Marketing Advice for Financial Services: The Future is Online.

Appraisers, M&A attorneys, and other financial service professionals need to consider whether they are allocating ad dollars appropriately in light of this data. Your customers are online - are you?

Could there be a shift in the way mortgage companies market themselves? The topic of the final session at the 2006 Mortgage Bankers Association annual convention was "The New Reality of Customer Acquisition and Retention." The three speakers did not come from the world of mortgage banking.
Rather, they work for Microsoft, Yahoo and Google. Their message is that to get the customer, companies need to address and adapt their online marketing methods.
Zack Hilton, national director, financial services, Microsoft Inc., said consumers are embracing the digital lifestyle. Approximately 70% of households have Internet access and half of those have broadband. Almost all of those are researching products on the Internet.  "There is a huge opportunity to acquire customers online," he declared. This is because Internet users prefer using the World Wide Web to other media to look for financial information.
Mr. Hilton did point out what he feels is a disparity between where people spend their media time and where advertisers spend their media dollars.  Consumers, he said, spend 17% of their media time online but advertisers spend just 8% of their dollars on online advertising.  It is the opposite for newspapers. Consumers just spend 4% of their media time reading newspapers but those outlets get 30% of the advertising spending.
Peggy White, the general manager of Yahoo Finance, said while it is rare if a consumer makes an actual online purchase, they are using the Internet to gain knowledge, including researching which providers they want to work with.  At one time just 5% of borrowers made their payments online. That number is now 28%, which means it is growing but still behind mailing it in. And today 54% research loans online.

Will the Target's Customers Be Loyal to You?

Customer loyalty seems like an often-overlooked factor in valuing a company.

In today's competitive marketplace, customer loyalty is serious business. It's widely known that holding onto an existing customer is far less expensive than trying to gain a new one. It's also well documented that there's a high risk of customer defection following a merger or acquisition. Most buyers anticipate some degree of customer-base erosion post-closing. How can a buyer evaluate the risks associated with a potentially weak customer base?
However, what many buyers fail to do is to get a deep understanding of the behavioral and attitudinal attributes of the target's customers and quantify the acquisition's impact on customer loyalty before shaking hands on a deal. Although most buyers are armed with financial statistics on a target, many lack data on the stability and loyalty of the target company's customer base - an important indicator for forecasting future revenues.
Evaluation of a customer base should be an integral part of due diligence. An objective customer loyalty audit can reveal what drives customer loyalty. For example, customer loyalty may be impacted by the products or services delivered by the company, by the relationships with current staff or by a variety of other factors.
Over the past few years, great strides have been made in customer satisfaction measurement techniques, which help companies identify and understand their customer base, gauge customer loyalty, and develop a loyalty profile. Customer loyalty is an attitudinal metric that captures the strength of a customer relationship, which is strongly linked to critical customer behaviors. Tracking and managing loyalty can help a company understand the reasons why customers defect, and how important they are to its bottom line.
A customer loyalty profile also can be used to place an asset value on the customer base.  Using a customer loyalty metric for a broad cross-section of customers allows a company to analyze its customer profile, identify problem situations, and develop a plan for converting neutral and vulnerable customers into loyal ones. Scientifically measuring customer loyalty is a key step to minimizing risk in buying a company.

Oracle Loses Would-Be Customer To SAP Due To Integration Concerns

Oracle’s problem is one of the most common facing acquirers today – being able to successfully integrate an acquisition. It appears that Oracle faces a substantial technology challenge before it can obtain the revenue growth that it hoped to obtain through the acquisition of Retek

SAP and Oracle are locked in a fierce battle over the enterprise-resource planning software market, with SAP fighting to retain its lead and Oracle hoping to catch up through an aggressive acquisition strategy.
And in a close battle, every success, no matter how small, is celebrated. That's why SAP is announcing today that it beat Oracle in a bid for the business of Sport Chalet, a $350-million-a-year retailer. One of the biggest turnoffs to Oracle, says Sport Chalet CFO Howard Kaminsky, was -- ouch -- lack of integration between Oracle financial applications and the retail apps of Retek, which it acquired about 18 months ago.
SAP's offering for the retail market, by comparison, "was ahead of its time in that a lot of pieces were integrated," Kaminsky says. Oracle was a close runner up, he says, but Sport Chalet was concerned that an employee in accounts payable, for example, would see a different screen then a buyer on the merchandising side, even if the data was the same. "It wasn't like Oracle couldn't do everything; it just felt like SAP had an edge," he says.
Such impressions on would-be customers aren't good for Oracle, as the potential difficulty of integrating its myriad acquisitions is the biggest question hanging over its success in ERP. With the Sport Chalet deal, SAP also is gloating over the win of a "midmarket" company, or one under $1 billion in revenue, which is key to SAP's aggressive plans to grow from 35,000 to 100,000 customers by 2010.

A Harvard B-school prof talks about the trend of companies luring teams from a competitor. Such a move can work wonders -- or fall flat

Lift outs, or the acquisition of entire teams of employees by one company from another, are increasingly prevalent. More businesses, including those in financial services and health care, are luring groups of talented individuals from competitors instead of acquiring or merging with companies.In fact, about 30% of analysts move in teams, says Boris Groysberg, assistant professor at Harvard Business School and co-author of "Lift Outs: How to Acquire a High Functioning Team," an article in the December, 2006, issue of the Harvard Business Review. In the article, Groysberg and co-author Robin Abrahams, a research associate at Harvard Business School, lay out the steps to a successful lift out. The article is the culmination of extensive interviews with leaders of lifted-out teams and work groups in multiple industries and countries, analysis of over 40 high-profile moves, research into best practices as reported by headhunters who facilitate these maneuvers, and two in-depth longitudinal case studies.Once taboo, lift outs are now a viable alternative for companies who want to avoid the headaches of a merger. "You don't want to buy the back office, you don't want to buy support people," says Groysberg. "Instead of buying the firm, you just acquire the team of individuals that has been working together a long time and works well." Lift outs have become more acceptable, in large part, because more U.S. employees are less loyal to the company that signs their paychecks and more aligned with their direct supervisors, Groysberg says.