9 Secrets to Building Customer Engagement in Banking

Virtually every bank and credit union has the acquisition of new customers as a top priority for 2014. But generating a new account is only the beginning. To generate near-term profitability and long-term relationships, the new customer must become fully engaged. 

Customer engagement can not be achieved in a day, week or a month. It is the foundation of a relationship that includes trust, dialogue, a steady growth in service ownership and a growth in share of wallet if done correctly. The alternative to focusing on building customer engagement is a relationship that does not meet its full potential or customer attrition.

According to Gallup research entitled, The Financial and Emotional Benefits of Fully Engaged Bank Customers, the tangible benefits of a fully engaged customer that is both attitudinally loyal and emotionally attached to the bank include the following:

• Increased Revenues, Wallet Share and Product Penetration: Customers who are fully engaged bring $402 in additional revenue per year to their primary bank compared with those who are actively disengaged, 10% greater wallet share in deposit balances and 14% greater wallet share in investments. Fully engaged customers also average 1.14 additional product categories with their primary bank than do customers who are 'actively disengaged'.

Source: Gallup (2014)

• Greater Purchase Intent and Consideration: An engaged customer not only holds more accounts at their primary bank, they also look to that same bank when considering future needs. At a time when so much of the shopping process is done online, improving your bank's chances of being in the customer's consideration set is important.

• Becoming a Financial Partner: Less tangible, but no less important, the Gallup research showed that an engaged customer builds a bond with their bank or credit union that every financial institution would covet. According to the research 54 percent of engaged customers strongly agree that their bank helps their financial dreams come true and a similar percentage believe their bank makes their life more enjoyable. Most importantly, 71 percent of engaged customers say they will use their current bank for the rest of their life.

Here are the secrets to setting the foundation for strong customer engagement:

1. Improve Acquisition Targeting

Customer engagement begins before a new customer even opens an account. With today's depth of data and processing capability, it is possible to find new prospects that are similar to the best customers who already have accounts at a financial institution. By building acquisition models that look at product usage, financial behavior and relationship profitability, opening accounts that have limited potential for engagement or growth is reduced.

Beyond demographic, financial behavior and product use modeling, geographic modeling is also important since the strongest potential trade areas are not always clearly defined by branch radius mapping. 

2. Change the Conversation

One of the key elements of building an engaged customer relationship begins with the conversation during the initial account opening process. To build trust, the conversation must focus on making sure the customer believes that you are genuinely interested in getting to know them, are willing to look out for them and that, over time, you will reward them for their business/loyalty.

This early conversation needs to focus more on capturing insight from the customer and discussing the value different products and services will have from the customer perspective as opposed to simply discussing features. The goal is to illustrate to the customer that the products and services being sold will meet their unique financial and non-financial needs. 

Some of the insight that should be collected (beyond the basics) includes:

• Financial objectives
• Primary financial decision maker in the household (it is often the wife)
• Communication channel preference(s) 
• Accounts held elsewhere (balance details are not as important as knowing the category)

Unfortunately, research studies indicate that the majority of branch personnel have difficulty having in-depth conversations with customers around needs and the value of an organization's services. In other words, having a firm grasp of product knowledge is no longer enough. The initial focus should also be on sales quality as opposed to sales quantity. 

Interestingly, some financial institutions have begun utilizing iPads to collect insight directly from the customer. While seeming less personal, an iPad new account questionnaire standardizes the collection process and usually is able to collect far more personal information than the bank or credit union employee is comfortable collecting.

3.  Communicate Early and Often

It is interesting how banks and credit unions set objectives for expanding a customer relationship and engagement and then establish arbitrary rules around communication frequency and cadence. It is not uncommon for a bank to limit the number of 'touches' to one a month or less despite the fact that a new customer has been shown to desire significantly more interaction as part of their new 

relationship.

In fact, research from J.D. Power has found that the optimum number of communication messages during the first 90 day period from both a customer satisfaction and relationship growth perspective is seven 'touches' across various communication channels.

An example of an onboarding engagement communications plan is shown below. The contacts below don't include additional media such as online and mobile banking messaging, ATM messaging, digital retargeting, etc. It is important to remember that at the very least, an engagement communications plan should include a 'thank you' message within the first 5 days of the account opening (from either as new or existing customer).

	Focus	Messages Sent	Email	Mobile
Day 1	Welcome & Activation	Welcome Kit Preapproved Offer	Email Capture	Mobile Capture
Day 2	Thank You		Welcome Email	Welcome Text
Day 5	Utilization	New Account Follow-Up 'Go With' Service Discussion	Alert Notification Sign-Up	Alert Notification Text
Days 7-30	Utilization & Engagement	Branch Phone Check-In Engagement Letter	Engagement Email (Direct Deposit/Online BillPay)	Engagement Text (Direct Deposit)
Days 30-60	Utilization & Engagement	Branch Engagement Call	Day 30 Engagement Email Day 45 Utilization Email	Engagement Text (Mobile Deposit)
Days 60-90	Engagement & Cross-Sell	Call Center Relationship Expansion	Modeled Engagement Service Email	Engagement Text Rewards Offer
Days 90-180	Cross-Sell	Call Center Relationship Expansions	Modeled Service Cross-Sell	Modeled Service Cross-Sell

Top 8 Financial Marketing Resolutions For a Successful 2014

For the past three years, I have published an article on resolutions bank and credit union marketers should make for the upcoming year. While these posts have always been extremely popular and well read, many marketers still have difficulty achieving some of the most important resolutions.

Despite this lack of success by some, I am again providing suggested resolutions for financial marketers since research shows that people who make resolutions are ten times more likely to attain their goals.

When I published my first financial marketing resolution post in 2011(Ten Bank Marketer Resolutions for 2011), the primary emphasis was on replacing lost fee income caused by the Card Act, Reg. E and the Durbin Amendment. Most of the other resolutions addressed ways to either generate new revenues or reduce costs. I did discuss the need to test social media marketing, deliver on the mobile banking promise and reconfigure the branch model, but these were not the highest priorities in 2011.

My resolution post for 2012 (10 Resolutions Bank Marketers Can't Ignore in 2012) enlisted the support of more than 20 global banking industry leaders to help develop suggested strategies for the upcoming year. While the focus of many of the resolutions were similar to the prior year (communication channel mix, customer centricity, social media testing and building share of wallet), discussion expanded to include the importance of leveraging big data and embracing innovation.

As with any list of resolutions, last year's banking industry leader crowdsourcing post (22 Industry Leaders Provide New Years Resolutions for Bank Marketers) included several resolutions from prior years that still presented a challenge, such as enhancing the customer experience, improving measurement of results, integrating the mobile channel and continuing to innovate. The major difference last year was the increasing importance of focus and grabbing the lower hanging fruit due to all of the distractions caused by new regulations and compliance initiatives.

This year, I again collected ideas from some of the most prominent names in the banking industry in the development of my top resolutions for financial marketers. I also researched trends in other industries that are served by my firm, New Control. While some of the suggested resolutions are similar to those in the past, the impact of digital shopping, big data, the mobile channel and a contextual customer experience is evident.

Maximize Bank Marketing Results With CRM Retargeting

From the beginning of a relationship, banks and credit unions capture and store customer data within a CRM database. This data is often enhanced with transaction history, purchase behavior and contact history and used as the foundation for building models to better target communication through direct mail and email marketing.

But what if you could leverage your offline CRM database for digital marketing campaigns as well, transforming your data into anonymized online segments through a process called data onboarding? These segments would then receive messages as a follow-up to your direct mail and email campaigns, improving all direct marketing results.

In the whitepaper, "Data Onboarding: The Key to a Successful Marketing Kingdom," Epsilon and LiveRamp discuss the benefits of integrating offline CRM data with online digital marketing. "Using CRM data to market effectively across channels is essential for marketers who want to reach their target audience multiple times with engaging, relevant and consistent messaging," says Auren Hoffman, CEO of LiveRamp.

What is CRM Retargeting?

Unlike regular retargeting (covered in Bank Marketing Strategy last October), CRM retargeting uses your internal offline customer and/or prospect database to reach individuals and households online, not just after they visit your website. By 'onboarding' your offline data, you can reach your customer and/or prospect segments with highly targeted display ads appropriate to their purchase history and interests.

CRM retargeting provider ReTargeter founder and CEO Arjun Dev Arora says, “With CRM Retargeting, marketers can seamlessly integrate display ads with their existing email and direct mail initiatives to create effective cross-channel campaigns with ease.”

Simply put, it's the marriage of the precision of using direct mail or email combined with the rich content and context of display - bridging the worlds of offline and online marketing for more successful customer communication. Since not every customer visits your website regularly (if at all), CRM retargeting is a great way to re-engage these customers and welcome them to key areas of your site.

Improving Bank Onboarding, Cross-Selling and Retention With Personalized Video

At a time when self-service banking models are replacing one-to-one interaction, personalized videos can provide a highly engaging and relevant communication option that can improve engagement, increase sales and reduce churn. 

Combining real-time data with highly customized content, marketers can turn big data insights into differentiated 'wow' experiences.

Online video is coming into its own, no longer being just an add-on component to institution's Web site. Partially due to the explosive growth of tablets, web videos have evolved beyond being used just for education or brand building to become a viable direct marketing messaging and selling tool, deserving of dedicated resources.

Online Content Booming

According to recently released data from comScore, 180 million U.S. Internet users watched almost 36.2 billion online videos in January of 2013. While the majority of these videos were for entertainment purposes, nearly 25 percent were promotional content, helping companies communicate with new and existing customers. In fact, video ads were the fastest growing category of online advertising in 2012, with U.S. spending increasing 46 percent to $2.9 billion.

More and more sophisticated viewers don't want to watch a repurposed 30-second TV spot on their computer, tablet or phone. They want online content that is personalized, compelling and interactive. "People are sitting viewing content online wanting to push a button -- give them a reason to push a button," said Jay Miletsky, CEO of online video network MyPod Studios in an interview with CMO.com. If done right, online video can be both a strong branding opportunity and an effective engagement tool.

A survey by Digitas found that 51 percent of online video viewers in the sought after 18 to 44 year old demographic would look up a new brand or product they saw on an online video, and 58 percent of 18 to 34 year olds who follow brands on social media would watch a video that a brand posted online. In addition, the just released Global Video Index : 2012 Year in Review conducted by video analytics provider Ooyala, found that while viewership differs between devices (desktop, tablet, mobile), the overall amount of viewing doubled in 2012.

5 Bank Marketing Strategy 'Quick Wins'

With the start of a new year, financial institution marketers are under increased scrutiny to generate measurable returns on marketing investments. While it is important to focus on the 'big picture', moving  your organization forward to create long-term value, many institutions ignore 'quick wins' along the way that can build momentum. 

Winning organizations are advised to leverage a hybrid approach to marketing strategy prioritization, using short-term wins as milestones that are aligned with longer term objectives. When implemented correctly, quick wins have the added advantage of serving as clarion calls that signal deviations from the overarching roadmap to success.

Over the past few years, I have written several blog posts on specific bank marketing strategies for financial institutions looking to acquire new customers, improve product engagement, increase share of wallet, reduce attrition and enhance the customer experience. Some of the strategies are complex and are more difficult to implement, while others represent money that is left on the table if not initiated by a bank or credit union. 

The key is to effectively prioritize your strategies and implement those that meet your organization's goals while not burning unneeded resources.

Strategy Prioritization Matrix

A Strategy Prioritization Matrix (SPM) is an easy to use tool to quickly and easily identify those initiatives from a wish list that offer the highest return for the least amount of effort. This tool is especially useful for organizations that have more marketing initiatives than can be funded, or where human resources are limited (every financial organization I know).

The Strategy Prioritization Matrix quadrants include:

• Quick Wins (High Impact, Low Effort): These are the most attractive projects, giving you a good return for relatively low effort. Focus on these to build momentum and a strong ROI;
• Must Haves (High Impact, High Effort): While these provide strong returns, they take longer and use more resources, potentially crowding out viable 'quick wins'. While these are important, they only bring a return when complete. Set deadlines for completion but don't ignore their importance;
• Low Hanging Fruit (Low Impact, Low Effort): While tempting, don't focus too much on these unless they are creating a distraction to the accomplishment of either of the above. Do these in spare time, but put them to the side if a 'quick win' or 'must have' initiative comes along;
• Money Pits (Low Impact, High Effort): These strategies should always be avoided. Not only do they provide low returns, but they crowd out time that is better used on any of the other three quadrants.

Banks Include Retargeting As Part Of Digital Marketing Strategy

While not a new tactic in the online world, retargeting is gaining momentum from more than just e-commerce players. 

Due to the ability to target interested consumers as they proceed through the purchase funnel, financial marketers are increasingly leveraging ad-tech advancements to influence financial service buying behavior.

Over the weekend, my son and I were looking at new car options on Edmunds.com. After about 45 minutes on the site, I decided to leave the virtual showroom only to be 'stalked' by car ads for the next two days as I visited totally unrelated locations on the web (I am sure the retargeting won't end soon). Even my entry into the Edmonds.com site was a bit unnerving since the front page of the site was promoting the newest version of the car currently sitting in my garage. 

A coincidence? . . . Not a chance. In fact, illustrating the digital geotargeting prowess of the team at Edmunds.com, the first search I did for the category of car I might be interested in highlighted a sponsored ad from the brand of the other car in our garage . . . from a local dealer. 

It comes as no surprise to today's consumer that the internet knows almost everything about us due to the tagging, tracking and monitoring that is done on an amazing amount of 'big data' flowing in the digital universe. Technology and digital tools have the ability to process our digital footprints almost as fast as we surf the web, predicting what we might do next and what we may be interested in purchasing.

While becoming almost Orwellian in it's omniscience, and a very powerful tool for digital marketers, the process is not always perfect. For instance, because of my profession and my search habits, I am often targeted for financial services I don't need, a new brand of smartphone I don't want and a candidate I would never vote for. Worse yet, I am sometimes targeted for something I already bought (an example of marketing without sufficient channel integration).

Despite the occasional mistargeting, the 2012 Display Advertising Study from Bizrate Insights found that the majority of consumers (60 percent) were neutral on the tactic of retargeting, 25 percent appreciate the ads because they "remind [them] of what [they were] looking at previously, and only 15% do not like the process." Also noted was the convenience of being able to visit a web site users already were intending to visit (28 percent), and the proactive offering of more information on a desired product or service (21 percent).

From a marketers perspective, retargeting allows an organization to customize the overall prospect or customer experience and maintain consistency across all customer touch points. In other words, the retargeting does not need to stop with online ads, but could extend to email and even direct mail as part of an overarching cross-channel strategy.