What Are Consumers Really Doing When They Research Financial Products Online?

Forrester Research found that across a range of eight financial products, at one end, 59% of consumers researched their choice of credit cards online, while at the other end, 34% researched their life insurance decision online. Even at the low end, that’s a pretty healthy percentage of customers.

But where are they really going when they research online?

In the January 2008 issue of Direct magazine, an article on financial services marketing quoted Ogilvy New York’s chief operating officer as saying:

Consumers are going to very interesting places to get their information. It’s amazing how many of them are going to YouTube and not the obvious places like blogs to understand products.”

My take: YouTube? Not the “obvious places like blogs”?

I can’t find data from any research firm (Forrester, Jupiter, Javelin) that reports online research behavior down to the type-of-site level. But I find it really hard to believe that any significant percentage of consumers use YouTube to research their financial product decisions. Especially those over the age of 30.

(FYI: I went to YouTube and searched for “credit cards.” The first link was to a video in which someone puts 24 credit cards into a blender to see what happens. I guess if the American Express card comes out most intact, then it must be the best card on the market)

And since when did blogs become an “obvious place” to go to research financial products?

I know of BankDeals and some blogs that focus on personal money management, but many other potential sources of information are just ad-hoc rants and raves from bloggers. And with the exception of Wells Fargo and some credit unions, none of the major banks, brokerages, or insurers have blogs.

When asked if financial services marketers are investing in social media, Ogilvy’s COO responded:

Yes. With one of our financial services clients, we’ve actually created networks of influencers who play a role in advocating the brand. And with another client, we have an online community of more than 1,000 people who regularly provide feedback on products, customer experience, and advertising.”

I really wished she would have named names. Who are these influencers, how many of them are there, and — most importantly — what measurable impact on sales have they had?

Sorry, but I’m not buying any of this. While not specific to financial services, Forrester did find, regarding online product reviews, that bloggers were the least trusted source of information.

Bottom line: While the number of people who research financial products online is approaching — or exceeding — a majority for some products, the number willing to put a lot of time and effort into their financial decisions is far less.

Sure, there are some who will scour the Net for every bit of information they can find to help them decide between high-yield savings accounts or credit cards. But a lot more just hit the search engine and go to the sites of the firms that are already on their short list.

Having said this, I do believe that a FI-sponsored blog still has a role in helping build relationships with existing customers. But I’m not buying Ogilvy’s claims.

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Knuckle-Draggin’ CMOs

Kudos to Forrester and Heidrick & Struggles for their recent report on The Evolved CMO. It’s a good report (that’s a glowing review for Mr. Cranky here) and I wanted to share some of the highlights with my takes on their findings.

Before I do, though, I wanted to point out that I did find it odd that they would hold out the model CMO as an “evolved” CMO. That paints a picture of most CMOs as knuckle-draggin’ cavemen types from the Stone Age. (Maybe that was intentional, who knows). Seems to me there’s a better label to connote the CMO they’re trying to describe (“catalytic” comes to mind).

Some of the findings involved CMOs’:

1. Top marketing objectives. Number one was acquiring new customers, listed by just over 60% of respondents. But only about one-third listed increasing customer retention. And less than 30% of the senior marketers surveyed said increasing customer lifetime value is a top marketing objective.

My take: This is a worrisome finding. Increasing customer lifetime value should be towards the top of the list. A coherent and effective strategy for increasing CLV will result in the acquisition of profitable new customers, guide customer retention tactics, and help marketing better measure the impact of its efforts and investments.

2. Views on the skills important to their personal success. Vision and strategic thinking was cited by more than three-quarters of marketers as the most important skill/competency. When asked about self-improvement areas, of the 17 attributes listed, the most popular area was “personal knowledge of your customers” and the third most popular was “technology-savviness.” But customer knowledge was only mentioned as an important skill by about 10% of respondents, and technology-savviness by less than 20%.

My take:
There’s a disconnect here. On one hand “strategic thinking” is listed as the most critical skill, but only 16% desire self-improvement in this area. Which implies that they think they’ve got this nailed down. And the attributes that rose toward the top of the self-improvement list — customer knowledge and technology-savviness — were ranked towards the bottom of the importance list. If they’re not very important, then why do so many CMOs want to improve in those areas?

3. Career development resources.
Among a list of 16 resources to help CMOs build their skills and competencies, marketing publications, conferences, and organizations were ranked at the bottom. Forty percent of respondents found marketing conferences to be of little to no value — just 10% said they were of great value.

My take: No surprise here (see my comments on why so many conferences suck). It would be interesting to know, though, why so many (40%) marketers see great value in business publications, but so few (~15%) see great value in marketing publications.

4. Marketing tools and tactics. When asked which tools and tactics are the most important to their marketing organization’s future success, the top three are: 1) customer trends and research; 2) marketing measurement; and 3) CRM/customer data analytics. Despite all the hype, social computing/Web 2.0 was second from the bottom, just ahead of user-generated content [note to self: resist urge to call UGC “dumb”].

My take: Many CMOs are missing something here. Social computing and customer community development are techniques to help them better understand customer trends and do customer research.

The next few years will interesting times for CMOs. I hope I get to work with the ones that walk upright.

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