“A whole lot of people — the majority of consumers, really — could benefit from switching to a credit union. Why, oh why, do all those people insist on throwing their money away with banks? But I prefer to look at it another way — CUs appeal to an elite, exclusive group of people. Overall, I’d say it’s a group of people who are paying attention. I’ve seen stats indicating that CU members on average are a little healthier, wealthier, and even better drivers than the average. CU members seem to make slightly better decisions in life.”

My take: An interesting assertion. CU members pay attention, and are healthier, wealthier, and make better decisions–OK, slightly better decisions–than other consumers. But is it true?

Based on a survey just completed by Aite Group and BancVue, I might be able to shed a little light. The problem is we didn’t capture data about CU members–we identified consumers who consider a credit union to be their primary financial institution.

That’s obviously just a subset of the overall member base, but if this subset isn’t more attentive, healthier, wealthier, etc., then Brian’s assertion holds little water, since CU members who don’t consider a CU to be their primary FI likely consider a large bank to be their primary FI, and that’s just not going to support Brian’s contentions.

—————

The first challenge we have is in defining what “pays attention” means. Could mean a million things, but I’d like to propose that from a financial services perspective, we could create a proxy for “attention” by looking at the various financial management-related activities that consumers do, and the frequency with which they do them.

The survey asked respondents about 14 different financial-related activities like creating and managing a budget, categorizing and forecasting their spending, analyzing the allocation of and returns on savings and investments, accessing financial educational content, and seeking advice on a variety of financial-related topics.

I assigned points based on the frequency with which respondents did the activities — ZERO points if not done at all, and up to 10 points for an activity that was performed on a weekly basis. Theoretically, credit unions could achieve a total score of 140 if 100% of the people who consider a CU their primary FI (let’s call them CU primary members) did each of the activities every week.

I computed the score not just for CU primary members, but for people who consider a large bank their primary FI, and for people who consider a community bank their primary FI.

The result: Large banks received a score of 22.3, credit unions scored 19.3, and community banks got a 17.5. Across the range of activities, more large bank primary customers performed the activities, and did so more frequently, than CU primary members.

—————

Let’s take a look at income. Forty-two percent of large bank primary customers earn more than $60k per year. The corresponding percentage for CU primary member is 35%.

—————

Wondering about level of education? After all, they say (I don’t know exactly who, but you know, the royal they) that educated people are healthier than uneducated people. Among large bank primary customers, 52% have a college degree or higher. Among CU primary members, it’s 41%.

—————

In case you’re interested, large bank primary customers and CU primary members are equally as likely to “friend” their primary FI on Facebook (a paltry 12%), and about as likely to view videos on their primary FI’s YouTube page (a measly 5%). Large bank primary customers are nine times more likely their primary FI on Twitter than CU primary members, however (9% for large bank primary customers, 1% for CU primary members).

—————

Among CU primary members, just 34% are working full-time. Compared to large bank primary customers, CUs have a higher percentage of the unemployed, homemakers, and retirees. Not that I’m saying these groups don’t make good decisions, or aren’t good drivers.

—————

Bottom line: I think you get the picture. Any belief that CU members are healthier, wealthier, wiser, more attentive, more this, or more that, than other consumers might be the result of smoking something illegal. 

If you share those illegal things with me, though, I promise not to tell on you, and I’m sure I can find a way to massage the data to support your view of the financial services world.

We asked consumers about their bank channel preferences, and their response was unanimous: “What the hell is a banking channel? We thought channels were something on TV.”

When we explained what bank channels were, consumers were again unanimous in their response: “Aha! Got it. We’d prefer to not have to use any bank channels. We’d prefer for there to be no problems to be resolved, we’d prefer to be hoodie-wearing bazillionaires who don’t worry about what their account balance is, and we’d prefer to have our money transfer itself between accounts. No, wait — we’d prefer to not have to keep separate accounts to move money between in the first place.”

My take: This endless stream of research that purports to show how consumers’ banking channel preferences cause banks to miss opportunities to “better engage with consumers online and create a consistent brand experience across all channels” has got to end.

The latest study shows that two of the four most popular reasons why consumers use the online channel for banking is checking their account balance and transferring money between accounts. Do you really think there’s an opportunity to create a “consistent brand experience across all channels” to do those things?

And so what if banks do create a “consistent brand experience across all channels”? Do you think bank customers will be lulled into forgetting the other issues and problems with their that they face?

One of the amazing things about being human is that we adapt. Adapting to an “inconsistent brand experience across channels” is one of the easier things that we adapt to.

Here’s something that Kristen Christian, the founder of last year’s Bank Transfer Day, did not say:

“We can’t let banks get away with an inconsistent brand experience across channels. We need to rise up and move our money to credit unions.”

Looking at the results of a survey of US consumers regarding their financial lives, here’s what I can tell you: Of people who switched their primary bank last year, maybe 2 out of 1,000 said that it was because of a poor cross-channel experience, and as best as I can tell, those two people were Phuquing Yooseless and his brother Totalee.

At the top of the list of why people switched: Fees, followed closely by fees, and in third place, fees. 

The other side of this channel preference nonsense is the conclusion that many people come to regarding channel investments. Their logic goes something like this: If 50% of people prefer the online channel, and only 20% prefer branches, then we should be putting 50% of our investment into the online channel.

Sadly, this is not only faulty logic, but it’s a reflection of the dysfunctional organizational structure found in so many financial institutions. Not that there’s any easy fix to the problem. But organizing by channel will lead the people that work in that department to find any argument they can to protect and grow their budgets.

If, however, the focus was on “fixing problems” or “redesigning” processes and interactions, then maybe funds would flow to the places where they’re really needed.

But you’re not going to effectively prioritize those investment alternatives by asking consumers about their channel preferences.

And I’m really happy right now, because the results of a survey of 1,115 US consumers, conducted by Aite Group and BancVue, is sitting on my PC providing me with hours of analytical fun. In the next few weeks, we will be publishing a report on PFM (which you might be able to get from BancVue if you’re really nice to them). 

With permission from BancVue, I wanted to share a couple of data points (which have nothing to do with PFM, so I’m not giving away the PFM punchline here).

My take: Both banks and credit unions should take note of these data points as I believe they’re cause for concern on the part of both types of financial institutions.

We asked consumers to assume that they were in the market for a new financial product, and that the providers they were considering offered similar rates, fees, terms, etc. We then asked them if they would prefer a large bank, a community bank or credit union, or if they had no preference.

Below are the results by the respondents’ generation affiliation:

Credit unions should not be happy to see this. Gen Yers — the generation that practically all CUs are dying to court in order to lower the average age of their member base — are just as likely to consider a credit union or community bank as they are a large bank.

Who’s the most likely to prefer a CU or community bank? Seniors, who, it would seem, are discarded and ignored by so many industry observers as not being profitable or providing the engine for growth.

Bottom line: Credit unions should stop patting themselves on the back every time a survey comes out showing that consumers trust credit unions more than large banks. 

It’s great that the 20% of consumers who consider a CU their primary FI trust CUs more than the 60% of consumers who call a big bank their primary FI trust those big banks.

I don’t want to downplay the importance of trust in developing customer relationships, but the data shown above (as well as other data points that will be published later) point to two concerns CUs should be worried about:

1. Preference. More than half of Seniors would prefer a CU or community bank, but just over a third of Gen Yers express the same preference. Not a good metric for CUs.

2. Conversion. Nearly half of Gen Xers — who, while not a particularly large generation in overall numbers, are critical because many are in the peak of their financial service need years — said they’d prefer a community bank or credit union. But do 45% of Gen Xers who open up a new financial account or apply for a new financial product do so with a community bank or CU? I don’t think so. Conclusion: CUs have a conversion problem.

This is what CUs should be worried about. Not their trust numbers.  

“A February 2012 CMO Survey asked marketers “In what percent of your projects does your company use available or requested market analytics before a decision is made?” The average score was 37.2%. This means that 62.8% of the time, managers are not using marketing analytics!”

The author of the article offered a number of reasons for why this is the case including:

“First, managers don’t want to know the answers marketing analytics provides. Second, marketing analytics doesn’t offer sufficient insights to managers; it tends to confirm what they know. Another reason managers may be reporting lower usage levels is that they are discounting an important impact marketing analytics can have on companies—it can change the way managers think.”

The author goes on to introduce an interesting construct for thinking about marketing intelligence:

“There are three ways manager use any type of marketing intelligence, including marketing analytics—instrumental use, conceptual use, and evaluative use. Instrumental use means that marketing analytics is used to develop or implement strategy. Conceptual use means that marketing analytics affects managers’ beliefs, knowledge or the mind-sets they bring to their work. Evaluative use means that marketing analytics is used to evaluate marketing actions. Unfortunately, companies tend to spend most of their marketing analytic investments on evaluation.”

[Note: Yes, I know, it should be "managers" not "manager.' This isn't the only grammatical typo in the Forbes article. I get the sense that nobody proof reads that stuff]

My take: The explanation for the use of marketing analytics is way off base, as is the estimate of how companies allocate their marketing analytics investments.

There are a number of things wrong with the Forbes article:

1. The CMO Survey asked marketers what percentage of their projects use marketing analytics. It didn’t ask — which would have been an interesting question — in what percentage of the projects where marketing analytics was not used, could it have or should it have been used. There’s no basis upon which to assume that every project should have or could have used marketing analytics.

2. There is no reason to believe that marketers “don’t want to know the answers marketing analytics provides.” There may be plenty of marketers that dismiss, mistrust, or ignore the “answers” that marketing analytics provides, but that’s a different explanation than “don’t want to know the answers.”

3. Marketing analytics doesn’t just “confirm what marketers already know.” In fact, the author contradicts this assertion herself by defining the Instrumental and Conceptual use categories later on in the article.

4. It’s questionable that “companies spend most of their marketing analytic investments on evaluation.”  No data is offered to back up this claim.

—————

The Forbes article, and from what I can gather, the CMO Survey itself, does a huge disservice by failing to address the most important question here:

What is marketing analytics?

In a related article, the author of the Forbes article indicates that asking top marketers to report what percentage of their marketing budgets they spend on marketing analytics was s a reasonable request because “70% of all top marketers state that the marketing analytics group reports to them.”

No argument there. But marketing analytics is more than just a department. If we’re talking about just the department, then maybe having their involvement in 37.2% of projects is too high.

If marketers answered the survey only thinking about the marketing analytics department, then they shortchanged the concept of marketing analytics.

—————

Without seeing the full results of the survey, I can’t tell whether or not marketers were asked specifically about their investments and activities as they relate specifically to the three categories of marketing analytics (instrumental, conceptual, and evaluative). This is an interesting categorization that warrants further research, if it wasn’t included in the CMO survey.

—————

Bottom line: Analytics continues to be a big buzzword in the marketing space. Understanding the uses and opportunities for the practice needs to do a good job of defining what it is, and isn’t.

Don’t get me wrong, I have nothing against the company or the site. In fact, I think the site does a pretty good job of what it does, and I certainly don’t begrudge the company’s right to make an honest, ethical business out of what it does. 

But as a self-professed psuedopsycho presentation snob, I hate that people find value in slide decks. 

So maybe that’s really it: I don’t hate SlideShare itself, I hate the fact that there’s demand for something like SlideShare. 

—————

I give a lot of presentations at conferences, webinars, and at clients. And I’m usually happy to share my slides with anybody who wants them — after the presentation, that is.

That’s because, as far as I’m concerned, the slide deck itself is useless.

The value of the presentation is what I say and how I say it. The deck is nothing but a prop.

But, as evidenced by the popularity of SlideShare, apparently there are a lot of people who don’t share my philosophy. It kills me when I see SlideShare users fawn over some deck that consists of little more than a bunch of slides showing high-resolution pictures of stuff with a pithy sentence plastered somewhere on the picture strung together.

—————

There are three components to a great presentation:

1. Quality of the content.

2. Quality of the delivery.

3. Quality of the material.

If I had to weight the three components, I’d say 60/30/10. Great content can compensate for a less-than-great delivery. And great delivery can compensate for butt ugly slides.

SlideShare captures #3. Which means — according to my book — it captures 10% of the value of a presentation. 

—————

Another reason I hate SlideShare: I posted a presentation I did a while back to SlideShare just to see how many people would download it. Here’s the sobering reality: More people downloaded that deck than will read this blog post. 

So, not only do people place higher emphasis on the least valuable part of the presentation (the deck), it’s become clear to me that one reason for SlideShare’s popularity is that a lot of people are just too damn lazy to read. 

—————

The irony is that I’m preaching to the choir. By reading this, you’re proving that you’re not one of the lazy-ass heathen ruining the business world with crappy-ass presentations filled with nothing but stupid-ass pictures. 

What’s that? I sound mad? Can’t imagine why.

—————

I would ask you to tweet the link to this blog post so that others may partake of this presentation wisdom. But the reality is that they won’t read this because it requires too much mental energy. 

If I had half a brain, I’d take this blog post, split it out over 30 slides, paste it on top of a bunch of high-res pictures, and post it on SlideShare. 

UPDATE: Big thanks to @jameswester who created a deck of this post and put it up on SlideShare. Thanks, James!

“No longer does ROI stand only for return on investment. Today, ROI also stands for return on impression, which encompasses two primary values — a hard metric and a soft metric. Together, those two values are far more powerful for measuring marketing performance than the single dollar value provided by return on investment metrics. Traditional ROI analysis is just the tip of the iceberg. The really interesting part of the story is what happens beneath the surface of the water. The hard metrics related to return on investment barely touch the surface.”

If you do click over to the article, skip reading the article itself, and go straight to the comments. There you will find the voices of rational, sane, and intelligent people.

Bob London writes:

“Sorry but in my opinion this smacks of a desperate attempt to cover up marketing’s tenuous or fictional link to real business metrics.”

My Twitter buddy Jeff Marsico (@jeffmarsico) writes:

“I don’t agree with many of the metrics mentioned because they are too soft. It feeds the notion that somehow marketing folks have their head in the clouds.”

Bob and Jeff are nice, polite guys who know how to disagree with someone in a civil manner.

Sadly, I lack that skill.

My take: The Forbes article is a shameful display of stupidity. And it has nothing to do with women. Why was this sad excuse for an article published in the FORBESWOMAN column?

Talking about “traditional ROI analysis” is like talking about the “traditional definition of left and right.” It’s senseless. ROI is ROI. There is only one way to calculate it: Revenue minus costs divided by costs. The only consideration that’s left to “redefinition” is the timeframe in which those revenues and costs are calculated.

I’m not saying, however, that marketers shouldn’t define new metrics if they add value to our understanding and measurement of marketing activities.

—————

Marketers (and perhaps Forbes columnists) should realize that there are three types of metrics: 1) Input; 2) Output; and 3) Impact.

Input metrics capture how much of something you put in the investment. It could be things like hours per week, dollars spent per customer, raw materials used by item.

Output metrics capture what you get out from that input. Units produced per week, page hits per day, etc. Measures like those proposed in the Forbes article — like Return on Impression – are output metrics. In and of themselves, they have no financial return.

Impact metrics are those with financial return. They capture the amount or increase in sales per some unit of measurement, or they capture the reduction in cost of doing something per some unit of measurement.

—————

Input and output metrics do not replace impact metrics. The problem we have with marketing measurement is that it’s hard to quantitatively tie input and output metrics to impact metrics like ROI.

Smart marketers understand that there is a return on investment chain. You put things in, you get things out, and there is an impact — or maybe not, and possibly it takes a combination of the things that come out to achieve an impact.

—————

The Forbes article clearly demonstrates one other sad fact about today’s business world. Once-top-quality publications like Forbes must be so hard up for content that they’ll publish anything. 

But seriously, LI’s findings on advisors’ prefered networks are consistent with my research. What caught my eye, though, was the following stat:

Advisors who prospected on LinkedIn achieved a 62% success rate.

My take: Quantipulation at its finest.

To refresh your memory, quantipulation is:

The art and act of using unverifiable math and statistics to convince people of what you believe to be true.

What exactly does 62% success rate mean?  Succeeded at what? Is it implying that 62% of the time that advisors used LinkedIn they “succeeded”? Does it mean that 62% of the prospects they found on LI became clients?

My guess is that it means that 62% of advisors said that they had success with LinkedIn, not that they had a 62% success rate.

If that’s the case, it’s hardly a remarkable finding. Advisors — and all marketers — generally find some success with every marketing channel they use.

—————

The infographic also says that, of the advisors who had success with LI,  32% gained $1m in new assets.

Oh really? Was that $1m in assets from just the LI prospects, or $1m in new assets overall? How much in new assets did the other 68% generate? It’s entirely possible that those 68% grew their book of business more from other sources that the LI-successful group.

Here’s my contention: Advisors who are good at marketing use lots of different channels to prospect, and are more aggressive in prospecting than advisors who aren’t as good at marketing.

The channel doesn’t make the marketer, the marketer makes the channel.

—————-

Another interesting data point states that 52% of investors would interact with advisors on LI, but that just 4% do.

Hey, LinkedIn: If you want advisors to be successful using your network, you have to answer these questions:

• Why the gap?
• Why don’t more investors interact with advisors on LI?
• What’s the secret to engagement on LI??

—————

Bottom line: You can’t take statistics at face value. But you knew that already, right? RIGHT?

“According to Millennial Media, from 2010 to 2011, mobile ad spending in the finance vertical grew by 314% worldwide. The study suggested finance brands are putting more dollars into mobile because people who engage with financial content and ads via mobile devices tend to be young (between the ages of 18 and 34) and affluent, with 48% having an income of $75,000 or better. Of these users, 55% are male. They also are brand-loyal, saying they’re willing to pay more for a product they trust and stick to brands they like. When it comes to selecting a financial services company, [Millennial Media GM Marcuc] Startzel said, “These are purchase decisions we make in these early years, stick with the rest of our lives and only change rarely. We know this intuitively – and the data shows that, as well.”

My take: The logic and explanations for the increase in mobile ad spending doesn’t hold water. There are five points made in the article that just don’t hold up:

1. The age argument. If, as the MM GM states, “we make these decisions in early years” and “stick with the rest of our lives and only change rarely,” then advertising to someone in their early 30s is wasted, because the financial service provider decisions would have been made long ago.”

2. The “stick with” argument. Point #1 is moot because it’s simply not true that these decisions are made early and never change.  Ten percent of US consumers switched their primary bank last year. A quarter of them were Gen Xers (roughly 32-46 years old) and one in five were Boomers (roughly 47-66 years old). The “stick with” argument also doesn’t hold up because consumers have evolving financial product needs.

3. The “pay more for a product they trust” argument. Consumers within the demographic described — 18-34 years old,  making more than $75k — may very well pay more for products they trust. But necessarily for financial services products. In fact, the evidence from the study cited above would suggest the opposite of what the Millennial Media GM claims: That the increase in financial mobile ads is due to the fact that financial services products are generally utilitarian, high consideration products which lead consumers to research and find the lowest cost product for their needs.

4. The “55% are male” argument. Hello! Women make all the financial services decisions today! I bet that men shop for financial services products about as often as they shop for…well, let’s not go there.

5. The “data shows that” argument. There is no data that shows that.

Bottom line: The increase in mobile advertising from 2010 to 2011 isn’t because of the demographics of mobile financial content viewers. It’s a result of some combination of three factors:

1. Financial services firms are looking to reduce ad costs in other channels and shifting dollars to the mobile channel;
2. Financial services firms are experiencing good and/or better than expected results from their mobile advertising efforts, and therefore put more money into it. My recent post on The Importance Of Mobile Advertising To Banks demonstrates why the real reasons have little to do with the arguments given above. The best reason comes from a study from professors at INSEAD and the University of Pittsburgh who found that: ”Low-fidelity mobile advertising campaigns are effective when they are for products that trigger further thought and consideration, which includes campaigns for high (versus low) involvement products, and for products that are seen as more utilitarian (versus more hedonic).”
3. It’s easier to achieve 314% growth when you start off spending $10k than when you spend $10m.

What caught my attention were these two comments made by two of the other speakers:

“With so many un- and underbanked consumers out there, who have no access to a bank account, accepting alternative forms of payment is becoming very important to billers.”

“Among consumers with income less than $30k, who we typically refer to as the underbanked, smartphone penetration has reached nearly 30%.”

While a sample of two is hardly a representative sample, I think it’s a pretty good bet that these aren’t the only two individuals in this country who have some serious misconceptions about who the under-banked are.

According to he FDIC:

“Underbanked households are defined as those that have a checking or savings account but rely on alternative financial services. Specifically, underbanked households have used non-bank money orders, non-bank check-cashing services, payday loans, rent-to-own agreements, or pawn shops at least once or twice a year or refund anticipation loans at least once in the past five years.”

My take: It’s time to strike the term “Underbanked” from the lexicon.

The growth in the use of “alternative” financial services has shot up significantly in the past few years. So-called alternative products like prepaid debit cards are already — or fast becoming — mainstream (i.e., not alternative) financial products.

The reality of the financial services world is that many of the consumers who use check-cashing services or payday loans are not the underserved, disadvantaged, uneducated, preyed-upon-by-the-big-evil-banks consumers that consumer advocate groups often portray them as.

The FDIC says that the Underbanked:

“Have access to a bank account, but nevertheless rely on more costly financial service providers for a variety of reasons.”

There are two big problems with this statement:

1. Who says alternative products/providers are more costly? Monthly fees on a checking account could run $5/month. Banks want to (or wanted to) tack on fees for debit card use that would make those monthly fees even higher. Prepaid card fees are roughly similar with no additional fees for the use of the card. And have you seen overdraft fees? Reality is, depending on one’s behavior, the cost of a mainstream financial product could be way higher than an alternative product.

2. The “variety of reasons”  include reasons that no one has the right to argue with. Example: Assume my neighbor and I make the same amount of money. I choose to buy a low-cost Honda, he chooses to buy a high-cost Mercedes. Do we have a right to criticize him for buying a higher-cost product? Do we criticize Mercedes for selling a higher-cost product to someone who chooses — for whatever reasons — that higher cost product? Why is it any different in financial services? Please don’t give me the “because we have to bail out big banks when they fail” argument because we bailed out the auto makers, too. People have different reasons for choosing different products, and there’s simply no good reason (political reasons being bad reasons) for criticizing people for choosing a higher cost product if that’s what they want.

Bottom line: The use of the term Underbanked has loaded political connotations. But the connotations relate to a set of consumers that do not correspond to who the consumers in the segment actually are. 

There is only segment that matters in these discussions: The Unbanked –consumers without a checking account, savings account, or prepaid debit card account — who can’t afford to have one of these products.

Seriously, if you want to know what makes for good tweeting, re-read that first paragraph a few times.

According to a few researchers (translation: people with nothing better to do), just 36% of tweets are worth reading. Which means that, for some of you, your tweets must really suck, because I know that 100% of my tweets are worth reading.

How do I know? Well, our esteemed researchers discovered that the best tweets fell into four categories:

1. Random thoughts
2. Self-promotion
3. Questions to followers
4.  Information sharing

The worst tweets were in the following groups:

1. Opinion/complaint
2. Conversation
3. Presence maintenance
4. Me now

My take: What the research is basically saying is this:

• No one cares what problems you’re having. Stuck in the security line at the airport? Too fu*king bad. Tell it to the person next to you.
• No one cares what you have to say to other people. If the conversation doesn’t involve me, your conversational tweet bugs the crap out of me. And now I know that I’m not alone in that opinion.
• No one cares where you are, what you’re doing, or what you’re eating. If you’re thinking of tweeting one (or more) of those three things, do us all a favor and don’t.
• No one cares about you. Period.

Reading this article on the HBR site was a huge relief for me, because it confirmed what I had suspected all along: My tweets don’t suck.