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Data Rich, Insights Poor: Why Banking Needs Analytics

 

January 8, 2015 | by Stephen Messer, Co-Founder, Collective[i]

 

 

The 2015 champions? Banks following a B2C model: insight-driven, one-to-one customized selling.

 

 

In 1992, Bill Clinton was elected the 42nd president of the United States, and as such arguably had access to more intelligence than 99 percent of the world's population. By contrast, the average farmer in Sub-Saharan Africa at the time had to trek 18 miles just to reach a phone.

 

Fast forward to the present day and that same farmer, now with his own cell phone, has a greater volume of data at his fingertips than President Clinton did during his tenure.

 

From America to rural Africa, the intelligence age is upon us. IBM reports that 90 percent of the world's data has been created in the last two years. To put this in context, every day the average person produces enough content to fill six New York Times Sunday papers and is exposed to 34 billion bits of data — the equivalent of two full-length novels — according to the University of Southern California.

 

For sales professionals, this means an inordinate amount of time and energy is spent each day weeding through information, rather than talking to clients and potential buyers. Between emails, texts, CRM reports, news alerts, instant messages, phone calls, Facebook and LinkedIn, it's easy to get lost in simply the housekeeping of data.

 

Plus as the amount of time for focused selling is decreasing, buyers' expectations are increasing.

 

According to a study by Pardot, 70 percent of business-to-business (B2B) buyers now expect targeted content at each stage of the buying process. Forget form emails and canned voicemails — they want relevant information that solves their challenges near-instantly. The same study found that 77 percent of B2B buyers don't trust that sales representatives are adequately prepared to engage them.

 

 

Time for One-to-One Selling

 

While B2B sales and marketing struggles, consumer marketing has already adjusted to one-to-one selling and so can be treated as a guide.

 

Thanks to Big Data champions like Amazon and Facebook, it's customary for tailored advertisements to follow shoppers on multiple sites for several days. Those running shoes you Googled? They're suddenly popping up everywhere. Amazon's home page adjusts automatically based on recent purchases, and its recommendations adapt accordingly. These companies are experts at using your data to better sell to you.

 

Like B2B buyers, consumers want content designed for them personally, not for the masses generally. As consumers, when something isn't targeted to us, we quickly discard it.

 

And yet, in most B2B sales organizations, cold calling or copying and pasting email scripts is still common. Rather than implementing sales processes that are data-driven, decisions are justified with a gut feeling or weighed against past experience. Many banks are still conducting foolish sales blitzes with generic brochures and coffee mugs every week, just to get feet on the street.

 

Compounding this issue are challenges such as data biases, false data or futile reporting.

 

Even when organizations believe their data is accurate, it's often not. A staggering fact: CSO Insights reports that typical sales forecasting is less accurate than the average win rate at a casino craps table (46.5 percent vs. 49 percent, respectively). That's a hefty gamble.

 

Lead the Industry

 

While much of the financial industry is stuck, there are market disruptors pushing for change. Bitcoin, Square, Lending Club, Wealthfront, Betterment, Indiegogo —just to mention a few– have each learned what many banks haven't yet: that applications and technology can be trustworthy time-savers, devoid of bias. At these companies, data and information guide decisions, rather than instincts alone. And they have been successful: Lending Club is growing at a rate of 150 percent per year, having issued several billion dollars in loans since its inception in 2007.

 

The most competitive financial institutions of the future will need to perfectly combine human strategy (honed instincts, experience) with data-derived insights to drive sales forward. B2B buying behavior will continue to adapt to the consumer market. Banks and credit unions need to follow suit to stay relevant.

 

Create a Tactical Action Plan

 

There are steps that financial institutions can take to become more insights-driven and promote a one-to-one selling process. These include:

 

 

Most banks' sales organizations still aren't equipped with even basic tools like CRM, let alone insights about clients or prospects that can be used to inform a one-to-one sales process. This lack of investment in analytical sales tools can leave managers and sales professionals at an extreme deficit when they're selling against organizations with buyer insights at the ready. A beautiful branch, a helpful sales team and a free toaster are no longer enough to sway prospects. You must consistently deliver timely, personalized messages and promotions to every potential customer, and arming your team with data-derived insights is the only way to do that well. If there isn't a line item for ‘data or analytics' in your 2015 budget, it's time to add one.

 

 

We've all come to expect personalized marketing and targeted content from organizations we interact with in our consumer lives. Netflix —which doubled its profits in 2014 —uses data on client viewing behavior and search patterns to drive its strategy. Viewers are automatically served content that matches their preferences, making for a personalized viewing experience that engenders loyalty and trust.

 

Amazon started in a garage in 1994, competing against traditional retail giant Barnes & Noble, which was grossing more than $2 billion annually and offered a pleasant café experience in-store. However, using CRM and a data warehouse running on Linux, Amazon was able to generate analytics that garnered buyer insights. These insights led to targeted product recommendations, personalized Amazon homepages and—in 2013—$25 billion in sales (compared to Barnes & Noble’s $75.7 million). Despite its lack of a cozy in-store experience, Amazon’s acknowledgement of consumers’ need for personalized content swayed buying behavior.

 

On a B2B level, finance start-ups are listening to your customers' needs and disrupting the marketplace. Payment applications Venmo and Apple Pay are built on a methodology that seeks to simplify personal finance and retail spending. Lending Club and Kickstarter are thriving in small business lending because they're transparent and easy to use. These organizations are seeing such success because they solve for many of the challenges buyers have with traditional financial institutions.

 

With the onslaught of information and new products available at the click of a mouse, cold-calls, emails and marketing brochures can get lost in the shuffle. As difficult as it is for you to hear your buyers, it's equally —if not more challenging — for potential buyers to hear you. Financial institutions that commit to a one-to-one approach, where buyers receive customized and relevant content, will gain competitive advantage and be heard through the noise.

 

 

Like B2C marketers, your sales managers must be equipped with personalized insights into buying patterns and preferences. Are customers responding the way you'd hoped to a sales strategy? Why not? What is your prospect confronting that could affect the deal? Being able to preemptively answer these questions is key to making your efforts at a one-to-one process seamless and effective. Any tools you use to facilitate this process must cut through the daily noise and information overload, while not taking away from sales managers' already minimal selling time.

 

For example, at Collective[i], we've created an entire subcategory of analyses designed to enable extreme efficiency. Each analysis we provide either saves time, generates revenue or both. For instance, there is one analysis that aggregates news on current events from various on- and offline sources, providing valuable information about a prospect within moments. To visualize the impact of this, imagine preparing for a call by visiting one page rather than spending hours researching multiple channels.

 

The trick is to find the right tool that operates holistically within the workflow. Put simply, if it's not user friendly, it won't get used. Gartner supports this assertion. It found that 60 percent of business intelligence initiatives fail due to low user adoption. Further, three stated reasons that users don’t adopt business intelligence tools were difficulty of use, a failure to perform as promised and a lack of perceived relevance or value to their work.

 

The third challenge —perceived relevance —requires a cultural shift to a more data-driven organization so users can understand the full impact insights have on the sales process.

 

 

 

Reshaping your sales culture so that it focuses on insights can seem intimidating. However in some cases, it merely means modifying something you're already doing. Take coaching, for example. Right now it is likely an impromptu activity squeezed in when time permits without much planning or forethought. But when coaching changes to an insights-based, data-backed conversation, it becomes a core sales management activity—and for good reason. According to CSO Insights, the more effective and actionable the coaching strategy, the more likely organizations are to achieve their revenue goal and retain employees. When there is a formal coaching structure in place —one that uses insights especially—organizations, on average, achieve 95 percent of their revenue goal versus 86 percent when an ad-hoc coaching strategy is used. Managers that spend three or more hours facilitating action-oriented coaching exceed their goals most often.

 

Further illuminating this impact, Harvard Business Review reports "clarity of task" as the biggest motivation for salespeople. Just as buyers want targeted sales content, so too do sales professionals desire coaching that is focused on their specific skillset. In fact, a clear understanding of revenue-generating goals and the necessary sales activities required to achieve those goals is three times more effective at increasing salesperson motivation than compensation and payment plans. Using analytics to inform coaching practices provides a new level of task clarity and thus an increase in motivation. Considering that CSO Insights reports 50 percent of organizations take 6 months or longer to properly onboard new sales professionals, unmotivated team members primed for departure can create a noticeable loss in sales force productivity and revenue generation.

 

 

Training is an essential component to making the cultural shift to an insights-driven sales organization. This is especially true when algorithms and new applications are expected to override people's natural tendency to trust human judgment. Colleagues must be untrained from their reliance on gut instinct when making decisions, but this can only be achieved when insights are provided alongside education.

 

At Collective[i], we employ a unique one-to-one education model. While our solution is intuitive to use, each client receives training around analytical management practices and has the opportunity to get comfortable with its capabilities. Though Collective[i] is a finished solution—no customization or client work is required to launch—our approach backs Gartner's assertion that a constructive, tailored education establishing an application's relevance is vital to gaining trust and adoption.

 

In today's intelligence age, where information is king, financial institutions must invest in insights that make a one-to-one sales approach possible. The bad news is that banking is an industry that's been slow to adopt this mentality. The good news is: that makes it an industry still prime for disruption.

 


 

Stephen Messer, vice chairman, Collective[i]

Collective[i] is a network-based, next-generation approach to extracting insights from data. Our finished applications pair data from the tools our clients already use with network-derived intelligence and science-backed analyses to provide — instantly and beautifully — critical answers that sales and marketing operations can act on with confidence. Visit us at www.collectivei.com or @Collectivei. For more information, find us here: www.collectivei.com or @collectivei.

 

Stephen Messer is the vice chairman of Collective[i] and a founder of the company, along with Tad Martin and Heidi Messer, his sister. Prior to Collective[i], Stephen and Heidi co-founded LinkShare Corporation, a host to one of the world's largest online affiliate networks, and later sold it to Rakuten for $425 million. Stephen is a recipient of the Ernst & Young Entrepreneur of the Year Award and a frequent speaker on entrepreneurship, sales and the future of the Internet.