Discover how Lloyds Banking Group convinced 707 SMEs – 280% above target – to switch banks using innovative direct mail formats
This direct mail-led programme successfully turned SME prospects into customers.
In SMEs, it’s financial directors who gate-keep the banking relationship and they have little time for extra admin, meaning just 4% switch banks annually. Plus, FDs think banks are all the same, so even when getting a raw deal, they stay with ‘the devil they know’.
Research revealed two things: what matters most to SMEs is service – it’s the main reason for switching; and that it takes five to 12 contacts to convert prospect to customer. What’s more, for a decade, FDs voted Lloyds ‘Best Bank for Service’.
The challenge was to land the service message and persuade SMEs to switch without being able to pinpoint the precise moment they’re actively in-market.
The strategy was a multi-burst campaign built around the brand truth: ‘service that’s second to none’. Direct mail (DM) was the obvious vehicle; it meant it could deliver cut-through and interaction – and it has a long response curve. Follow-up email, telemarketing and digital display supported the DM.
The first tranche, ‘Tick’, delivered 176 switchers – 352% above mailing target, 70% towards the annual target. Subsequent tranches delivered 145 and 386 switchers respectively – 280% above target.
Lloyds Banking Group is a financial services group focused on retail and commercial customers. Its Commercial Banking division has a rich heritage of supporting businesses and the economic prosperity of the nation and has been providing customers with the support they need to help them grow, manage risk and enhance efficiency, for 250 years.
Lloyds Commercial Bank has been Bank of the Year for 11 consecutive years, voted for by more than 1000 finance directors from across the business spectrum in the UK, a resounding endorsement of their track record and offering.
Lloyds faces the challenge that SMEs typically perceive switching banks as a hassle – with administration and financial costs as key barriers. Hence just 4% of companies switch annually.
Although competitors focus on free banking periods to encourage switching, research found that SMEs don’t care much about free banking; what matters to them is service. It’s the main reason for switching but, crucially, the moment an SME is going to experience a service failure from its incumbent bank can’t be pinpointed through data.
There was a need to establish Lloyd’s service credentials over a series of communications to increase the opportunity to connect with SMEs and be there at the moment when they were ready to commit.
Objectives of the campaign
The objective was to get 250 SME cold prospects to switch to Lloyds.
It started by probing marketing, product and the salesforce and hit on a neglected truth; one powerful enough to make any SME listen. For 11 years straight, finance directors had voted Lloyds as best bank for service. The ‘a-ha!’ moment wasn’t just that Lloyds had consistently won a service award, it was all about
gave Lloyds the thumbs up. If Lloyds could impress typically hard-to-please FDs for over a decade, then its service had to be good.
The campaign was built around this truth, so ‘service that’s second to none’ became the organising thought. And, because the moment an SME is actively considering a switch cannot be identified, a series of five tranches of activity were organised to ensure that it was constantly front of mind.
The target audience
Within SME companies it’s FDs that own the banking relationship. FDs are known for being dour, sceptical and demanding – in other words, hard to impress.
Experian data was used to target (with each tranche) FDs of around 70,000 businesses in key sectors for the bank. This was further segmented by size so they could be treated appropriately in the DM and follow-up comms.
Media, channels and techniques used
The campaign was built around direct mail, with five tranches planned.
DM was chosen because of its long response curve, which was important given the exact switching moment cannot be pinpointed. DM also has cut-through when so much business communication is via email. Lloyds sought to amplify the cut-through by developing non-standard formats.
- ‘Tick’ included a scorecard mechanic that borrowed from the scoring criteria of the FD Excellence Awards, and included a few of Lloyds own USPs. This was sent together with a branded pencil, prompting SMEs to evaluate their banking arrangements and allowing them to draw their own conclusions.
- ‘New Perspective’ used a square, roll-folded format and focused on service in relation to lending, highlighting the role of relationship managers, and encouraging SMEs to compare this to the offering provided by their own bank.
- ‘Quiz’ used a one-piece mailer format with quiz mechanic asking SMEs to consider their own bank against Lloyds’ offering. A summary panel evaluated their current banking relationship based on their answers and directed them to call Lloyds to make an appointment.
The call to action (CTA) asked FDs to call and make an appointment with a relationship manager.
Each DM was followed-up by an email that reiterated the service message and telemarketing, as well as digital display on LinkedIn and other business sites.
Timescales of the campaign
The planning phase took place in Q1 2015 – including Lloyds’ stakeholder research and the development of a five-tranche prospecting campaign. The first tranche mailed July 2015, the second in October 2015 and the third in January 2016.
Follow-up emails were sent two to three weeks after each mailing and telemarketing and digital display ran throughout.
Results started to come in during the fortnight following each mailing and peaked two to three weeks afterwards. The analysis for the purposes of reporting for each campaign was carried out one week after the DM had landed.
Conversion rate from in-bound call to appointment and appointment to switch were key metrics as an indication of channel performance and effectiveness of the conversion funnel.
- Typically, FDs don’t phone banks after a mailing, however, one in 10 of the leads were inbound across the campaign.
- Conversion from in-bound call to appointment increased slightly with each tranche, particularly in the most valuable segment – rising from 40% in tranche one to 78% in tranche three.
- These conversion rates, along with companies each mailing against control cells, suggest the strategy of multiple contacts is working.
Based on initial income the campaign to date has delivered a 5.5:1 ROI.
Lavern Mason, marketing manager, B2B marketing communications, Lloyds Banking Group, said: “This innovative and brave campaign was a huge change of pace from our previous activity. We wanted to focus on the relationship side of things and the creative DM formats gave us the perfect way to engage with prospects and get them to look closely at how they worked with their current bank.”