Are Bank iPod Giveaways A Good Idea?

NetBanker recently highlighted free iPod offers that two banks are making online to prospects. Beyond the question of the campaigns’ ROI, these efforts should raise two strategic questions for banks to address:

1) What impact (if any) could this have on existing customers? These offers recall the approach that telcos often take — offering great deals to new customers while treating existing (and potentially loyal) customers like 2nd class citizens. Isn’t it possible that existing customers, coming to the bank’s site to log on to their accounts, will see the offer and wonder “why don’t they give ME an iPod? I’ve been making direct deposits and online payments for years!”

Customers won’t leave the bank because of this. But it might plant the idea in some of their heads that taking care of them is not their bank’s top priority.

2) Do these giveaways attract the right customers? Execs at a bank that ran a free iPod offer told me that while the campaign brought in more customers than they had expected, it attracted a predominately young group of customers who, quite frankly, didn’t have the funds and assets to put into the accounts and products the bank really wanted to sell.

In addition, since these new customers didn’t fit the typical customer profile, the bank was ill-suited to support them, and it experienced a high rate of attrition among these customers.

My take: Few banks can adequately and accurately answer these questions. The root cause: Misalignment of acquisition and retention marketing efforts.

Organizationally, the people responsible for these efforts are in separate departments. And strategically, there’s no clearly defined and accepted customer strategy to guide long-term relationship building that encompasses the product-focused marketing and selling efforts.

iPods may get some new customers in the door, but what are you going to do with them once they’re there?

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6 thoughts on “Are Bank iPod Giveaways A Good Idea?

  1. You’re right Ron. Ever seen a lifetime customer strategy highlighting the type of customer a bank (or any org) needs to attract, how they will treat them and how any relationship should end?

    This iPod offer is the equivalent of meeting someone in Vegas at 9pm, winning big on a table then getting married at 4am having 1st drunk a bottle of JD. When the dust settles, both parties are afraid to say it but they know it’s never going to last. It’s then a question of who needs to act first.

  2. The old “Sweepstakes No” problem – YES, I want to enter your sweepstakes for a chance to win $1 million but NO, I don’t want to subscribe to your magazine / buy a car from you / make a deposit in your bank. Bribery consistently generates poor new customer quality.

    The newest game in town (at least in Florida) brings back memories of those old long distance check mailings – the Walgreen’s / CVS prescription battle. “Switch your prescription to us and we’ll give you a $25 gift card”. My wife has done this 7 times, back and forth – Walgreens and CVS are right across the street from each other, so that makes it pretty easy!

  3. Yesterday’s post at CUES Skybox has to do with the acquistion metric:

    Typically, iPods are given as part of checking account promotions. Most people probably aren’t going to close their current account and go through the hassle of opening a new one just for an iPod. Financial institutions are fighting a stubborn opponent — inertia. Besides, most people that would want an iPod already have one (or more).

    For those who have already made the decision to open a new account, an iPod just may carry enough weight to sway the decision. The rationale going something like, “Well, if I’ve got to open a new account, I might as well get SOMETHING for it.”

    Whether you give something away to win new checking accounts or not, the bigger question is: Do “new checking accounts” translate to “long-term, lifetime relationships?” I’ve banked with BofA for over 20 years, but not because I have a “relationship” with them. And they’ve never given me anything. I stay with them because they store my money and give it back to me without messing up. And they have a ton of ATMs. They are a buckstop, nothing more. I certainly don’t stay with them because of their service…I haven’t even been in one of their branches in over 5 years, nor spoken with anyone there.

    I contend that the quality, long-term relationships financial institutions seek are built through high-value services, not a commodity like checking.

  4. I agree also Ron. From what I’ve heard from other co-workers, iPods usually just bring in customers that only want the iPod and then close the account. I have heard of some existing customer grumblings about not being able to get one. We’ve also used iPods for EALs, which I think is a better idea than just for checking accounts.

  5. I actually took advantage of one of these offers. I had been waiting in the wings for months looking for a bank that would do something that would pique my interest enough to switch accounts from my big bank with whom I had become disenchanted. A free iPod Nano offer from Key Bank caught my eye and I went for it. (And I’m in financial services marketing, so why not make a project out of responding to incentives where I can detail my results in a blog?) I was a prime candidate: 38 year old professional girl, somewhat prosperous, own my own home, will need a new car in 2-3 years, interested in saving and investing, want to remodel my bathroom and kitchen. So, contrary to the mistake of some banks attracting too young an audience as mentioned in this blog – I was prime financial meat, so to speak. Unfortunately, KeyBank was abysmal. I got charged $28 for my “free” checks. I got charged for a savings account fee I did not know existed. I got charged for the overdraft of said savings account. I came in with $50, and left 6 months later with $7.71. And, to top it all off – no Nano. I left a voicemail saying so. No return call. So, even if you do attract the right customer with a free iPod, you still have to have your stuff together to behave in a business-like manner towards your business-like customers. That is really all that I am looking for. And I’m still lookin’…….

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