Financial Facts: The Web Wins Customers' Research and Buy Ways
Customers are doing their research when it comes to financial services, according to a group of panelists at Forrester's Finance Forum 2005 last week. They shop around for new products, rather than remaining loyal to their current institution. "It used to be," when marketing to these customers, "stick some ads in the paper and throw some direct marketing in there," said Catherine Graeber, vice president and principal analyst for Forrester. "Ten years later...we're not in Kansas anymore. The Web creates a new path for consumers to research and buy financial products."
Forrester research reveals that cross-selling to existing customers isn't guaranteed or even common for financial services. The firm found that 46 percent of insurance company customers will consider their current provider for their next need, 44 percent of brokerage firm customers, 38 percent of credit union customers, and only 28 percent of banks. "Each time a new product comes about, consumers feel the need to start researching and start shopping all over again," Graeber said. "So just because you've got them doesn't mean they'll use you for other things."
Companies are ranked by how much they bid for Web placement; Graeber did a real-time search and found that the top company listed under free checking
pays $1.49 per click, the first for auto insurance
pays $12.55; and the first to pop up under online trading
pays $15 a click. So how much is too much, she asked, and how important is rank really? Justin Merickel, finance category manager for Yahoo! Search Marketing, said rank matters, but he recommended testing the volume of hits against the cost effectiveness. Imran Kahn, director of marketing--search, affiliates, and online media for E-LOAN, agrees. "Even if a keyword costs you fifty bucks, if it delivers you a positive ROI, go for it," he said. However, he stressed keyword research and development is an ongoing process.
Many customers do their homework via the Internet, but most of them end up visiting institutions' branches before making a decision. "When we ask what stopped you from buying online, they said, 'I needed validation that I was doing the right thing. I needed some kind of reassurance,'" Graeber said. "The answer? Drive consumers to your site to research online, then give them the right path to buy online."
The way to do that, according to the panelists, is through search marketing. Yahoo! and Harrisdirect studied the impact of display advertising on search behavior. They found it increased brand awareness by 7 percent, brand familiarity by 32 percent, and purchase intent by 15 percent. But what they really wanted to understand was how customers use search terms to find information about financial service providers, Merickel said. Most people conducting research online will purchase the product during the same search session, and 75 percent will do it within the same week. Additionally, these types of customers refine their search terms significantly less from their original queries than people looking for other types of products, so having the right search term is essential.
Financial institutions must understand their success metrics. "Manage keywords as a portfolio of stocks," Merickel said. "You want a positive portfolio of keywords--not necessarily each
keyword." He also suggested checking for misspellings and similes and interviewing customer-facing employees to find out how customers refer to the company's products.
Organizations also need to have the right ghosts in the machine. E-LOAN's employees in charge of these tactics all have backgrounds in computer science, statistics, or economics. "You need quant jocks to manage search engine marketing," Khan said. "Not traditional marketers with soft skills."
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