To preview a compelling Loyalty360 webinar, Banking on Loyalty: Why Financial Institutions Must Foster Ongoing Engagement, Not Transactions, set for Nov. 3 at 1 p.m. EST, the two scheduled speakers participated in a riveting Q&A with Loyalty360.
The webinar will be co-presented by Aite Group and Deluxe Rewards.
Jane Johnson, Strategic Account Development Director with Deluxe Rewards, addressed the following questions:
What are banks and credit unions doing well in the area of customer engagement, and where are they falling short?
When it comes to customer engagement, the larger U.S. banks have definitely realized the importance of online and mobile banking. Their customers have embraced these channels and the banks have responded with online and mobile banking sites and apps. Smaller banks and credit unions are following suit. The area where the banking industry falls short as a whole is in their continued product centric organizational structures, legacy systems and marketing communications. Financial institutions are missing the opportunity to build a complete relationship with their customers because they lack the customer-centric view that is required to do so. And the missed opportunity is a big one–with the average consumer purchasing eight financial products but only three of them are with their primary financial institution. A customer-centric approach would allow these banks to win their customers’ business for the other five.
How can banks and credit unions drive more customer loyalty?
Banks and credit unions can drive customer loyalty by using the wealth of information they capture and maintain on their customers’ financial behaviors. They need to bring this data together from across product lines to build a 360-degree view of the customer and then use the data to create timely and relevant touch points with their customers. Consumers are loyal to the companies that know them and offer timely and relevant offers that meet their needs.
How can a loyalty program jumpstart this process, and how can the customer insights be leveraged to promote better customer engagement?
Integrating product-centric legacy systems can be a long and daunting process. Partnerships with trusted third-party providers, such as a loyalty platform provider, can shortcut this process and allow banks to quickly spin up an enterprise-wide reward and marketing engine. Once this data is all in one place, banks can begin reward relevant customer behaviors across the enterprise and identify the best opportunities for upselling and cross-selling new products and services to the customer. And a loyalty program is a great way to increase engagement with the customer in new and exciting ways–including gamification techniques such as sweepstakes, auctions, daily deals and promotional codes. These new reward interactions change the way customers think about their primary bank.
The following questions were answered by Andrew Copeman, Senior Analyst with Aite Group.
Why should banks and credit unions change their thinking about customer loyalty and retention?
Banks and credit unions recognize that they are operating in a rapidly changing world, in which old certainties no longer apply. They face an increasing array of challenges, including a banking environment which is becoming increasingly competitive as new tech-led startups attract funding and attention from consumers. At the same time, they are more in tune with the mindset of the millennial generation, appealing to its use of interactive and mobile technology, and its avoidance of some more traditional means of engagement, such as branches. In addition to increased competition and changing customer behavior, mobile devices offer platforms for retailers to engage with shoppers, loyalty offers to be displayed and promoted, and new payment technologies developed. In this environment, immediacy is key. Banks are in danger of allowing themselves to be further disintermediated as other businesses vie for the consumer’s attention.
What can these institutions do better or start doing, in terms of fostering sharper customer engagement?
Banks still have many important strengths–they need to use them to the best advantage. They still have the benefit of strong brands, for example, and a reputation for security, solidity, and probity. They also have massive amounts of behavioral data at their fingertips from every payment instrument the customer uses. What they need to do, therefore, is to start to think more creatively about how to bring these strengths together in a way that engages their customers and strengthens their relationships.
Banks should start to segment their approach to loyalty and think about it in terms of customer lifestyle and attitude, rather than through the rather blunt instrument of loyalty point schemes. They should understand changing customer behaviors, develop the means to deliver benefits at a much finer level, and start to lever the data they hold. For example, not all customers like or respond to reward schemes and points systems. Many would prefer advantageous interest rates for savings or borrowing, or travel benefits. Banks need to be significantly better at finding out what different customers respond to, and how they would prefer to be rewarded for their loyalty.
Where does digital banking fit into this as far as a customer engagement strategy?
The key thing is to take a holistic view of the entire customer-bank relationship, and learn how to best use all the engagement opportunities and channels available wisely. It is not about swamping customers with a barrage of information or offers, or requests for feedback after every interaction. It is instead about learning how best to engage and how frequently, whether it is better to inform, or entertain the customer, whether they respond better to targeted offers, broadly based points schemes, pricing incentives, promotions, gamification, etc. It is also critical to keep things fresh over time. Increasingly, banks can no longer deliver all of this strategy themselves. They need to explore partnerships with specialists in data analysis, rewards, etc. and seek to bring loyalty-related benefits together as part of an overarching customer engagement strategy. As we go forward, this strategy will increasingly be tailored to the individual, rather than broad cohorts of customers.