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  1. Analysis
May 27, 2011

NAB social media break-up campaign pays off

National Australia Banks (NAB) break-up campaign a promotion it commenced engaging various social media platforms such as Twitter and YouTube in mid-February to attract mortgage customers from rival banks has become a marketing and commercial hit. NAB has recorded a "significant increase" in the number of mortgage customers switching from Commonwealth Bank of Australia (CBA) and Westpac to NABs lower standard variable home loan rate since the launch of the break-up campaign by 43% and 37% respectively, according to NABs group executive, personal banking, Lisa Gray.

National Australia Bank’s (NAB) break-up campaign – a promotion it commenced engaging various social media platforms such as Twitter and YouTube in mid-February to attract mortgage customers from rival banks – has become a marketing and commercial hit.

NAB has recorded a “significant increase” in the number of mortgage customers switching from Commonwealth Bank of Australia (CBA) and Westpac to NAB’s lower standard variable home loan rate since the launch of the break-up campaign – by 43% and 37% respectively, according to NAB’s group executive, personal banking, Lisa Gray.

Gray said NAB would continue to offer to pay A$700 ($748.61) in early exit fees if CBA’s and Westpac’s mortgage customers switch to NAB’s standard variable home loan rate.

NAB’s other traditional rival, Australia and New Zealand Banking Group (ANZ) scrapped its mortgage exit fees in November 2010.

 

70% rise in new mortgage customers since February

NAB’s social media drive has also helped the bank register a 70% increase in the number of new mortgage customers since the “break-up”.

“NAB customers are now A$47 per month better off on an average $300,000 home loan than the customers of the most expensively priced major bank,” said Gray.

Regulatory reform on banking competition in Australia is one of the primary factors driving change in the market.

In March, all of the country’s senior bankers were called before the country’s Senate Economics Committee in relation to three amendments of the country’s 1959 Banking Act.

The proposals included preventing banks from changing variable interest rate charges on mortgages above or below the Reserve Bank of Australia’s discount rate, as well as the banning of some ATM fees and mortgage exit fees.

In light of growing competition, NAB began to abolish monthly account service fees on most popular retail banking transaction accounts 22 months ago.

 

Using social media to differentiate itself

It also slashed fees on several personal and transaction accounts, enhanced its credit card offering by making it “fairer” for customers and, by joining the rediATM alliance with Cuscal, doubled its ATM-network to over 3,100 units in almost two years.

But as banks are facing harsh restrictions on loans, NAB seized the social media initiative to differentiate itself from competitors:

On the weekend before Valentine’s Day, NAB commenced the break-up campaign on Twitter, posting a tweet that read:

“Sooooo stressed out. Have to make a tough decision and I know I’ll probably hurt someone’s feelings! Arrggghhh.”

NAB also posted a link to its YouTube page, which was set up in 2005 and has had 71,852 channels as well as 238,807 total upload views. It also launched a micro-site at www.breakup.nab.com.au.

The YouTube video showed somebody – NAB – writing a letter to CBA, ANZ and Westpac, explaining the break-up: “(…)I’ve decided I need to break up with you. Honestly, it isn’t you…it’s me. I’ve changed. I’ve moved on. (…)”.

 

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