Sense & Sensibility

As discussed in the previous post, I believe Banks are Service based rather than Product sales organisations. The problem is that historically Banks have set up their marketing based on selling Products rather than providing Services.

Product based marketing is about finding people for your product. The product approach lacks the key element of Timing. Using statistics, I can safely say that 87.1% of my target group will buy a new car sometime in the next 3 years. The problem is When! This is like stabbing in the dark and hoping for success. A bit like the children’s game Battleships.

Service based marketing is about determining customer’s needs and addressing them. The latest mantra in the Service industry is called Sense & Respond. Whilst essentially correct, I would like to break this down a little more.

The ‘Sense’ portion needs to be able to answer several questions before I can formulate and give a reasonable Response. These questions are; Who, What, Where, When and Why.

Of these, in Service based marketing, the Who, Where and When are usually answered in by the interaction itself, ie. The Customer, in the Channel, Now.

Ok that was easy. And in most modern ‘real-time’ marketing systems, this is enough. Thus, a service request typically states something like ‘Customer A is in the channel now. What do I offer him?”

These systems, using the previously stored and calculated Customer info, will then suggest an offer based on either

a) the pre-calculated next best offer.
b) a simple rule based on what they are doing, eg. looking at mortgage > offer mortgage.

This is wrong!

If you haven’t correctly answered the questions ‘Why are they doing this?’ and ‘What is the need (if any)? If you don’t know Why and What, then you are simply exchanging outbound Product push marketing for inbound Product push. The difference is that with outbound, Customers can set up filters or opt-out, but with inbound approaches, they feel that they are being targeted whenever they contact the bank. And guess what. Just as your customers ignored, binned or opted out of your outbound approaches, they will do the same to these even to the extent of finding another Bank.

Answering the Why and the What are they keys to highly effective marketing. If you know What a person wants and Why, then the chance of being able to fulfill this need is immensely higher than if you play Battleship marketing. Let me quantify that for you. Doing product push, statistically targeted, battleship marketing will generate sales of 1%-3%. Marketing to an understood need results in sales of 18%-54%.

This is stunningly obvious. So why isn’t everyone doing this? The answers may be something like:

  • My bank’s marketing is Product focussed.
  • My bonus is based on Product sales.
  • It’s what my supplier told me.
  • Isn’t this what everyone does?


Let’s have a quick review. Kotler’s 4P marketing is Product focussed. It lacks in its ability to know the When but it certainly knows the What and the Why. Over the years this approach has been advocated and developed by every single CRM and statistical modelling company and regardless of whom you bought it from, you achieved the same business results.

With the advent of internet based technologies and channels, it has become possible to correctly recognise the Who, When and Where and this is where the above suppliers have all headed. Now you can buy real-time advisors from most major CRM players.

The problem is that none of them have really made the correct effort to understand either Sense and Respond, Service based marketing or provide a proper understanding and analysis of the Why and What. Instead they have all added their Product Push back-end thinking to their offerings.

So depending upon which approach I take, on the one hand I can tell you What to sell and Why but not When or on the other I can tell you When to sell but not What or Why. In reality the complete customer-focussed marketing approach is one that answers all the questions; Who, What, When, Where and Why.

I could be wrong, and only time will tell, but my guess is that those early adopters of the real-time product advisor philosophy will find the same results as they had previously, only as this is inbound and much more intrusive, I would bet that it will result in a lot more customers opting out or even leaving the bank altogether.

With Event Driven Marketing the attempt was to address the limitations of Kotler and determine the correct Timing: Who, When and Where but also to focus on answering the What and Why. To my mind, a properly implemented EDM system is still the most efficient and effective marketing approach available in the market today.

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