The financial industry is changing, and rapidly, which makes the growing emphasis on maximizing customer experience and winning brand loyalty now so important. As the marketing landscape evolves and new digital and social technologies emerge at every turn, banks and financial organizations must remain vigilant about adapting alongside these cultural shifts.
That was the focus of Tuesday’s Loyalty360 webinar, where Andrew Copeman, Aite Group Senior Analyst, and Jane Johnson, Strategic Account Development Director of Deluxe Rewards, urged customer experience and financial professionals to change their thinking about customer loyalty.
During the webinar titled, “Banking on Loyalty: Why Financial Institutions Must Foster Ongoing Engagement, Not Transactions,” Copeman and Johnson demonstrated why traditional tactics no longer win loyalty and how new holistic approaches can nurture continuous engagement.
The webinar was co-presented by Aite Group and Deluxe Rewards.
“For a long time, banking seemed to be relatively resistant to the disruptive power of the Internet, but that is not the case anymore,” Copeman said. “Banking is becoming an increasingly digital and virtual industry. Branches are under threat as people change the manner in which they prefer to do business with banks, and payments are moving to mobile and online channels.”
Nonetheless, most banks are still mostly structured for an older era. There are legacy IT systems abound, slow and lengthy business decision-making processes run rampant, and, of course, customer engagement efforts are not equipped to retain customers, much less keep them happy.
“Banks best think about how to work with this tidal wave of change because they are certainly unable to stop it,” Copeman continued. “It is time for a rethink.”
According to Johnson, one of the ways to begin tackling this problem is to think about implementing a “Rewards 3.0” loyalty program. Unlike a traditional loyalty program that simply offers points based on behaviors, Rewards 3.0 programs combine the best of both traditional programs and benefits programs, which also offer faster redemption rates, controlled liability factors, and support a wide range of diverse segments.
“This is a loyalty methodology that addresses the downfalls of the two previous versions,” said Johnson.
This helps transfer from a mentality driven by short-term tactical goals toward a refocused emphasis on building long-term customer relationships. In our new digital world, loyalty is best achieved by generating a deeper level of engagement. This also means that financial organizations must begin to leverage the tools most relevant to this type of engagement, which is seeing the rise of mobile and the decline of obsolete plastic cards.
“Moving away from product-centric to customer-centric is really key,” said Johnson. “That is really going to allow banks to move that customer relationship away from a commodity mentality toward a full company-wide relationship. And that can be difficult today given the siloes and legacy systems that are still in place.”
Johnson and Copeman both stressed that since customer loyalty is changing so quickly, banks are in real danger of being left behind.
But to successfully embed loyalty in a bank during the age of digital engagement, financial organizations must work hard to build up trust between the customer and their brand, generate a larger community footprint, completely embrace mobile banking, and never underestimate the power of big data and analytical insights.
“One of the key messages that we want to get across is that it is important to have consistent and appropriate engagement with customers,” said Copeman. “Customers value communications that are meaningful and offers that are transparent, and it is easy to turn customers off. They are very wary of potentially hidden fees or rewards that are unattainable. So that needs to be built into a loyalty program’s design. You do not want to do anything that can undermine confidence.”
Johnson and Copeman concluded with a few main takeaways that financial customer engagement professionals must consider.
1) Ensure consistent and appropriate engagement with customers
2) Lock in positive behaviors via meaningful incentives
3) Utilize the power of data, and particularly behavioral data
4) Leverage the power of mobile devices
5) Use the power of user groups