Challenge Your Bank's Current Marketing Approach - Almost Everything You Thought You Knew about Marketing Is Wrong
by James Gilmartin, BOL Guru
More than thirty years ago Maslow said in Toward a Psychology of Being that highly matured people reflect "polarities and oppositions" in their behavior; strive to simplify their lives; experience changes in values; become more autonomous, and avoid extremes. Identity is the biggest single factor in customer behavior. These observations are customer centric taglines. Nothing has had more influence on how marketing is done than those values. Because these values play well in the New Customer Majority, there is a growing generation gap between marketers and the marketplace majority.
Perhaps no company has reflected better understanding of the midlife soul in its marketing than the New Balance. It became the fastest growing shoe company in America by connecting with the more temperate behavior of the New Customer Majority with its tagline, "Achieve new balance." It is ironic then, that New Balance's popularity in the New Customer Majority has
spread into younger age groups, according to Maria Stefan, Vice President of the Sporting Goods Manufacturers Association.
An Aging Society Laid the Foundation for Personalized Marketing
The rational marketing triad works better among the young because the young want proof. Ambiguity unsettles the young mind. The older mind often reflects aversion to the kind of unbridled explicitness that turns young minds on. "Shades of gray" perceptions of reality dispose the older mind to tune out bold, absolutist claims about products and banks. Members of the New Customer Majority are more relationship minded than the Old Customer Majority that was more categorical minded. This predisposes members of the New Customer Majority to respond quite favorably to banks that see them as whole people, not merely as prospects for a product or service.
Personalizing the customer experience is something that top people in sales have always done. It was only recently that marketers began thinking personalization as a marketing strategy. But despite all the experts on personalizing the customer experience that have cropped up, the real impetus behind the various "sects' of relationship marketing is an aging population. The quality of the buyer-seller relationship is more decisive among members of the New Customer Majority than it was under the Old Youth Majority. New Customer Majority buyers want banks they place their loyalties with to feel what they feel.
Lexus turned enough members of the New Customer Majority into loyal customers by establishing empathetic connections with them to earn it the highest repurchase rates in the auto industry - higher than Infinity. Many former loyal Mercedes and Cadillac owners will now be Lexus owners for the rest of their lives - provided Lexus continues empathetically delivering on the customer experience. Moreover, certainly don't tell Lexus that older people won't switch brands. Lexus demonstrated two opposing truths about older customers - truths reflected in the Yankelovich Monitor's pronouncement that today's consumers are "more paradoxical." Giving customers experiences that make them loyal is an affordable value added perquisite.
As the median age has risen, relevance of marketing messages to customers has decreased. Often, ad creatives will be much younger than the customers they are addressing are. Richard Lee, head of High-Yield Marketing in Minneapolis, researched this problem. He conducted a survey of ad agencies to assess attitudes towards older customers. Unsurprisingly, Lee found that young creatives felt most comfortable creating product messages for people around their own age or younger. If the target audience happens to be younger consumers, that works.
Until recently, the long-standing bias against marketing to older people was reflected by media trackers like Arbitron and Nielson. They reported only the media habits of people 49 and younger. When people turned 50, they no longer existed on Madison Avenue. It is actually easier to turn people in the New Customer Majority into loyal customers than it is young people. Training ad agency creatives in how New Customer Majority minds work will not only pay off in more effective marketing in 40-plus markets, but in younger markets as well.
Changes in What Customers Buy
Reaching midlife changes not only what people buy it also changes their purchase frequency patterns. The automotive and housing industries will also experience falling demand due to population contraction in key age groups. We can expect some growth from households headed by people aged 45 and older, but even total spending growth there reflects slower economic expansion than seen in the past. Still, as the New Balance story, demonstrates, the New Customer Majority could be the salvation for many banks. It offers persuasive anecdotal evidence that the market reach of a product that is usually marketed primarily to youth and young adults can be dramatically expanded through segment busting strategies that give it an appeal to virtually all age groups. The customer experience is key to success in securing a competitive advantage in today's buyers' markets. Young people buy products. Middle age and older people buy experiences. New Balance identifies with the values of midlife in ways that give aging boomers the pleasurable experience of dealing with a company that understands them.
Changing Your Approach is Not Difficult
Creating customer experiences that give a bank a strong competitive edge isn't necessarily expensive, nor complicated. Meeting the expectations of New Customer Majority shoppers is not very difficult. The New Customer Majority loathes artifice. Ad agencies are killing the ad business by continuing to ignore the New Customer Majority by pumping out advertising that was more suitable in the pre-1990s marketplace. One of the most persuasive pieces of evidence that banks do not have a good understanding of their customers is falling customer satisfaction levels. We shouldn't define customer satisfaction in the era of the New Customer Majority simply by gracious smiles on a retailer's sales floor, nor the acceptable performance of a product bought by a customer. That helps to explain why customer loyalty is fraying so widely. No industry experienced a rise in customer satisfaction from 1995 through the end of 2001. Some 90 percent of the companies in the index experienced a drop in customer satisfaction.
"My way or the highway" describes how the New Customer Majority feels about companies and brands. Success in today's buyers' markets demands enterprise-wide changes in mindset, from the executive suite to the mailroom. The shift from a product centric mindset to a customer centric mindset dramatically changes how both marketing and customers are viewed:
Customers are no longer targets; they are humans to be served.
Bank marketing is no longer a game of persuasion; it is a service.
Customers are no longer data sets; they are human beings.
The focus is no longer on products; it is on the customer experience.
Making such changes in bank think requires the power of executive leadership. A CEO must also be the CTO - Chief Transformation Officer, for no change can take place in bank mindset to support a customer centric business model without the unequivocal commitment of executive leadership. Putting it as Bill Clinton's campaign manager James Carville would put it, "It's the Customer, stupid!"
Note: This article is adapted and summarized from the unpublished writings of David Wolfe, Wolfe Resource Group, Reston VA.
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