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.

Bank Brand Loyalty Tested With Every Move

When it comes to lifestage marketing events, new movers have always represented a significant opportunity and risk. This is because consumers who move tend to significantly increase spending in a variety of categories while also changing their brand loyalties as to where they shop, eat, buy personal services and even bank. 

But, with new home sales in 2011 being 80 percent below the peak in 2005 (making the number of existing and new home sales the lowest in almost two decades), should bank marketers still invest in this target audience? Do consumers still spend at the same rate as in the past? Is this target audience even scaleable?

Interestingly, despite the ongoing reduction in home sales, the number of people moving has steadily increased since mid 2009, indicating that consumers in transition still represent both a risk and opportunity for marketers. In fact, the New Mover Report 2012 from Epsilon found that consumers continue to spend thousands of dollars in the months following a move, representing a valuable opportunity for those marketers who can identify and effectively communicate to new movers. 

The study also found three major themes when they looked at consumer spending habits, brand affinity and channel preferences associated with a move from one location to another:

• Consumer brand loyalty is tested during a move, with new movers being twice as likely to change brands or service providers than non-movers.
• New movers have an interest in changing and/or upgrading services such as banking, credit cards and insurance after a move.
• Direct mail continues to be a highly valued channel for receiving information during a move, and is even highly valued by Gen Y consumers.

Big Data Provides Big Opportunity for Bank Loyalty

In a new regulatory environment, banks are faced with changing the foundation of rewards programs that were previously funded by interchange income from credit and debit cards. With debit interchange funding gone, FIs still need to continue to find ways to improve bank loyalty and drive the desired card behavior. In addition, banks need to leverage “big data” and mobile payments in the hope that they can replace some of the revenue lost as a result of Reg E and the Durbin Amendment.

Optimally, the future of rewards and loyalty will allow banks and credit unions to take advantage of the “Loyalty Trifecta” (my term for bringing together the benefits of 1) payment and transactional insight, 2) targeted offers and personalized communication as well as 3) mobile offers and payments).

To get an insider view of the challenges and opportunities available to banks today in the area of rewards and loyalty, I reached out to the leaders of four companies that provide unique solutions to the banking industry and who also will be co-panelists with me at the upcoming BAI Payments Connect 2012 Conference & Expo in a session entitled “Rewards in a Mobile Banking Environment.” 

Thanks to Tom Beecher, CEO, Cartera Commerce Inc.; Rob Heiser, President and CEO, Segmint; Schwark Satyavolu, CEO, Truaxis; and Rod Witmond, senior vice president, Product Management & Marketing, Cardlytics Inc who agreed to participate in the panel and contribute to this interview.

Note: An abridged version of this interview is also located as a BAI Banking Strategies article entitled, Big Data Drives 'Loyalty Trifecta' for Banks.

Banks Need to be Proactive to Stop Switching Trend

According to the 2012 U.S. Bank Customer Switching and Acquisition Study just released today by J.D. Power and Associates, continued frustration with fees and service has resulted in increased levels of switching at large, regional and mid-sized banks, with smaller banks and credit unions faring significantly better.

The study found that 9.6% of consumers switched their banks in the past year compared to 8.7% in 2011 and just 7.7% in 2010. But not all financial organizations were impacted equally. In fact, there was a extremely wide disparity between the switch rates at larger banks (avg. of 10% - 11.3%) and the .9% switch rate of switching at smaller banks and credit unions (a reduction from 8.8% in 2011).

Interestingly, roughly half of those leaving big banks went to another big bank. This could likely be attributed to the importance of being able to serve the customer as their life circumstances change and the importance of convenience as defined by the customer. According to Michael Beird, director of the banking services practice at J. D. Power and Associates, "Our study showed that consumers at smaller banks and credit unions were more likely to shop for an alternative provider if their financial needs  changed. In addition, bricks and mortar and the availability of advanced mobile technology is a value proposition that has yet to be overcome by smaller banks and credit unions." The disparity between large and small bank offerings of mobile services was reinforced by the recent Javelin Strategy & Research study, Mobile Banking, Smartphone and Tablet Forecast 2011 - 2016.

Banks and Credit Unions Focusing on Onboarding to Build Revenues

There has never been so much pressure on financial institutions to maximize the revenue and relationship potential of each customer. With government regulations reducing fee income, historically narrow interest rate spreads, and consumer satisfaction with many financial institutions wavering, there's a need to ensure that once a customer opens a new account, every effort is made to help the customer understand and use their account, expand their relationship, and increase loyalty to your organization.

While time and resources have been dedicated to new customer acquisition processes in the past, a majority of financial institutions are now working to implement or improve the communication process right after account opening and for several months into the relationship. And instead of a single welcome letter (or nothing at all), more and more organizations are using a series of well-timed, personalized communications leveraging multiple channels to improve effectiveness.

According to the recently completed 2012 Financial Services Marketing Survey done in partnership with The Financial Brand, both banks and credit unions indicated that onboarding would be one of the most important strategies for the next 12-24 months, with virtually no institutions stating that the importance of onboarding would be less.

2012 Financial Services Marketing Survey

Banks Need to Make Love Not War

Over the last three days, leaders from the top banks across the country convened at the Barclays 2011 Global Financial Services Conference in New York to present investors with a review of results so far in 2011 and provide an outlook for 2012. Unlike the past two years, where this conference was dominated by bank presentations focused on TARP, credit risk, capital reserves and liquidity, this year's presentations highlighted the opportunity for organic growth and improving client's share of wallet.

For instance, Jim Rohr, Chairman and CEO of PNC Financial Services Group said that PNC will be focused on adding new customer relationships and cross-selling going forward. "If we cross-sell new clients, we'll see an almost $220 million increase," Rohr said during his presentation.

Similarly, Tim Sloan from Wells Fargo discussed significant opportunities that exist as a result of the integration of Wachovia. According to the presentation done by Sloan, there is a variance of an average of one product per household between legacy Wells Fargo (6.25) and the results from the Eastern footprint (5.29). He further illustrated that there is a variance of two products when legacy Wachovia is compared to the top Wells Fargo region (7.36).

The Business Case for Onboarding

SELLING STRATEGIES

Over the past several months, I have spoken to large and small groups of bankers from organizations of all sizes and have been surprised by the number of banks that still do not have a formal onboarding process for customers opening new accounts. 

Given the amount of trade press, webinars, white papers and research done on the value of onboarding, I would have thought that virtually every bank would be communicating with customers aggressively during the instrumental 90 days after account opening.

According to a J.D. Power and Associates study, 2011 U.S. Retail Banking Satisfaction Study, one of the most powerful ways to unlock customer value is to build a multi-channel, multi-touch onboarding process that begins at the new account desk with needs identification and extends to a post-sale communication sequence that builds engagement and share of wallet.

Worldwide Response to the Importance of Cross-Selling

Last July, I posted a question on the Retail Banking Network Group on LinkedIn asking how the goal of cross-selling is prioritized in relationship to the goal of new customer acquisition at banks today. Since my posting, I have had more than 80 comments from bankers representing large and small financial organizations all over the world.

For instance, Lance van Wyk, Regional General Manager at Nedbank Ltd in South Africa believes that education, reward and recognition of employees is needed to improve cross-selling. In addition, he believes the timing of cross-selling is important and states, "Proactive investments in cross-selling at the acquisition stage could prove highly rewarding".

What Bank Marketers Can Learn From Apple

After two and a half weeks of waiting, a lost FedEx delivery and an eventual call and visit to a local Apple store, I am finally the happy owner of a 32GB 3G iPad. While the delivery experience wasn't as smooth as I would have liked (no fault of Apple), the device more than delivers on the promises made and the positive reviews.

The purchase, however, got me thinking about why I (and obviously tens of millions of others) feel so compelled to emotionally purchase devices from Apple that may not be perfect (no flash, no USB port and no camera) and will usually be outdated due to upgrades in a few months.

Onboarding Needs to Reflect Bank Customers' Diverse Preferences and Needs

According to a new Javelin Strategy and Research report issued today, many banks are not leveraging the insight available early in a new relationship to develop customized offers and to utilize preferred channels of communication. In their study entitled, 2010 New Account Onboarding: Using a Systematic, Tactical Approach to Deepen Financial Customer Relationships, the importance of collecting key pieces of information such as age, income and the customer's previous banking experience is emphasized. With this baseline insight, Javelin proposes that communication channel determination and messaging can be improved, thereby leading to improved engagement, retention and cross-sell results.

The findings in the robust 44 page study are a refinement of a previous Javelin onboarding study from 1997 and are consistent with what I have found visiting and speaking with banks across the country. In fact, two of my clients (Zions Bank and KeyBank) are referenced in the study.

Onboarding Communication - How Much is Too Much

As I discuss multichannel new customer onboarding program development with financial organizations, it doesn't take long before the client asks about how much communication is too much early in a new relationship.

Interestingly, according to our research at Harland Clarke as well as research from J.D. Power, the number of new products sold and the customer satisfaction ratings both increase as the number of contacts increase during the first 90 days. In fact, according to J.D. Power, the average number of accounts sold increases from less than 2.5 to more than 3 if the customer is communicated with 4-7 times or more. In addition, the satisfaction ratings increase by more than 10% if more connections are made with the customer who opened up a new account.

Drop in Loyalty and Impact of Premiums Should Concern Bankers

According to the 2010 U.S. Retail Bank New Account Study released by J.D. Power yesterday, large banks captured a higher proportion of prospective customers compared with regional banks. Based on responses from 3,770 consumers who shopped for a new banking account or a new financial institution during the past 12 months, larger banks acquired 70 percent of prospective shoppers while regional banks secured only 59 percent of these shoppers.

According to the study, the higher capture rate by large national banks was significantly impacted by the use of promotional gifts and attractive short-term interest rates, with 24 percent of those opening an account with a large national bank saying that was the primary reason for selecting the bank (compared to only 13 percent for regional bank customers).

Ten Steps to Onboarding Success

Later today, I am presenting at the Oregon Bankers Association 105th Anniversary Convention at Sunriver Resort on the topic, Stemming Attrition and Building Relationships Through Effective Onboarding.

In addition to sharing recent statistics from J.D. Power and Associates around the positive impact of increased attention early in a new relationship and the positive impact of using multiple communication channels from case studies across the banking industry, I will be sharing the ten key steps to onboarding success that I have seen over the past five years.

Effective Onboarding Begins with Good Insight

In 2003, the BAI released a research study entitled, 'The Ninety Day Window of Opportunity', where interviews, deposit statistics and segmentation models revealed that nearly 75% of all cross-sell opportunities and the vast majority of attrition occurred in the first 90 days of a new customer relationship. These findings continue to be verified in the marketplace, with expanded concern recently around the lack of funding, engagement and use of new products by these new customers.

More than ever, financial institutions need to begin the onboarding process by capturing an accurate and robust view of the customer which can be used across the organization to enhance the customer experience and expand the relationship with the bank. In short, to optimize the customer experience during the first critical months and year of the relationship from both the customer's and bank's perspective, you need a 360 degree view of the customer. With online account openings, this process becomes even more critical.

Alternatives to Online Bill Payment May Drive Stronger Engagement

Research has shown that one of the strongest engagement tools for new and existing checking customers is to have the customer set up online bill payment. Unfortunately, even with aggressive 'switch' programs, the success banks have had trying to get customers to sign up for online bill payment has been less than overwhelming.

To try to simplify the signing up for online bill pay (and reduce first year attrition), some banks have moved to promoting the payment of bills using debit and credit cards. In the case of using a debit card, the payment still is taken from a customer's checking account and the process for signing up can actually be easier than with a traditional biller. In addition, using a debit card for bill payment can generate interchange income for the bank, rewards for the customer, and if the payment is recurring, it will not be subject to the new Reg E stipulations.

Chase Card Innovation Gives More Control to Customers

Last September, Chase Bank introduced Chase Blueprint, an innovative set of features that improves the way customers can manage their credit cards with tools to pay down balances, manage spending and pay off major purchases. Available at no charge to more than 20 million consumer and small business Chase credit card customers, Blueprint is fully integrated into the account and consists of four unique features that Chase calls Full Pay, Split, Finish It, and Track It.

The components of Blueprint provide the following benefits:

Growth in Deposits Presents Opportunities and Risks

The American Banker today had an article detailing the recent trend of low cost deposit growth experienced by the major banks in the fourth quarter of 2009. According to KBW Inc.'s Keefe, Bruyette & Woods, the top 40 banks experienced a deposit growth rate of 8% in the quarter, with only a couple large banks intentionally allowing higher-cost deposits inherited during acquisitions to run off during the year.

Even though interest rates remain extremely low, consumers were still saving at a rate of 4.7% as a percentage of disposable income in November, according to the Bureau of Economic Analysis primarily due to uncertainties in the marketplace and due to the view of banks being the safe harbor for funds accumulated during a time of reduced spending.