Giving Finance the Warm Fuzzies
You’re a Boston-based company with six million customers and $600 billion in assets. You offer products like discount brokerage retirement funds, life insurance, and discretionary management money services. But in 1997, your record as an outstanding performer begins to slip a bit – only one of your stocks that year beats the Standard & Poor’s 500-stock index. What do you do?
If you’re Fidelity Investments, Inc., you hire Steve Cone as your president of retail and corporation marketing. A former chief marketing officer for Cleveland-based KeyCorp, Cone sees marketing not as a job, but as a pursuit that fulfills what is deepest in his being: “I love marketing,” he says. “I’m passionate about trying to excite customers about loving the company they work with.”
Cone, 48, has an analytical gift that enables him to see the basic elements of an organization in a new way. Upon his arrival at Fidelity in February 1998, he was quick to implement market initiatives that changed the company’s focus from products to customers.
“Traditionally, Fidelity was organized by product,” says Cone. “But I thought by taking a deeper view of the customer, we could increase customer loyalty, even [increase] their business,” he says.
Cone’s idea was to use the company database to organize customers by sensible segments. The first group would be Fidelity’s employees, a group never before included. Next came the top 20 percent of customers in terms of assets – “the VIPs” – which would be broken down further by kind and asset amount. After that came “the Matures,” customers aged 56 and older, then “the Boomers,” aged 40 to 55, and the 40-and-under “young professionals.”
New products are being developed along those segment lines. For “the VIPs,” Fidelity debuted a tax advantage stock fund that is one of the first to focus on the potential tax consequences of owning an equity fund. For active traders, Cone introduced voice-recognition technology. For customers with young children, Fidelity now offers special tuition savings plans. And for all customers, the company offers free investment portfolio reviews.
“We send you the offer most likely to be of interest to you, to give customers what they most want,” says Cone. The strategy includes providing personalized pages on Fidelity’s Web site and personalized marketing messages on the company’s automatic phone service. The messages are upgraded every week or, if the customer takes advantage of an offer, change the next day.
Fidelity sends out a “very popular” quarterly newsletter – personalized, of course – and, as part of its added-value offers, provides a wireless trading service for active traders, and even a mutual fund alert that tells customers when an account closed to outside shareholders is still open to them. It also offers incentives for customers who register for online trading on the Fidelity Web site.
The use of data is key to all of these. “What the database does is give us a snapshot of the customer and his or her relation to us,” Cone says. Fidelity tracks response rates by seeing who buys what during a particular period. If the response is low, the offer is altered.
The record so far? “By making our direct mail more lively, more personal and warm,” he says, “we’ve had 10-percent response rates.”
Sounds like Fidelity made a solid investment.
