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AI and Three Predictions on Its Emerging Role in Marketing Communications

Jun 29, 2023 | Industry discussions

AI speaks letters, text-to-speech or TTS, text-to-voice, speech synthesis applications, generative Artificial Intelligence, futuristic technology in language and communication.

This content was originally created and presented by the Riger team as a webinar for the members of the Independent Bankers Association of New York State (IBANYS).

The premise: Treat retention as a growth strategy.
The promise: Reduce churn, minimize costs of acquisition, and hit your growth goals.

Accelerate Growth Through Customer Retention

For community-based financial institutions, maintaining vibrant, long-term relationships is a key to achieving sustainable, profitable growth.

Consider that attracting a new customer or member costs more —anywhere from five to 25 times more—than retaining an existing one. In fact, according to consulting firm Bain & Co., a boost of just 5% in retention can potentially increase bottom-line profits by 25-95%.

Yet today, it’s harder than ever to keep a customer, because of an increasingly fragmented financial services ecosystem and evolving consumer expectations.

Fortunately, retention is the growth lever community financial institutions can most reliably influence—and the one that determines whether acquisition ever pays off.

Community banks and credit unions enjoy some natural competitive advantages: you are community-minded; you promote fast, localized decision-making; and you can bank on a reputation for outstanding service. These attributes will give your organization a head start on the competition when it comes to keeping your existing customers or members in the fold.

But to reduce churn, minimize costs of acquisition, and hit your growth goals, it’s critical that you treat retention as a growth strategy.

5 Steps To Retaining Long-Term, Profitable Relationships

Step 1: Know your customer (or member)!

According to recent research from Rivel, 24% of customers say they may leave their current bank due to customer service issues, a factor that falls just behind high fees and poor rates.

Only 48% of bank customers believe their institution truly understands them as a consumer. And only 37% feel they receive personal advice most or all the time.

How do you counteract these trends? It starts with understanding what today’s financial consumer wants and needs.

“Knowing your customer” or “KYC” is a core principle of banking risk management. But it can also be applied to serving your customers through a deep understanding of their needs.

It all starts with assessing your current customer or member base. We recommend segmenting your clientele based on relevant common attributes.

Start with demographics (including factors like age, gender, income, employment, and education), and then expand your analysis to include behaviors. Then, assess how well these segments fit with your product, service, and channel mix.

One practical way to conduct this segmentation exercise is to use the Experian Mosaic Profile System, which assigns every household into one of 19 unique group categories. The system even includes a geo-coding feature that segments households based on street address. You can then add in your own primary research, through customer surveys, intercept interviews, and discussions with staff and stakeholders to fill out the data.

Step 2: Develop targeted retention campaigns.

Once you have a strong understanding of your client base, the next step is to create targeted, customized retention campaigns—ideally using all that good data you compiled through your research!

To do that, look for opportunities to build on the positive first impression you’ve already made with your customer. Focus on making a strong second impression, complete with upselling offers, that anticipate what they might be wanting or needing next.

Whether that’s through a marketing campaign, special event, or product promotion, keeping the conversation going with your current relationships is key.

Here’s an example of how this works:

Some time back Riger worked with Utica-based Partners Trust Bank to develop a mail campaign focused on both potential and current customers. We took a “Hi, Neighbor!” approach, inviting the individuals to visit their nearby branch for an open house event, where they could activate special offers (such as bonus rates on deposits and loans) and enter to win one of several $50 gift cards or even a $1,000 grand prize. The campaign was a success in terms of both attracting new customers and increasing the loyalty and engagement of existing customers.

Step 3: Rethink loyalty.

Speaking of loyalty, it’s a good time to take a peek under the hood of your relationships, to see just what keeps your existing relationships walking back through your door.

Most of your clients aren’t looking for anything fancy. They do crave some simple recognition—whether in-person or online—along with consistency, convenience, and access.

Of course, offering rewards points never hurts in building that loyalty, too!

Citibank’s ThankYou® rewards is a case in point. Like many institutions, the banking behemoth offers its customers extra rewards points if they add a savings account, a mortgage, home equity line or loan, or personal loan to their relationship. But beyond that, they also offer their cardholders extreme freedom and flexibility in how they can redeem their points. Cardholders may cash them in for money or gift cards, use them to pay bills online, donate them to charitable organizations, or even share them with other Citi accountholders. This might be a nice touch to offer to the people who you know have teenagers living at home—information you will glean based on their Mosaic profile.

Step 4: Watch for early signs of disengagement.

Throughout a relationship lifecycle, it’s important to keep your eyes peeled for early signs of disengagement. Some common triggers include:

Fewer mobile banking logins
Declining card usage
Loss of direct deposit
Lower checking transaction volume

Just as critically, make sure someone within your organization is assigned the responsibility for monitoring these metrics regularly. It could be a member of senior leadership, or a supervisor on the front lines. It doesn’t really matter who is responsible—just that it’s clearly communicated, that individual is held accountable for results, and incentives are clearly aligned.

Lastly, you must establish easy, repeatable processes to measure relationship health over time. This means treating the entire customer or member lifecycle like a system.

Step 5: Treat relationship like a system.

To ensure you’re measuring the most critical components of relationship health over time, you must treat customer or membership relationship management as a system. Ask yourself the following questions:

What happens after account opening?
Do you have a 90-day onboarding plan for engaging your customer or member, through direct contact and digital nudges?
How do your customers transition from single-account users to having a primary financial relationship with your bank?

The keys to successful relationship management are to set performance goals based on the right metrics, and to have a set of tools to make it automatic.

Because remember—what you don’t measure isn’t likely to get done.

There are several methods available for measuring relationship health. A few of the more common approached include metrics like Customer Relationship Value (CRV), Net Promoter Score (NPS), and Risk-Adjusted Return on Capital (RAROC). Each of these considers relationship health from a different angle, and many institutions use a combination of these (and others) to provide a holistic look at how well they are doing on the retention front.

Compete and Grow By Focusing On Your Existing Relationships

Today, in a world of heightened competition, digital dominance, and evolving consumer expectations, it’s harder than ever to keep a relationship for the long-term.

But remember retention IS a growth strategy, and community financial institutions have some natural advantages to achieve this. Now’s the time to rethink and update your marketing and relationship strategies to focus on retention. And the above five key steps are a great place to start.

At Riger, we’re here to help! Contact us to learn how we can help you make retention a regular part of your growth strategy. Request a copy of our IBANYS presentation by contacting Jamie at jjacobs@riger.com.

“I’m sorry, Dave. I’m afraid I can’t do that.”
-HAL

It was 55 years ago that Arthur C. Clarke and Stanley Kubrick explored the thrilling and terrifying dance between man and machine in their sci-fi masterpiece 2001: A Space Odyssey. As the brain of the spaceship in the novel and movie, HAL is an onboard robot that uses information systems to become human-like. An acronym standing for Heuristically programmed ALgorithmic computer, “Heuristic” and “Algorithmic” are two primary processes of human intelligence. Dave is the main character, the mission commander, who finds himself locked outside the spacecraft, asking HAL to open the pod bay doors and let him back in. HAL says no, the mission is too important to allow humans to jeopardize it. Clarke and Kubrick were prescient men.

Today, society stands at the threshold of—depending on how one looks at it—a revolutionary new age of content generation or a potentially HAL-ish moment in history: the dawn of easily accessed generative Artificial Intelligence (AI). In 2001: A Space Odyssey, when HAL becomes sentient and chooses to lock Dave out of the spaceship, we see a prediction of what could happen if AI-powered machines were to break bad. Even the CEO of OpenAI has testified before Congress that he believes AI needs to be overseen and regulated to mitigate its risks and thwart the ill-intentioned.

Without delving further into the details of its origin or the debate about the socioeconomic impacts, ethics and morality of AI, let’s look at the power this technology holds for the business of marketing communications.

First and foremost, it is our belief that generative AI programs, such as ChatGPT and DALL-E, are useful and beneficial tools, much as pen and paper, typewriter, computer, tablet, and smartphone have proven their worth in the communicator’s toolbox. Have the tools of the marketing trade become smarter and more powerful over time? Without a doubt. The phones in our pockets are exponentially smarter, faster and better tools than the first desktop Macs were in 1984. But the smartphone is still only a tool. In the hands of the right person, AI is another breathtakingly powerful creative tool. It is also out-of-this-world smart.

Released in 2022 by OpenAI, ChatGPT is a free AI-powered chatbot. ChatGPT answers questions typed in by the user. It responds in lightning-fast fashion, with eerily, almost unerringly human-like responses. It can develop simple or complex concepts and write about them, not only with the intelligence gleaned from thousands of years of reading and learning but often as if it possesses human feelings or emotional intelligence as well. If you haven’t tried ChatGPT yet, it’s at your fingertips: openai.com/blog/chatgpt

So, what is the emerging role of AI in marketing? We have three predictions:

Marketing strategists, writers and designers will use AI to jump-start creative ideas and content generation. An AI query can quickly, in seconds, identify what has been done before, maybe too many times, as it identifies patterns in strategy and content (both words and images). Because most AI creates from what already exists, we believe there will still be a need for original ideas created by humans. “HAL” may disagree. Only time will tell.
AI’s real power comes in asking it the right questions. Creative, effective marketers will become experts in honing the most pointed question or prompt to ask AI in order to achieve accurate, usable results. Sure, AI can deliver the answers from the database of all recorded human thinking, but if we are asking the wrong question, the results are only as good as the question asked.
Marketers will use AI to “get out of their own heads” and move to the universal with AI’s help in seeing those patterns. Great branding and advertising move us emotionally. We are all stirred by the same universal concepts, which show up in patterns across history. AI’s genius is in identifying those patterns.

Bottom Line: Don’t leave the spaceship. The ride is about to get interesting. For ChatGPT’s own essay on AI, read on.

Co-written by Steve Johnson (sdjohnson@riger.com) and Ann Rose (arose@riger.com)

Johnson is a managing partner at Riger Marketing Communications; Rose is Riger’s art director.

For AI’s take on this topic, here is ChatGPT’s unedited (7-second!) response to our query: “Write me a 400-word essay on AI’s emerging role in marketing communications.”

Artificial Intelligence (AI) has emerged as a transformative force in various industries, and its impact on marketing communications is becoming increasingly evident. AI technologies offer new possibilities for marketers to gain valuable insights, enhance customer engagement, and streamline their marketing strategies. This essay explores the emerging role of AI in marketing communications and highlights its potential benefits and challenges.

Data Analysis and Personalization: AI-powered tools enable marketers to process and analyze vast amounts of data, allowing them to extract meaningful insights and make informed decisions. Machine learning algorithms can uncover patterns and trends within customer data, helping marketers understand consumer preferences, behaviors, and purchasing patterns. This knowledge enables personalized marketing communications, tailoring messages and offers to individual customers, thereby enhancing customer satisfaction and engagement.

Chatbots and Virtual Assistants: Chatbots and virtual assistants, powered by AI, are revolutionizing customer interactions. These intelligent bots can provide instant and personalized responses to customer queries, improving customer service and reducing response times. They can also collect valuable customer data during interactions, which can be utilized to refine marketing strategies and develop targeted campaigns.

Content Creation and Curation: AI is increasingly being used to generate and curate content. Natural Language Processing (NLP) algorithms can create engaging and relevant content, including blog posts, social media updates, and product descriptions. AI tools can also curate content by analyzing user preferences and behavior, ensuring that customers receive personalized and compelling content recommendations. This automation of content creation and curation saves time and resources for marketers while maintaining a consistent brand voice.

Predictive Analytics and Customer Segmentation: AI algorithms can analyze historical data and predict future trends, enabling marketers to anticipate customer needs and behaviors. Predictive analytics assists in identifying target audiences and optimizing marketing campaigns for maximum effectiveness. AI-driven customer segmentation allows marketers to create highly targeted marketing communications that resonate with specific customer segments, resulting in improved conversion rates and higher ROI.

Ethical Considerations and Challenges: While AI presents numerous opportunities for marketing communications, it also raises ethical considerations. Marketers must ensure transparency and privacy protection while using customer data. They should address concerns about data security and demonstrate responsible AI usage to build trust with customers. Additionally, AI algorithms need to be continuously monitored and fine-tuned to prevent biases and unintended consequences that could adversely affect marketing communications.

AI’s emerging role in marketing communications offers significant advantages to marketers, enabling them to deliver personalized experiences, optimize campaigns, and improve customer engagement. Through data analysis, chatbots, content generation, and predictive analytics, AI empowers marketers to make data-driven decisions and create targeted communications that resonate with their audience. However, ethical considerations and challenges surrounding AI implementation must be addressed to ensure the responsible and beneficial use of this technology in marketing. As AI continues to evolve, its role in marketing communications is set to expand further, redefining how businesses interact with their customers and shape their marketing strategies.

Written by ChatGPT