This post was co-authored by JD Metcalf, Laura Watson and Nicole Pawluck.
The trend toward more personalized, human marketing will impact banks in a number of different ways. The first, and one of the most critical, is customer retention. About 46% of banking customers would strongly consider switching to one of the GAFA tech giants (Google, Apple, Facebook and Amazon) if they offered banking products. This tells us that customers are looking for a more personalized experience. Providing that experience will increase the chances that you’ll be able to retain your current, profitable customers.
Further research on customer experiences conducted by Forrester shows that a one point increase in the Forrester Customer Experience score improves a bank’s revenue by $8.27 per household. For a bank with only 121,000 households, that adds up to $1 million in additional revenue.
Cross-sell and channel migration are other areas that are impacted positively by properly segmenting your audiences and providing them with a personalized experience.
Here are three quick examples that can be implemented immediately:
1. New movers & pre-movers
Traditionally, this segment has primarily been used in acquisition efforts. But with 6% of Americans buying homes every year, it can be used for cross-sell as well. What do consumers do after they spend a lot of money purchasing a new home? They spend more money furnishing that home, remodeling that home, or buying a new car that looks good in front of that new home (or meets the life change need driving the home purchase in the first place).
About 46% of banking customers would strongly consider switching to one of the GAFA tech giants (Google, Apple, Facebook and Amazon) if they offered banking products.
In short, they spend. And they usually need a line of credit to support all of that spending.
If you’re fortunate enough to have written a mortgage for your customer, then you have a lot of data already about the move and that customer’s financial picture. Everything goes on that mortgage application: cash assets, credit accounts, salary, etc. But even if you don’t have the mortgage, you can tell when a customer is planning a move or has moved. It shows up in the form of large cash flows going out, large cash flows coming in, or a new automated clearing house (ACH) being set up to pay the mortgage provider. There are also valuable sources of data that identify if a customer has moved based on change of address data, or is looking to move based on real estate listing and other data.
All of these are signals that tell you a customer may be likely to enter into a new buyer’s journey with you — and why. You can use these clues to provide a customer with contextual information about credit, for example, when she or he may be short on cash to fulfill some spending needs.
2. Frequent digital use
Banks can reduce operating expenses and better service customer needs by engaging customers via their preferred channels. More than $1.2M is generated in ecommerce every 30 seconds, and that number continues to grow. With 60% of US adults banking online, and 70% of Millennials using mobile banking, that preferred channel is digital most of the time.
But a couple of services lag behind that adoption rate: paperless statements (or eStatements) and remote deposit capture (RDC). On average, switching a customer to eStatements saves a bank $14 per year, and a check deposited by RDC costs 600% less than one deposited at a branch.
What is the greatest indicator of a customer using a digital channel? They use one or more already. This is your opportunity to deepen the relationship by encouraging use of additional digital services. It’s amazing how many online banking customers aren’t already on eStatements or using RDC. It’s often because they have not tried it or simply did not take the time to enroll. A quick way to reduce operating expenses and help digital customers enjoy more digital features is to actively engage this segment with compelling messaging about eStatements and RDC. And not the “save the forest” messaging—it needs to be much more compelling. Consider testing a $5 cash deposit to the customer’s account for trying RDC so that they can experience how fast and easy it is. It’s worth at least $14 per year in expense savings to get a customer migrated to RDC and eStatements.
This same methodology can be put into practice with alerts, app use, and other digital offerings. It is likely that at least 20% of your bank customers are digital-only users, and if consumers like a channel, they will use it. They may just need a little help understanding how easy it is to get started. This is where your contextual content and messaging to this segment comes into play.
3. Media channel
86% of customers like receiving at least monthly emails from firms they have a relationship with, and 51% of consumers want to receive proactive offers and insights from their bank. Together, these stats make a case for identifying the segment of customers that is most engaged with the email channel. This doesn’t give us carte blanche to send whatever we want, whenever we want, but it does show that generally customers are open to receiving email offers. But we need to get more refined than this.
86% of customers like receiving at least monthly emails from firms they have a relationship with, and 51% of consumers want to receive proactive offers and insights from their bank.
Much like the data that helps to segment digital users, media channel preference can be determined using current data. There are some simple email stats that can help identify the segment of customers who are most likely to engage and respond. Basic metrics like open rate and click-thru rate tell a lot about a customer’s desire to receive and read email. Then, take things a step further and measure the attention rate (time spent reading) and you find out which topics are most relevant to your customers. This is a way customers self-segment. Now you can personalize future messaging to this segment based on their preference for email and their interests — as defined by their behaviors.
Case Study: Moving a Large Regional Bank from Campaign-Centric to Human-Centric
Retain and increase cross-sell of current customers by creating smarter, more human customer interactions.
Without the money and resources to compete with big banks, our regional bank client needed to make every marketing dollar count to drive value for their customers and their shareholders.
We created a program that integrated digital and traditional channels for more seamless customer engagement, leveraged personalization across channels, and significantly improved efficiencies.
They are now connecting with their customers in deeper, more meaningful and personal ways across nine unique channels, including paid search, display ads and retargeting. Today, they’re competing more effectively with the big brands AND driving increased revenue.
Results from the program launch were unprecedented:
Everyone should be moving toward providing the personalized experience that customers now demand. The world is moving quickly in this direction and expectations are rising every day. Fortunately, it is also getting easier to craft the kind of systems that enable an increasingly personalized experience.
Regardless of where your bank is in the spectrum of personalized experience for your customers — focusing on the right customers and getting to know them deeply is the first major step every bank must take to improve customer experience and drive revenue.
Have you read this one yet? If not, you'll want to check it out! The Path to Virtual Advisors Begins with Getting to Know your Customers
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