In 2010, BBVA was the second largest bank in Spain (48 million customers and 104,000 employees). Through an acquisition, it entered the US market in 2004. By 2009, it had established itself as the fifteenth largest commercial US bank and a significant regional player in the Sunbelt region.
BBVA has three primary lines of business: retail banking for consumers and businesses, corporate and commercial banking, and wealth management. Their goal is to become one of the top-10 banks in the US. BBVA’s target demographics is consumers identified as “strivers”, upwardly mobile 25-54 years old with an annual income of more than $75,000.
The primary marketing goals for BBVA, through online and offline channels, are to build awareness and trust in their brand, support their various lines of business ...view middle of the document...
Our overall recommendation is to increase marketing funding to online advertising in order to gain more customers.
Currently, only 5% of BBVA customers are acquired through the online channel as opposed to the much larger 95% through offline activities. Our evaluation is that the online acquisition process can be greatly improved. Certainly their competitors are using the online platform to build brand awareness (exhibit 3B) and have a great advantage over BBVA in that regard. Search ads are more effective than display ads and based on acquisition costs much cheaper. Therefore BBVA should look to invest in search ads with a much higher spending ratio vs. display ads (BBVA would be wise to gradually implement this with the intention of within 3-5 years having a 70/30 spending split in favor of search ads). The remaining display ad budget BBVA should concentrate on AOL and avoid duplicates on the other display ad sites. (Exhibit 8 and 9) For search ads, MSN and United Marketplace have low cost per application and low cost for impressions more money should be directed toward those platforms.
Recommendations to further improve the on-line application process are; insure proper notifications, alerts, and reminders are done for each of the application processes (Completion, Funding, and Low Balances) and look to use free online advertising platforms.
An effective acquisition cost for BBVA is between $100 and $150, anything below $100 is great. Customer retention rate plays a key role in forecasting Customer Lifetime Value (CLV). A typical bank has a CLV of $800 per 5 years and retention rate of 80%. Using a formula based on a typical banks CLV (1/1-r=5 years) BBVA’s CLV is $640 with an average retention rate of 60% per 4 years (average of online and offline). In order to improve BBVA’s CLV, retention rate is key, and this must factor into BBVA’s acquisition plans for the online channel.