Digitise or die

A delightful digital experience is no longer differentiating, it's table stakes.

Andrew Carrier

Sep 29, 2024

Read on to learn why:

① Failing to deliver digital delight will lose you customers.

② Marketing should be as focused on client retention as it is on acquisition.

③ The FCA’s Assessment of Value report requirement is doing a great job.

④ AI continues to confound regulators.

⑤ KPIs are focused on the big picture; metrics zero in on specific tactics.

⑥ It’s time to reconsider automated prediction systems.

⑦ The AI backlash has begun.

📸 But first, flashback to last week when I told you that a distinctive logo trumps corporate synergy every time. This week, it seems the Magic Circle’s oldest firm, Freshfields Bruckhaus Deringer, ignored my advice. Apparently, the New York-based partners charged with spearheading the law firm’s US presence insisted on a more ‘global’ look - and the results are as uninspiring as you’d expect.

What's new

Investors are prepared to dump their wealth managers if they fail to embrace new technology, Finextra reported this week.

In short:

“A survey, conducted by investment tech provider Avaloq, found that investors trust the wealth managers that are able to incorporate technology into their offering. Two-thirds (67%) of respondents stated that the ability to see their investment analytics and portfolio visualisation were crucial to building trust with their advisers.”
“However, despite the finding, wealth managers are still reluctant or unable to use investment advisory tools with clients, stating that the tools are not suited to clients' needs and too confusing.”
“This disparity is more acute when looking at the UK where almost three quarters (72%) of investors note the importance of portfolio visualisation but only 50% of wealth managers use investment tech with their clients.”

Why it matters

① Losing your customers matters, we can all agree on that. And this survey is just one of three out this week that make one thing abundantly clear: losing customers is exactly what will happen to any financial services firm that doesn’t meet its customers’ expectations of a delightful digital experience.

In banking, a recent survey reports that almost all consumers now regard the quality of digital products and services as the critical factors in their selection of a bank – on par with security and customer service, and much more than interest rates, fees, branch availability or anything else. Similarly, research commissioned by CRIF revealed a shift towards digital banking among UK consumers, underlining a dropping interest in bank branch proximity. Only 23% of UK adults consider having a nearby bank branch important when deciding on a financial provider.

Digital isn’t a nice to have, it’s a must-have. Why then are the majority of UK-based financial firms risk-averse when it comes to new technology? There are tech-related pain points of course - the persistent lack of integration between systems, the inability to hide sensitive information and the difficulty of navigating systems - but demand from clients is only going to increase. If financial services firms want to remain competitive, they must digitise.

② What has this got to do with marketing, you might ask. It is notoriously difficult to measure the impact of a lot of marketing activity (see Media & Marketing below). Teams typically report metrics like reach, engagement, and - yes - leads. But even if your marketing is delivering plenty of new business, it will count for little if your client attrition rates are high. Keeping a client happy is easier - and less costly - than finding a new one to replace them when they leave. Marketing should be just as focused on client retention as it is on client acquisition.

What to do about it

Take action

If your marketing team is already involved in developing your digital client experiences from a branding, copy-writing and tone of voice perceptive, then congratulations. You would be amazed how many firms don't even do that. But there's much more to be done.

Your head of marketing should be responsible for - or, at the very least, consulted about - every single client touchpoint. Use your marketing team's expertise to ensure that the user experience is consistent with everything your brand has been until then, that it's easy and feels like it was designed by humans who want to help. Make sure it delivers on all the promises that have been made and that a human adviser is readily available if needed.

Have a chat with your head of marketing this week. If you’re not already doing so, there are two obvious improvements you could make together:

Involve marketing in client retention: Marketing should have a say in every single interaction a client has with your brand. This is very much part of keeping a client happy. Whether it be through events, relevant and valuable communications, or simply a delightful digital user experience, marketing has a critical role to play in ensuring that a client feels proud about their decision and - whisper it - might even recommend you to their friends.
Work customer lifetime value into marketing’s metrics: Most firms will have a stab at measuring return on marketing investment by producing metrics like ‘cost per click’ or ‘cost per lead’. Some even measure ‘cost per new business’. But it’s worth making sure you have a precise ‘customer lifetime value’ in those metrics. Not only does it make your KPIs closer to financial reality but it will focus your marketing team on drawing out the all important length of that lifetime.

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Top stories

The other articles that are worthy of your time.

FINANCE

St James’s Place: Most of our funds are failing to deliver value on performance

③ The FCA’s Assessment of Value report requirement is doing a great job.

“The vast majority of funds run by St James’s Place ‘delivered insufficient value’ on performance and there are ‘no fast fixes’ to improve the situation for customers, according to the wealth manager’s own assessment of its performance.”
“Only four of St James’s Place’s funds were assessed as ‘delivering value’ on performance, with three more ‘broadly delivering value’. In total, 30 of the 39 funds run by the company were deemed to be lagging in their performance.”
“Asset managers are required to publish an Assessment of Value report annually by the Financial Conduct Authority, where they must assess their funds on seven different principles with a traffic light system. The FTSE 250 wealth manager was weakest by far on the performance category, with 77 per cent of funds flunking the assessment of value. Other areas with weakness included the comparable market rate of its funds, where six funds receives a red rating and nine received an amber.”

TECHNOLOGY

Bank of England emphasises collaboration with AI Consortium

④ AI continues to confound regulators.

Source: Payment Expert, 27 September 2024

“The Bank of England has established an Artificial Intelligence Consortium, as work to increase the technology’s adoption in the UK intensifies. Aiming to foster public-private collaboration, the Consortium will provide a platform for stakeholders to offer input on the development, deployment and use of AI in UK financial services.”
“Specifically, the Consortium aims to identify how AI is currently used or could be utilised in financial services, including new capabilities, deployment strategies and relevant technical developments. It also seeks to discuss the benefits, risks and challenges that arise from AI usage, considering both financial services firms and the broader financial system. It aims to inform the Bank of England’s approach to managing these risks and challenges while promoting the safe adoption of AI.”
“The bank plans to recruit approximately 30 members for the group, selected for their expertise in AI and financial services. Members are expected to provide technical, analytical and business insights during discussions. Acting in a personal capacity, members will share perspectives that reflect their broader constituency rather than the specific interests of their organisations and will also contribute to workshop activities as needed. The Consortium will not evaluate the Bank’s own use of AI. Its primary role is to guide the Bank’s approach to AI within the financial sector.”

MEDIA & MARKETING

B2B marketing KPIs vs. metrics: 24+ Every business should be tracking

⑤ KPIs are focused on the big picture; metrics zero in on specific tactics.

Website traffic: The volume of users visiting your site
Bounce rate: The percentage of visitors that click then leave your site
Conversions: The number of visitors who took your desired action
Leads: The number of contacts generated by your campaigns who might buy
Cost per lead: The money it takes to acquire a potential customer
Close rate: The percentage of leads who become customers
MQL: The number of leads that could become a serious prospect
SQL: The number of prospects ready to talk to your sales team
CAC: The amount of money it takes to convert a lead into a customer
CLV: The total amount of revenue you can expect from a single customer
MRR: The amount of revenue you get from a customer each month
NPS: How likely your customers are to recommend you
ROI: The amount of money you gain from your marketing efforts vs cost
Email list size: How many people have opted in to comms from you
Email open rate: The percentage of people opening your emails
CTR: The percentage of people who click a link in your emails
Social media reach: Total number of followers across social media
Social media engagement: How many interactions your posts receive
Impressions: How many times your ads are seen
Click rate: The percentage of clicks your ads get compared to just being seen
Lead rate: The percentage of impressions that turn into leads
CPM: How much you’re spending to generate an ad impression
Cost per lead: How much you’re spending to generate a lead
Return on ad spend: The revenue generated from an ad campaign compared to every dollar you spend

WILDCARD

Digital twins can help you make better strategic decisions

⑥ It’s time to reconsider automated prediction systems.

Source: Harvard Business Review, 23 September 2024

“Unlike the clunky, custom-made and pricey versions of the past, today’s digital twins are fast, inexpensive and far more advanced. They involve a virtual replica of a real object system using historical and real-time data, paired with advanced analytics and machine learning models.”
“This is more than a mere simulation — managers can subject digital twins of real systems to multiple scenarios, then make changes to their inputs to the real system based on the data produced by the model scenarios, and then use the data to produce to put the digital twin through revised scenarios which produce more data to apply to the real system, and so forth. As a result, managers now have unprecedented flexibility to experiment with changes before implementing them, fundamentally rewriting the rule book on strategy design.”
“CEOs and senior executives have long dreamed of trialing their strategic decision-making prior to its execution. Till now the methods haven’t been very reliable. This has changed with the application of gen AI and advances in digital twin technology. Whether your organization is big or small, it’s worth taking a fresh look at gen AI-enhanced digital twins to boost the success of your strategic decision-making.”

Off cuts

The stories that almost made this week’s newsletter.

The last word

⑦ Jim Covello, the head of stock research at Goldman Sachs, on the AI boom:

Jim Covello. Source: The New York Times, 23 September 2024

“Overbuilding things the world doesn’t have use for, or is not ready for, typically ends badly.”

Don’t settle for marketing.

Strive for InMarketing.

Wishing you a productive week,

P.S. Don’t get stuck in your ways. Shake things up every now and again.