The Power of C2C Recommendations for the Financial Services Sector
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  • 1. The Power of Consumer-to-ConsumerRecommendations in the FinancialServices Sector
  • 2. About RewardStream RewardStream is an emerging leader in consumer-to-consumer (C2C) marketing solutions for brands targeting the socially connected customer. We help clients to energize consumers to recommend & refer to their trusted networks, and then to evolve them into loyal, high value relationships. Since 1999, we have delivered customer referral, loyalty and engagement solutions for some of the world’s most esteemed brands.
  • 3. Speakers Alexandra Best Bryan Mavrow VP Marketing SVP Marketing RewardStream First West Credit Union
  • 4. Agenda• Quick Look: Marketing in the Financial Services Sector• Overview of Research: Keller Fay & WOM for the Financial Services Sector• Case Study: Using Customer Referrals to Perk Up a Growing Family of Credit Unions• Q&A
  • 5. Have a question?• Use the chat window in GoToMeeting to submit your questions throughout the session; we have left time for Q&A at the end of the webinar• If we don’t get to your question during the session, please send questions directly to amberlie.denny@rewardstream.com
  • 6. Dynamics Facing Financial ServicesMarketers
  • 7. • Search was once the stalwart of the web marketing world• The growth of social networking sites and non-PC devices like mobile has encouraged retailers to shift focus• Search is predicted to lose share from 55% to 44% of all interactive spend in 2016*Forrester, US Interactive Marketing Forecast 2011 – 2016 (published August 2011)
  • 8. “We do on the order of a billion queries a day, andwe’re not even trying. Most of it is people trying tofind people, but a bunch does link to commercialbehavior like trying to find brand pages. You get thesesearch engines where you type in keywords and it runssome magic to tell you what it thinks you want. But Ithink search is evolving to provide specific answers.Facebook is pretty uniquely positioned to answer mostof the questions people want to ask. Like “Whatrestaurants do my friends like?” - Mark Zuckerberg At Techcrunch Disrupt September 11, 2012
  • 9. Deliver great service. Give customers something to talk about. The importance of brand is not entirely going to disappear; but your value as a brand is going to be about service performance and delivery capability. The brands that will have high advocacy are those that deliver on the promise. The brands that suffer will be those brands that say, “We’re fantastic”, and then show by their actions that they’re not. - Brett King
  • 10. Listen to what customers are saying. “We are happy to take recommendations from friends, so as long as it’s not overt.” - Brett King
  • 11. “The role of banks as the financial expert has been replaced by ‘word of mouth’ peer conversations…the rapid emergence of social media in parallel with therise of mobility has seen customers increasingly turn to their peers for information and advice, rather than to financial experts in banks.” - PricewaterhouseCoopers (2011)
  • 12. How valuable Is word of mouth?• The value of any one customer does not reside solely in what that person buys• How your customers feel about you and what they are prepared to tell others can influence your revenue and profit just as much“How Valuable is Word of Mouth,” Kumar, Petersen, Leone: Harvard BusinessReview, 2011
  • 13. How valuable Is word of mouth?• Ideally, a company that wants to know a customer’s full value will include a measure of that person’s ability to bring in profitable new customers• Nearest most companies get to establishing the value of a customer’s referral power is some gauge of the individual’s willingness to make referrals (e.g. Bain & Co., Fred Reichheld “Net Promoter” Score)
  • 14. Method• Polled 9900 Telco customers, 6700 Financial Services customers about referral intentions• Then tracked customers’ actual behavior and behavior of the referred customers over time
  • 15. Results
  • 16. “Marketers spend millions of dollars on elaborately conceived advertising campaigns, yet often what really makes up a consumer’s mind is not only simple but also free: a Word of Mouthrecommendation from a trusted source. A Word of Mouth recommendation is the primary factor behind 20 to 50% of all purchasing decisions.“ - McKinsey Quarterly, April 2010
  • 17. Word of Mouth: The Keller Fay ReportGeneral Findings
  • 18. Research goals• What is the influence of word-of-mouth recommendations in the retail category?• Are word-of-mouth recommendations more or less influential at different points during the consideration and purchase lifecycle?• Is there a difference in the impact of solicited vs. unsolicited recommendations?
  • 19. Who is The Keller Fay Group?• The first research-based marketing consultancy focused exclusively on word of mouth• A few nuggets from The Face-to-Face Book: • It’s an invaluable tool for marketers who want to spread the word about their products and brands faster than the speed of Facebook and with far greater impact. • In-person social networking, not online marketing, is the secret to soaring revenues. • 90% of recommendations that lead to consumer action happen offline.
  • 20. Methodology• RewardStream commissioned Keller Fay to study how recommendations affect purchases in Banking, Vacation Travel, Communications, Subscription Entertainment, and Financial Services categories.• The survey was conducted among a total sample of 1,274 adults ages 18-59 who had purchased, applied to, or subscribed to a new product or service in the past 12 months.
  • 21. THE OVERALL IMPORTANCE OFPERSONAL RECOMMENDATIONS
  • 22. Recommendations are frequent Recommended a product or service to Made a purchase based on a someone recommendation Never Never 1% 1% Rarely Rarely 6% Very Often 7% Very Often 11% 16% Sometimes 33% Sometimes Often 42% Often 40% 43%
  • 23. Recommendations impact more purchases than any other source % of purchases influenced at any purchase stage, all categories A personal recommendation 40% Past experience 32% Something I saw in a store/office 19% Online consumer review websites 17% An advertisement in a magazine, newspaper, or online 17% Price comparison websites 15% A commercial on TV or the radio 14% Something on a package, flyer, or brochure 10% Over 20% of responses of An article in a magazine, newspaper, or online 9% “Something Else” include a reference A TV or radio program 6% to price, cost, an offer, or sale. Another type of website 5% Other items include convenience or Online blog 4% need, or general references to family Another type of ad 3% and friends. Social media site 2% Something else 22%
  • 24. Face-to-face communication is the predominant way to make arecommendation % of purchases influenced by recommendations by mode at any stage, all categories Face-to-face 82% Over the phone 15% Via e-mail 5% Via SMS/text 1% Via IM/chat (e.g. AIM, GChat) 1% Via Facebook or Twitter 1% Via another social media site (e.g. Google+, Tumblr) 1% Some other way 6%
  • 25. Recommendations are evenly divided betweensolicited and unsolicited % of solicited and unsolicited recommendations for specific purchases by purchase stage, all categories Solicited Recommendations Unsolicited Recommendations 55% 47% 46% 44% 44% 37% While becoming aware of a While researching various While preparing to purchase specific brand options
  • 26. Across all stages, recommendations aremost influential in purchases % of purchases influenced by purchase stage, all categories Recommendations Advertisements (Net) Online (Net) In a Store (Net) Nets defined as follows: 40% Online (Net) • Online consumer review websites 35% • Price comparison websites 28% • Another type of website 30% 26% 26% • Online blog • Social media site 25% 23% 23% 18% 19% Advertisements (Net) 20% • A commercial on TV or the radio 17% 13% • An ad in a magazine, newspaper, or 15% 14% online 17% 8% • Another type of ad 10% 5% In a Store (Net) • Something I saw in a store/office 0% • Something on a package, flyer, or brochure While becoming aware While researching While preparing to of a specific brand various options purchase
  • 27. WORD OF MOUTH:FINDINGS FOR THE FINANCIAL SECTOR
  • 28. Financial sector highlights1. For financial products and services, recommendations have a far greater influence than advertisements across all stages of the purchase lifecycle.2. Rewards are effective drivers for financial services and products, both for customers making the recommendation and for those receiving the recommendation.3. People are more likely to seek expert advice for financial services and products than for any other category.
  • 29. Purchase are influenced by recommendations much more thanadvertisements
  • 30. Rewards are effective drivers for both referrers and referees
  • 31. More people seek expert advice for financial products andservices than any other category. % of people likely to look for advice from different types of people for specific types of purchases Somebody Close (Family/Friends) Distant Friend with Experience in Category 52% 38% 10% A financial purchase/service (e.g. bank accounts, mortgages)
  • 32. Percentage of purchases influenced by recommendations
  • 33. Research takeaways• Word-of-mouth recommendations are a strong driver of consumer purchase behavior at all stages of the purchase lifecycle, regardless of purchase category.• More people seek informed recommendations for financial services products than in any other purchase category.• For financial products and services recommendations are far more influential than advertisements across all stages of the purchase lifecycle.• Verbal referrals are significant driver of new customers.• Your most valuable customers might be ones who refer you. Do you know who they are?
  • 34. Case Study: First West Credit Union’s“Referral Perks” with Bryan Mavrow
  • 35. First West Credit Union’s storyScope: multi-brands, Envision Financial, Valley First,Bank.Borrow.Insure.InvestSize: 3rd largest Credit Union in BC, 170,000 members,1,400 staff, 37 branches, $6.7B assets under managementMission: To make a meaningful difference in the financiallives of our members
  • 36. Problem: it’s tough to get new credit union members• Banking is competitive• Products are ubiquitous• Customers are loyal | Loyalty is Habitual | Pain points cause switching
  • 37. Therein, is the opportunity• We’re not a bank: Act Local• We’re differentiating ourselves: Keeping it Simple™• We rate very high on intention to recommend…
  • 38. So let’s make it simple to recommend• SPARK™: stand alone, low maintenance, simple• Social Media based: our demographic market focus• Easily scalable across the brands
  • 39. Ready, set, launch• Figuring out our customer key• What to reward with?• Get the brand right first!
  • 40. What’s next• Results will be?• Testing rewards: cash versus community giving• Internal platform for staff• Drive member awareness
  • 41. Have a question?• Use the chat window in GoToMeeting to submit your questions throughout the session; we have left time for Q&A at the end of the webinar• If we don’t get to your question during the session, please send questions directly to amberlie.denny@rewardstream.com
  • 42. ContactAlexandra Best Bryan MavrowVP Marketing SVP MarketingRewardStream First West Credit Unionalexandra.best@rewardstream.com bmavrow@firstwestcu.ca604.282.7549 Connect with us! Facebook.com/RewardStream Twitter.com/RewardStream