Omnichannel For Issuers?

Omnichannel isn’t just a retail phenomenon. Issuers have a big a challenge – and opportunity – in adapting their customer acquisition and servicing plans to a new cross channel customer, says SVP of Global Customized Marketing, Margot Vaughan. Vaughan sat down with MPD CEO Karen Webster to share some of the best practices that she says need to be baked into issuers’ strategic plans.

KW: The occasion for our chat today is to discuss a whitepaper that you’ve written recently on issuers and the omnichannel customer. What is the issuer perspective and challenges with respect to omnichannel?

MV: Where the issuer faces a challenge is in looking at multiple channels and platforms that they would be using to speak and respond to their customers. As you’re aware, there’s retail side and the card side, and they can be very different with different objectives. On the card side, they would look at how to acquire a customer across the many channels that are available to the customer and how they would or could use those channels.

For an existing customer, how omnichannel would work is related to how issuers reach those customers. So let’s say that today is by providing an email to them. The customer could respond in a number of ways: they could come into a branch or go onto the issuer’s website. If that happens, then the issuer would have to have an application to keep that customer engaged. That’s omnichannel marketing – it’s going across multiple channels and platforms.

In doing so, what’s critical for an issuer and for a merchant is that the messaging is consistent. So in acquiring an existing customer, issuers and merchants must keep the offer and features and benefits the same so there’s nothing that disengages or confuses the customer. The consistency and the seamless execution of that is really the guts of omnichannel marketing.

KW: On the merchant side, a real driver is the mobile device and the ability to be connected and move between connected devices. Is that also what’s driving the issuer interest in omnichannel?

MV: I think mobile is definitely a key channel for issuers. What we recommend, which is also mentioned in the whitepaper, is responsive design. That means all devices would have similar messaging – whatever is done on desktops and tablets would also be done within mobile.

If you were to look at some statistics on digital marketing, you’ll see interestingly that financial institutions are the second highest spenders, following retailers, with the third highest being automotive. Also, a key component of that digital spending for FIs is mobile spending, and it’s not surprising. Think of what you see on TV today – ads with people depositing checks or receiving alerts using their phones. FIs are very much in tune to the importance of mobile devices and how they can leverage that with their customers.

KW: So we have smartphones and we download apps. And I think there’s a school of thought that says that’s really where the emphasis needs to be in terms of communicating with consumers, whether you’re an issuer or merchant, versus putting money into enhancing the digital experience online. Do you think apps weigh more heavily than the digital browser, or do they both have their place in the marketing mix?

MV: I think right now, both do, but the direction is going mobile. We’re seeing more use of mobile, and that’s not surprising. For example, for credit card completion rates for applications – applying for a card – the number one way would be using the internet. Second would be direct mail, and right behind that is mobile.

Mobile has kind of snuck up on credit card issuers, and now some issuers drive their customers right to mobile and don’t even talk about going online.

KW: How much of an influence is cost in making these decisions about the marketing mix and omnichannel decisions? Are issuers looking to do things more efficiently and cost effectively, and does one channel or method help them do that more so than another?

MV: Absolutely. Financial institutions are always looking at ways to reduce their costs, and certainly the digital space provides that to them. What I advise is that issuers test, and look at where they’re getting the best ROI. It’s not just when businesses acquire customers or the cost per account, it’s looking at if customers are engaged, using their cards, or doing a balance transfer and spending at levels that they want. From the existing customer’s side, are those customers using the card as the issuer would want them to use it? Looking a customer’s checking account, how are those customers using it and are they taking advantage of offers?

It’s about cost and how issuers can save, but it’s also about where their customers are and how they behave. If customers are using more online channels, something that’s definitely happening today, then an issuer has to determine the most cost effective way to use that channel.

KW: You mentioned that omnichannel marketing is different than the basic marketing that issuers have relied on for many years. What makes it so different aside from the fact that they’re using different channels? And what mistakes are issuers making that you think you can help them avoid? 

MV: To answer the first question, it is definitely different in the channels being used. In the past, in financial services, we focused on the branch or direct mail, or maybe a little bit of telemarketing. Now, we’ve got all of those. Also what was important back then was that we were pushing out messages, mass marketing to customers without looking at segmentation. Omnichannel gives issuers the opportunity to segment their customers and look at how they can customize theirmessages to existing customers more so than non-customers, enabling them to provide personalized messages.

On to the second question – I’m not sure I’d say there are mistakes, but I’d say that some FIs might not be as ready to adopt many of the new channels. So we can help them in avoiding mine fields that they could encounter. In today’s environment, the subject line on emails is critical – you have to get customers engaged, even via SMS. So we have techniques that we use to get customers engaged and keep them engaged.

We also look at how, for example, for online applications, many customers become disengaged in filling them out. One of the mistakes I think we’ve seen, or where there’s an opportunity for improvement for issuers, is that many times they’ll develop an application and use it for a long period of time without putting themselves in their customers’ shoes. They need to ask if this is working as well today as it was when they originally developed it.

Because of the way the environment is changing, we strongly recommend that these applications are looked at and reenergized every 6-9 months. We also recommend usability labs, and how they’re compared to the competition.

KW: That’s a really good point. In the old days direct marketing via mail, it was the outer envelope that became so important. So many decisions were based on size, and what was on that envelope. Today it’s all about the subject line, but it’s also about making it a simple and less time-consuming process for consumers. What advice would you give issuers that are really looking to maximize their omnichannel marketing opportunity?

MV: They need to keep their message consistent – it has to be short and specific, telling consumers exactly what it is they’re offering to them. They have to get right to what the benefit is and how it will be a plus for the customer. That’s in emails, on the website when customers organic search, and it also ties in to online applications, as I mentioned earlier. A 5-step online application is way too long, and there needs to be real time correction. Some applications out there indicate that a state or zip code is wrong after the customer has completed it – this needs to be corrected immediately. Otherwise, they’ll lose the customer.

In today’s environment, we have to keep customers engaged and working with you to close the deal.

For more approaches and techniques on how issuers can get, keep and grow the omnichannel customer, download Vaughan’s whitepaper here.

Margot Vaughan
SVP of Global Customized Marketing, MasterCard Advisors 

Margot Vaughan is a senior member of the MasterCard Advisors Implementation (Managed) Services team, the professional services arm of MasterCard Worldwide, and is the global practice leader for the Acquisition Solution.

Margot is a seasoned financial services marketing executive with over 26 years in the financial services industry. She built the Acquisition Solution at MasterCard and has been responsible for Acquisition for over 10 years at MasterCard. Her proven track record includes direct mail wins with the leading US credit card issuers, product launches and relaunches, cross-sell programs and channel development. These successes were the cornerstone for the development of MasterCard Advisors Services.

Within Acquisition Solutions, Margot provides comprehensive marketing support to credit card issuers globally to acquire customers. Her solution delivers both strategic and practical support to improve issuers’ acquisition performance. The Solution supports all segments: Super Prime, Prime, Sub-Prime, Hispanic, and Youth across all channels; mail, online, branch, telemarketing, print, DRTV, and direct sales. Margot is recognized as a results-oriented, direct marketing expert within the financial industry.

The Acquisition Solution team has enabled financial institutions to acquire customers for both credit card portfolios and retail bank portfolios cost effectively and efficiently.

Prior to MasterCard, Margot worked with Citibank for 8 years supporting the Retail Bank business. Her career was launched with American Express where she spent 9 years in various senior positions.

Margot holds an MBA and an MA from New York University in Marketing and International Finance, respectively.