

Firstly, the leads he generates are basically a mix of campaigns and ad-hoc lists. These ad-hoc lists are selections made by the relationship managers.

Next, we looked at the results obtained from the 97% leads and found sales rates of about 1% – which is pretty much in line with averages found in other banks.

Interestingly, the results obtained from our 3% of leads was also 1%. Again, a 33% sales rate is in line with results found in other Banks using our Event software (see more about this here).

So, that is a ratio of 97:1 vs 3:1. Hmmmm. Which one is better? So, rather than being the most important part of the marketing system, as he claimed, it turned out that their campaign/ad-hoc stuff was the weak area.

The information we found out actually highlights three key points.

  1. Importance was not just sales rate but actually savings in marketing costs, reduction in churn, increase in customer satisfaction, etc.

We didn’t find more sales. What we did was find them with much more accuracy, ie. Only 3 calls to make a sale instead of 97. What this meant was a dramatic reduction in marketing costs (94 calls not made). It also meant that 94 customers were not bothered by the Bank, of whom 3-5 would have opted out of future communications from the Bank.

  1. Problem of needing more leads (weaker results)

The bank then says, “This is great. Give me more of the same.” As a result, Banks invariably try to generate more Event Leads. They do this by watering down the criteria for selection. The creates more leads but at a lower response rate. In fact, the bank I was talking to increased the number of leads generated by a third (4% instead of 3%) but this only resulted in 0.1% increase in sales. That is 3% got them 1% sales whereas 4% got them 1.1%.

What this showed was that you can’t force Customers to get married/divorced more frequently, to have more children, change jobs more often or win more on the lottery – or to buy more Bank products.

  1. Current Bank networks are geared to large numbers of leads.

Modern Banks have been gearing up for mass communication. They have built call centres and relationship manager organisations that need to be fed with leads. Providing a system that generates fewer leads doesn’t fit in with this approach and saying that you can get the same business results with 1,000 leads instead of 100,000 causes problems. Because it begs the questions, “What do I do with these big systems/organisations?”.

So either

  • increase the number of leads (see above), or
  • reduce the size of the network

If we look at the Relationship Managers, it is common to find organisations of 1,000 people (or more). RMs are expensive and for the most part, underutilised.

But they are necessary to provide a human face to banking – right?

Targeted Man

A big problem is that at least 50% of RMs are useless. If you do the research, you will find that at least this number ignore 80% of the leads given to them. Why? When asked, they say that they know their customers better than the ‘machine’. Anyway, they don’t need the CRM system, as up to 75% of all sales walk through the door – “Can I speak to someone about a mortgage?”, 15% are from renewals/repeat business, leaving about 10% of sales leads from the CRM system.

So, could we reduce the size of the network?

Well, in Hungary we found that 5-6 people in a call centre could screen ALL Event leads for the Bank. This was instead of 600 RMs!

Just last December I was talking to a large UK Bank who are in the process of replacing 1,000 Branch RMs with a call centre of 25 RM specialists. For them, the maths was simple. A branch RM only receives 1-3 leads per day whereas an RM in a call centre can deal with >50 leads a day.

Even this may change in the next 2 years as we will start to see AI replacing human RMs.

So, in terms of delivering and acting upon leads, what will the future Banks look like?

  • Campaigns/Lists are dead.
  • Leads will be generated when a customer does something significant (Events).
  • Leads will be delivered to an AI chatbot that can determine and even act upon a customer’s intentions and needs.
  • If necessary, or a customer prefers, they can be passed through to a human RM.
  • All leads will be trigger parts of processes (onboarding, sales, churn, complaints, etc.) which means they will be dealt with consistently, automatically and rapidly.

 

I will expand upon these last points in the next posts.

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