Working in the banking industry it seems obvious that rates have been going up. That insight is not nearly so obvious to consumers and the absence of that perception needs to figure into your marketing. In a study conducted by Raddon, only 10% of consumers perceived that rates had already gone up. That’s a kick in the teeth to bankers who have been feeling the pain of increased cost of funds, but an important insight to marketers charged with finding deposits.
Here’s the problem. The public is so far unimpressed by the magnitude of our rate offers. Raddon’s research shows that while customers will shift their dollars around accounts in your institution for a small increase, it takes 3% extra to make them pack up and move their dollars elsewhere. The story is a little better among high balance customers—they’ll change shops for 2.5%. Most promotions today don’t approach that level of change.
That’s where the marketing rub lies. Even if you are successful in bringing in dollars to your latest CD campaign, there’s a good possibility that you’re just shifting current customer dollars around without making a big dent on new to bank money. What’s worse, in doing so, you may be producing increases in cost of funds that are significant to you without impressing the new customer.