Marketing research in banking is done in a variety of ways, all with their own advantages and disadvantages. One of the most popular methods nowadays is online surveys. No matter what kind of research techniques you choose to use, the data they generate should be used by banks to make strategic business decisions or introduce new products or services. Marketing research in banking has many useful applications including providing data on the effectiveness of an existing product, comparing consumer preferences across different classes of products, identifying potentially profitable new products & services, and collecting feedback from customers to improve the quality of service.
Conducting market research for your bank or credit union offers several advantages.
It provides you with high-quality and evidence-based insights which help guide your operational and marketing strategies.
There are plenty of market research options for banks and credit unions.
All methodologies leverage feedback from the most important segment of all, your customer or member.
But what type of market research is best for your financial institution’s goals and objectives?
This blog post will walk through common projects our team conducts with our bank and credit union clients on a regular basis.
Banking Market Research Option #1
Online Banking User Experience (UX) Research
We don’t have to tell you about the shifts in banking from in-person and telephone experiences to digital and online touchpoints.
As a result, your online banking services and mobile apps are now essential pieces to your customer journey.
User experience market research provides you actionable improvements to enhance your website and mobile app to ensure your customers can accomplish their mini day-to-day goals without being frustrated.
What is the process for UX market research for banks?
UX research is a 2-pronged approach including:
- Website audits
- Traditional interviews
Website Audit
The first piece is a UX evaluation or audit of your website which analyzes everything from design to flow to the structure.
Traditional Interviews
The follow-up piece is traditional interviews with real customers as they browse your website and app.
The research interviewer engages with the customer and asks specific questions digging into the reasons why actions take place.
For this phase, screen sharing technology is used.
This UX research meshes perfectly with your Google Analytics data and has been shown to produce an ROI upwards of nearly 700% of the UX cost to your financial institution.
Changes suggested from the UX are actionable and impactful immediately.
Banking Market Research Option #2
Customer Satisfaction and Loyalty Surveys
Customer satisfaction and brand loyalty surveys are the most basic forms of market research.
These types of methodologies measure key metrics such as:
They identify key drivers which impact loyalty to a financial institution.
This survey also aims at measuring more specific metrics such as usage of channels, satisfaction with tellers, satisfaction with phone support, and more.
Customer satisfaction surveys are longitudinal in they should be completed every 6 months, 12 months, or 18 months.
These continual benchmarks help your bank or credit union understand how the dial has moved over time and changes are made based on the results.
Banking Market Research Option #3
Branding Focus Groups
A type of qualitative research, banks and credit unions looking to conduct focus groups often do so with the goal of exploring perceptions and mindsets.
The structure of the groups can be designed to meet any demographic or segment of customers or non-customers.
In branding focus groups the idea is to explore word associations of financial institutions including:
- Competitors
- Test marketing messages
- Creative for advertising
- Awareness and perception of the institution
- Factors of choice for financial institutions
- Sources of awareness for banks and credit unions
These focus groups provide you with in-depth anecdotal feedback which is used to improve your marketing strategies to ensure every dollar you spending on advertising is driven by customer feedback.
Banking Market Research Option #4
Image and Awareness Surveys
Similar to brand equity focus groups, image and awareness (I&A) surveys aim to not only explore brands but also measure perceptions (positive, negative, neutral).
These are conducted through random samples to understand total awareness figures for your financial institution.
The same questions are asked about your competitors.
In doing so, the results show a clear comparison to your major competitors.
It also showcases what differentiates banks and credit unions from each other from the perceptions of the customer.
Lastly, the insight from image and awareness survey identifies which advertising channels are most remembered as well as any messaging used in your advertising.
Results can be broken down by age groups, geographies, and other demographics.
At many community banks, marketing planning is the outcome of a periodic meeting to discuss the bank’s marketing efforts and product specials being promoted by direct competitors. While the process does provide short-term structure for decisions, it is reactive and lacks a strategic foundation.
Planning at its core is strategic. A proactive investigation of opportunities, not a reactive posture based on current market conditions. The simplest way to identify opportunities is to conduct relevant research.
Research is, in most organizations, an overlooked resource when plans are being developed. The reason might be cost, but more likely, it is the fact that research benefits are misunderstood by management. For many bank managers, research is the unwelcome telephone survey they receive during an evening meal. That is not the beginning or the end of effective research.
Structure your discovery
Well-designed research begins with the analysis of available data and migrates to intentional inquiries with targeted audiences. Think of it as a discovery process. What do you need to know about your customers or market? The answer might lie in an examination of current customer purchase behaviors and product possession. Examining your existing relationship data might be exactly what you need to effectively identify the best market segments for a new product. There is no need to conduct market surveys if data management provides the information you need.
Begin with objectives
Research is only required when additional information will improve the quality of a decision. Some research is conducted to determine what to do, while other projects are directed at how to do it.
The results should be focused on objectives set before the research begins. If a decision has been made to introduce a new product, then utilize your research to gauge customer reactions to the service.
The research results can improve the focus of your product introduction. If a new market area is on your list, utilize your research to examine the competitive environment and financial solutions not being delivered effectively by other institutions.
Provide a foundation for management
Let’s use Cross Bank as our example. The Cross Bank management team is investigating the placement of a new branch in an adjacent community. If they have already purchased the property and started developing the branch floor plan, then the research opportunities are driven by questions about relationship acquisition in the immediate market area. However, if the bank’s management team is genuinely interested in whether to even enter the market with a new branch, research can provide an excellent foundation for their decision.
Cross Bank could employ several different research resources to evaluate the community and potential branch locations.
Relationship Information Management. An internal examination of Cross Bank’s customers can identify if the bank already possesses relationships in the proposed trade area. If customers are present, their product utilization is an excellent predictor of relationships that could be acquired. A bank’s future customer is typically a clone of existing customers in the same market area.
Image and Positioning Research. Using telephone surveys for data collection, image and positioning research can help examine the top-of-mind awareness for Cross Bank and competitors in the market area. The investigation can be expanded to evaluate reputation factors and investigate consumer propensities to change financial institutions.
Focus Groups. Conducting focus groups with consumers or businesses in the new community could provide important insights about competitors with established market share. Competitor strengths and weaknesses or consumer preferences are all easy to investigate in a focus group environment. By profiling your focus group participants, you can capture the insights applicable to your desired market segments.
Improve your decisions
All research methodologies have a “best practice” application. Mail surveys perform well with existing customers and fail to produce responses with noncustomers. Online surveys are inexpensive to execute, but include a passive design for data collection. They produce excellent results with employees and customers. Clarifying your research objectives is the only way to ensure that you are selecting the most effective research methodology.
If you want to know what your customers are thinking, who better to ask than your customers? Research, properly designed, can provide actionable information superior to the general observations typically shared during planning meetings. The kind of information that removes the guesswork you get when creating a marketing plan based on last year’s results plus 10 percent. Adopt a strategy that places research in your bank’s budget every year.
Create accountability
Not every performance measurement needs to come from the balance sheet or income statement. Research provides an additional layer of information to examine success and create accountabilities.
Consider utilizing a customer satisfaction survey to determine if corporate communications and staff training are having a favorable impact on customer experiences. Utilize mystery shopping evaluations to collect customer assessments of the service they receive. You can even create accountabilities for your managers by using an employee survey to create an index to track employee engagement. The options are numerous and more affordable than your might think.
Conclusion
The banking sector is facing a lot of problems as people’s attitudes and behavior towards borrowing and repaying loans as well as investing and hoarding money are changing rapidly. Institutions like banks should keep watch on such changes and keep reviewing their policies. They can use marketing research to do the job.