Twenty years ago, most bank marketing managers did little more than manage the bank's advertising. Senior bank management viewed the marketing function as primarily advertising-driven for one simple reason: the vast majority of marketing budgets were allocated to media advertising.
Ten years ago, many marketing departments began to grow in size and influence as marketers assumed both sales and marketing responsibilities for growing branch networks. Retail bankers and marketers were, it seems, often kindred souls. In addition, many banks also asked the marketing function to assume new CRA, product development and pricing responsibilities.
Today, sales management has been moved from the marketing department to the line divisions of many commercial banks. Frankly, this is as it should be. It is the line divisions, not the marketing department, that have the ultimate responsibility for creating new customers and retaining current customers. However, this change in responsibilities has left many marketing departments in search of a new mission. While advertising and promotions, customer communications, public relations, market research, product management and other responsibilities are still housed in the marketing department at most larger U.S. banks, many marketing managers are frustrated--beyond belief--at their lack of short- and long-term planning responsibilities.
Marketing is considered a traditional career path to the executive suite for the up-and-coming young manager in most large manufacturing, distributing, wholesaling and retailing organizations. But, with few exceptions, this is rarely the case in banking today. That's because the banking and finance industry is still a numbers-driven environment--and because marketing is still considered a "soft, support function" in banking, marketing is often a fringe player in the senior management structure of most U.S. banks. Hence, marketing also plays a relatively small strategic planning role.
The fault, if there is blame to be assigned, resides squarely with most marketing managers.
Using Information You Own
While the lion's share of the marketing budget may still be allocated to advertising and promotions, the majority of marketing managers spend, only a small percentage of their time managing the promotional function. Rather, most marketing managers spend their days interfacing with other functions, collecting information and analyzing data-branch performance, market research, competitive analysis, product and pricing patterns, etc. Yet somehow, many marketing managers have not been able to successfully integrate this information into the bank's decision-making process.
For example, most all larger financial institutions have an in-house database called a Marketing Central Information File (MCIF). This database usually resides in the marketing department and contains a staggering amount of information about the bank's customers and markets. In fact, the MCIF is usually a far more reliable customer relationship information tool than the customer information files that most banks operate manually.
An MCIF can profile the customer base and assign profitability to accounts, product types, relationships, branches, regions, line divisions and even individual officer portfolios. In addition, the MCIF can help predict seasonal buying habits, identify which customers are most likely to purchase additional products and services, help identify new branch locations, aid with Community Reinvestment Act analysis, analyze repricing and new product opportunities, and much more.
As an asset/liability management tool, MCIFs can calculate in seconds what used to require days or weeks to research. In short, the MCIF can be the bank's single most powerful management information tool. Yet the actual use of MCIF data often falls short of its potential--usually because the capability resides in the marketing department, not in the finance department. While the MCIF is primarily a marketing management tool, the system can be the bank's single most important in-house strategic planning tool as well.
Unfortunately, at far too many banks this capability is a well-kept secret. The reason is easy to document: All too many marketing managers do a poor job of selling their in-house consulting services to the various functions they supposedly support. Hence, executive management continues to view the overall marketing department based upon its budget allocations for advertising, rather than on the information and analysis the function can deliver.
The Planning Process
The first step in any planning process is the assessment of the current internal and external environment. The marketing department usually has more information available at a moment's notice than any other function within the bank. The planning process should involve an assessment of the current customer base, market areas, competitors, product performance, branch and line of business performance and more. In short, it should be marketing's responsibility to paint a current situational analysis of the bank's performance within the framework of its various environments.
As a second step, the marketing function should aid in assessing the potential of strategic target markets, competitive actions and product/pricing opportunities. But within many marketing departments, the frustration level is running high. Marketers are often strategic thinkers who see the world a bit differently than many traditional bankers. Frankly, this difference is an organizational strength which is too often left untapped.
A sophisticated bank marketing manager usually works with most, if not all, of the bank's line divisions, support functions and regional operations. The marketer is usually in an excellent position to assess current performance and future opportunities. From this vantage point, marketing managers can often see the world as it is--and as it can be.
All too often, banks fail to explain objectives and strategies to the very people who must implement their strategic plan. So, if the marketing department is the primarily resource for external communications to customers, the general public, investors, the press and others, why not utilize the function's skills to tell the bank's story internally.
Sadly, many bank employees first hear about a new product, a new promotion, a branch opening or even a newly appointed officer by reading the news in the daily paper. By communicating with the press and the general public before informing officers and employees, bank management is--in essence--saying that the bank's staff is far less important than the external public.
Solving the internal communications problem goes far beyond publishing a monthly newsletter or using e-mail more effectively. The solution requires that the bank's marketing function be involved from the get-go in the decision-making process.
