Marketing always has a sense of quality over quantity. This concept is especially true when it comes time to determine what individuals we want to communicate with. This leads to marketers spending a lot of time determining who should fit in this mold.
I get it though, you don’t want to bombard your members with so much communication they just stop listening to you all together. Along the same line of thinking, there is only so much of the budget set aside for marketing, therefore you need to reach out to just the members you think fit the perfect mold. I get it, I’ve heard all these road blocks before, but still I can’t help but wonder if the old sales motto: ‘the more, the better’ should be followed.
So, when it comes to determining what members should be marketed to, what is more important; quality or quantity? Many credit unions are concerned that over communicating with members will lead to high unresponsive levels. While this is a valid concern, the member will stop paying attention until they don’t.
I receive several emails a day from various companies telling me to upgrade my internet plan, take advantage of new phone options, and even reminding me it is time to order more dog food. All this constant communication has made it the new norm. But with all this constant communication, why are credit unions afraid of over communicating with members?
In fact, I receive roughly 2 credit card offers a week from various financial institutions. Granted, most don’t even get opened. But recently, I decided to actually open one and sure enough, on that particular day I decided to take action. The issue is, how do you expect to win the game of getting a new credit card loan if you don’t even show up? I had no previous business with the company that won me over. If my FI would have had a credit card promotion in my inbox that day, I probably would have gone with them, but they didn’t even show up to play. The large companies are not afraid to send out lots of communication, because they know in order to win the game, you have to at least show up.
The argument can be made that these large companies have the funds to communicate so much, and that their marketing budget is much larger than the average credit union. This is true, but is communication really as expensive as we make it out to be?
To explain, let’s look at some numbers for a hypothetical marketing campaign for auto loans. In our example, we will take an average size credit union with 7,000 members. The fixed cost of the marketing material will not change, such as how much labor it takes to create the email. Once you have these items created, the only thing the target audience has effect on is the variable cost of the marketing campaign. In this example, we will also use the variable cost of $0.02 per email.
Target audience: 1,000 members
Email Cost: $20.00
Total Variable Cost: $20.00
This is great, because we were able to email 1,000 members and it only cost $20.00. But what about the other 6,000 members that never received any communication about the auto loans? How confident are you that none of these 6,000 members have no interest in an auto loan? If only one member out of that 6,000 actually took action, their first month of interest would cover the additional cost. In example 2 we can see that for $120.00 more, we are able to communicate with the entire membership, and not wonder if any of the people originally left out would have taken action.
Target audience: 7,000 members
Email Cost: $140.00
Total Variable Cost: $140.00
Now I get it, emails are cheap. What about other marketing channels such as physical letters? At $1.00 per letter, the difference between the two target audience sizes would be $6,000.00. At this point were actually getting into some real cost associated with the target audience. But again, how many loans out of that group would it take to make up for the additional cost?
The point is, quantity is important when it comes to cheap communication. Credit unions should be emailing every member they have for every single marketing campaign they are running. The additional cost is very miniscule, and it only takes one additional loan to cover the cost. As the variable cost increases due to marketing channels, start utilizing data driven methods to determine effective target groups.
Every member should receive some sort of communication about the auto loan promotion. Then, build tiers to reach out to members that fit your ‘mold’.
Membership Size: 7,000
- Email Target Group
- Members targeted: 7,000
- Letter Target Group:
- Members targeted: 2,000
- Phone Target Group
- Members targeted: 200
In 2018, the reasons for not constantly communicating with members are starting to become invalid. Marketers need to focus on quality, but not when it comes to deciding who gets communicated with. Don’t be scared to constantly make contact, everyone is doing it. Don’t be scared of the budget restraints, communicate so much that the sales driven from it will cover the additional cost. And if you want to win, make sure you at least show up.