BBVA Compass: Marketing Resource Allocation
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BBVA Compass is a US bank established through mergers and acquisitions. It aims to become a top 10 bank and targets customers earning over $75k annually. Its goals are to build brand awareness, acquire new customers, and increase account retention. However, its marketing budget allocation was ineffective - 75% went to TV and online but aided brand awareness dropped. Only 2-3% of online visitors became customers. The CMO must review performance and reallocate the budget across regions and channels, emphasizing convenient services, personalized service, and friendly service. More should be spent on direct marketing rather than TV. The application process also needs improvements.
BBVA Compass: Marketing Resource Allocation
- 1. Integrated Marketing Communication BBVA Compass: Marketing Resource Allocation Group 3 Shweta Zacharia Kern Rachita Swarooparani
- 2. About the Company Parent company BBVA Second-largest bank in Spain in 2010 Entered US market in 2004 Through mergers and acquisitions, established itself as 15th largest commercial US bank- 700 branches and $49 billion in deposits- across seven states (Sunbelt region) Three primary lines of business units: retail banking, corporate and commercial banking, and wealth management Goal: to become one of the top 10 banks in the US Positioning: small enough to offer customized solutions while big enough to offer breakthrough innovations Target customers: Sunbelt Area (significant population growth) – “strivers” – 25 to 54 year old- annual household income of more than $75,000 Marketing Goal Build awareness and trust in the brand Bring in new customers and increase the total number of accounts in the bank Improve satisfaction and retention customers and cross-sell to them Marketing Budget Under $50 Million for 2011 Offline Marketing Brand building: Adopted trade name BBVA Compass- aided awareness reduced Sponsorships: Multiyear sponsorship with NBA + Title sponsor of PapaJohns.com Bowl + Associate sponsor of Texas Bowl, Bell Helicopter Armed Forces Bowl, New Mexico Bowl Online Marketing Paid Search: Buy generic words on search engines Display: Buy advertising space on websites that prospects were likely to visit Offline vs. Online Marketing New checking accounts- 5% from online, 95% offline (80% branches, 15% telephone and direct mail) Average annual retention rate- online 55%, offline (through branches) 65% Annual income- slightly higher from online customers than from branch customers Account balances- lower of online customers than branch customers Measuring effectiveness- accurate in online, difficult in offline Applications for new checking accounts- about 80% online are approved, while 95-100% offline (branches) are approved
- 3. What was going wrong? Banks typically spent about 25% to 30% of their budget on measured media (such as TV, print and internet) and the remaining on unmeasured media (direct marketing and promotions). But BBVA Compass spent around 75% of their budget on TV and online alone. After adopting a new name, BBVA Compass, the aided awareness of their brand dropped. If 100 online visitors clicked on the online ads (paid or display), then only 2 or 3 accounts become functional, i.e., they are approved and actually funded within the required time frame. What should be done? The chief marketing officer must review the marketing performance of the company and decide how to allocate next year’s marketing budget across different regions and different advertising channels. How to do it? More emphasis on – convenient branch locations, easy online banking services, more personalized service, free checking services, friendly service - in all marketing messages Therefore, more spending on direct marketing and promotion, rather than TV and print Can try a breakthrough innovation to provide a platform to help customers on one-to-one basis 24*7 to improve the service provided, but keeping the cost incurred in mind. To enhance customer interaction at lower cost of delivery. More importance to brand awareness and trust building by making a personal connect with customers- new customer acquisition will follow Better selection of sites for display advertising- avoid duplication Improve online application process- make it more elaborate to explain to customers what information they are required to fill- give constant reminders to fund the account within the specified time frame Measure the effectiveness of sponsorships to Sports organizations- accordingly, increase or decrease spending