Aventine Partners

Tipping Point for Online Banks?

Wingspan Bank.  Remember the short-lived online-only bank launched by BankOne in the late 1990s? 

A recent post at Bankwatch called attention to an American Bankers Association survey showing that online had become the most-favored channel for bank customers for the first time. Memories of Wingspan, Telebank, Jupiter Bank, and others that made a go at the online-only business model came flooding back along with the unanswered questions.  Was online-only banking the wrong idea, or was it just the wrong time?  With changing consumer preferences, might we expect a new breed of online-only banks to emerge soon?

Stronger Patient Relationships

This summer, as most of America became embroiled in the debate over health care reform, we had the privilege of working with a client looking to reform how health care is delivered at an innovative chain of dental clinic.

A health care outsider had been brought in to run and grow this business.  He began to ask questions about patient relationships, but couldn't easily find the answers.  Questions like:

• What is our patient retention rate?
• Which of our offices, dentists, or hygienists do the best job of generating loyal patients?
• What is the value of a patient? 
• Why do patients defect?    

We worked with his team to develop a set of metrics and analyses that began to shine a spotlight on some surprising patient retention statistics and the potential value to be created by managing both patient retention and acquisition differently.

Topgrading Marketing Spend

As I noted in my post To Cut or Not to Cut?, this is a smart time for most companies to reduce marketing spend, notwithstanding desperate pleas from marketing services providers that you double-down in the downturn.

Is there a smart, systematic way to do this?  Probably, but it's elusive, as confirmed by the many stories I hear of the across-the-board, arbitrary 10%, 15%, 25% cuts many marketers are trying to cope with.

A recent white paper from former colleagues at Deloitte Consulting prompted my writing this post, so let's look at their approach, which they call Structural Cost Cutting.  

The premise of the Deloitte's Structural Cost Cutting is that the big opportunities for big near-term reductions in spend come from challenging basic assumptions about the business and how marketing supports it.  The savings will emerge from multiple categories of marketing spend.  The Deloitte hit list of areas to examine are:

To Cut or Not to Cut?

As has been in the case during every downturn I've lived through as a professional (this is my third), many observers of the marketing discipline are quick to remind us that "studies show" successful companies increase advertising spend during downturns and reap great rewards from having done so during recoveries.  Of course, those most emphatic in offering this counsel are those peddling media and marketing services.

One of many possible examples can be found in a September blog post by John Quelch offering advice on "How to Market in a Recession".  Quelch is a director at WPP, so there may be some bias when he counsels: "Maintain marketing spending.  This is not the time to cut advertising.  It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times."

Even though we also peddle marketing services, I question the wisdom of this line of thinking.  More to the point, we need to be mindful that what was true in the past may not longer hold.

What's different now?

The Shifting Consumer

Identifying how consumer attitudes are shifting in this downturn and which shifts will stick is an important, but tricky, task.  John A. Quelch and Katherine E. Jocz tackled this issue in the Financial Times with their Managing in a Downturn.  

I can recommend this article as thought provoking, and it contains some good insights.  But there's some bad mixed in with the good.  First the good.

Key takeaways:

"What is certain is that the market segmentation scheme you were using to plan your marketing budget and programmes this time last year is obsolete. You need to listen to your customers and possibly develop a new segmentation approach."  

Very true.  The authors recommend an overlay segmentation that adds insights to how consumers are reacting to the current environment.  This is likely a good first step.