Saving Grace

Sure, you want to save money. Everyone does.

But why do you want to save? Are you putting away pennies for a sailboat, or to pay your daughter's way through college? Maybe you're dreaming of taking a trip to Italy to see the village where your grandfather was born.

All of these reasons are emotional as well as fiscal, a theme HSBC Direct is using for a new series of DRTV ads set to air this month.

“Much advertising in the financial sector is product oriented, with very little focus on the end benefit,” says Michael F. Prebenda, senior vice president, e-acquisition for the online bank. “We expect to keep moving more along the emotional curve.”

With the help of its agency of record, New York's RMG Connect, the bank is also beginning a CRM initiative this month aimed at building loyalty with customers who in the past likely felt no personal bond with their financial institution.

HSBC Direct was launched nationally in November 2005, and is accessed entirely online. While the bank's 350,000 direct customers can call an 800 number for support, they can't access their account via one of parent company HSBC's more than 430 U.S. retail branches. (Customers do, however, have the option of using an ATM card to access their online savings via automatic tellers at HSBC or other banks.) As of today, HSBC Direct only offers one product, a high-yield savings account; plans are under way to introduce more products in the near future.

The target customer for the bank thinks about cash from a savings perspective, Prebenda says. “They tend to save for a rainy day, and are disciplined, educated, understand finances well, and are diligent and deliberate in their management of cash.”

“We don't really use demographics,” he adds. “We're looking for people who are predisposed to save.”

“HSBC has proprietary segmentation that we are working with,” says Lisa Racioppo, senior partner and group account director at RMG Connect. “It's more of a psychographic/attitudinal profile that we're going after. It cuts across age demographics.”

The majority of HSBC's U.S. branches are concentrated in New York state, meaning when the direct brand debuted, HSBC wasn't a household name all over the country. At present, better than half of HSBC Direct's accounts are from outside New York.

“We don't have footprints across the United States, so we're looking for people who are comfortable going online, are self directed, and capable of managing their business on their own,” Prebenda says, citing a recent study that reported 50% of customers don't feel any loyalty to their bank.

“There's an opportunity to create an experience online that's a bit more enduring,” he believes.

Indeed, many of these customers would rather go online than wait in line, Racioppo adds. “They actually felt there was more of a personal relationship with their online bank, because they could customize it to their needs. They had no relationship with their [retail] bank and no loyalty. But in their own online space, they basically felt a warmth.”

The new DRTV ads' creative will both promote the product and tap into what customers ultimately want to do with their account.

Television has had a powerful “drive-to” impact for HSBC Direct, and played a big role in increasing awareness of both the brand and product during the launch year, Prebenda adds. Fifty-five percent of the media budget this year will be devoted to DRTV, with the remainder going to other media such as search, banner ads, direct mail and print.

He concedes that it's sometimes hard to quantify television's impact because the path from screen to savings isn't usually straight. Often someone will see the ad, then go online and click on a banner to open an account. “But we know it's powerful.”

Search engine marketing is also a significant prospecting tool for the bank, because individuals searching keywords like “online savings” are pretty focused about their goals. “[They're] people looking to open an account with a clear idea of what they want to do with it,” Prebenda says.

This year HSBC Direct intends to use traditional mail primarily as a prospecting vehicle — “it's expensive as a retention tool,” he explains, and the customer base seems to be most comfortable with hearing from the bank online. (To that end, e-mail is being used in a “test and learn” fashion, to see what strategies work best.)

Direct mail will tie into the overall promotional activity. “For us, that channel is a work in progress,” he says, adding that financial services mailings have grown jaded thanks to mailbox glut. “We're working hard to figure out how to cut through in this type of environment. We'll be in the prospecting/acquisition mode for quite some time.”

HSBC Direct is also preparing a relaunch of its Web site this month with the intent of getting better tools to customers to help them fully realize the benefits of their accounts, says Prebenda.

“We want to develop a better experience for customers and address their needs,” Racioppo adds. “We did a ton of research, and the majority of things produced were done on their feedback.”

HSBC Direct's customer base tends to be risk-averse savers, she says, and the Web site redesign will reflect that. “They put their money into safe endeavors and keep high balances there, and they're the type of people who have a ‘dashboard’ approach to everything. We need to give them tools to plan, because they're serious planners. They're looking to the future.”

The bank doesn't do outbound telemarketing, but has an inbound call center for customer-issue response. Initially, Prebenda says, call volume reflected the newness of the product and brand, especially in areas where HSBC was not well known. Over time, he continues, people are becoming more comfortable acting remotely with the bank.

Prebenda was hesitant to give out specifics of HSBC Direct's upcoming CRM initiatives (“It's a competitive environment, and products are easily replicated”), but he would share that the bank is looking to establish a dialogue with customers that “respects their values and understands how they interact” with HSBC.

“In the online space there's a lot of information about what customers are doing, and we're looking to leverage that to create a more tailored relationship. We definitely segment our customer base and use that to guide our development efforts in every respect of the business,” he says. “CRM executed against the broad customer set without any discrimination between individuals is one way to do it, but we're looking to be more targeted in our messaging.”

“Rather than selling every product under the sun, we're developing products for a segment group. It's kind of like banking on steroids,” adds RMG's Racioppo. “Everyone will be touched, but we'll have different schematics for different customers, based on their habits.”

The main thrust of the CRM efforts will be to create a relationship with the bank's audience, according to Prebenda. He says churn isn't an issue yet: “That's not our primary focus at this time.”

HSBC Direct looks at a range of metrics to gauge the success of its marketing efforts, including balance information, account activity trends, number of accounts maintained and new product adoption. The bank has a proprietary loyalty index as well.

Outside the United States, a version of HSBC Direct is offered in Taiwan. Similar products and services are planned for other countries.