Financial Marketers Are Failing to Curb Customer Defections

For banks and credit unions, it seems that “improving the customer experience” is an annual goal on the to-do list. And many institutions pump a lot of money and resources into areas that would ostensibly accomplish this, such as digital channels, marketing and advertising, updating branches and more. Yet, consumer trust in banks still remains low. According to Accenture, only 43% of customers say they trust banks to help them look after their long-term financial health.

For financial marketers, this means they must reach customers with messages that resonate with empathy and understanding. According to a Nielsen paper, marketers must “connect with people and build meaningful relationships based on true needs.”

This involves growing top-of-mind awareness, the firm notes, and tailoring messaging to meet each particular customer’s needs and experiences.

The Double-Edged Sword of Digital Delivery

We all know the story: Consumers love digital financial services, whether it be for accessing accounts, opening new accounts, budgeting or a wide range of other things. And financial institutions have placed a priority on digital. Even the smallest community bank knows it must invest what it can in digital, and many of the largest global banks have tech R&D budgets that would make many software companies blush.

But the irony is that the evolving nature of the digital world has only served to fragment the customer relationship. Long gone are the days when a customer— passbook in hand — strolled into a branch of the institution that held their checking account, savings account, mortgage and children’s college fund. The rise of digital has commoditized financial services and has led to consumers having many different financial relationships, often not with traditional providers.

According to Nielsen data, fewer than half of U.S. bank customers consider their bank to be their primary financial services provider. Furthermore, they are increasingly less likely to use their primary bank for products like home loans and credit cards, Nielsen notes, instead often gravitating to fintech and digital providers.

Pick and Choose:

The smorgasbord style of consumer behavior today makes it difficult for financial institutions to create long-term ‘sticky’ relationships.

Comfort, Plus Ease of Use Is a Strong Pull

This means financial marketers need to build real connections and long-lasting meaningful relationships with customers. But this is easier said than done. According to Nielsen data, 32% of consumers say they will only engage with a brand they are familiar with. This is especially true in financial services. Getting a mortgage is not like buying a scarf, and most people are reticent and cautious when considering acquiring a new financial product.

Key Takeaway:

Consumers are much more likely to do business with a company they say they feel comfortable with.

Nielsen notes that more than one-fourth (28%) of consumers consider themselves concerned or nervous at the start of the journey for a financial services product, whereas only 18% would describe themselves as confident.

Yet consumers clearly have become familiar with, and comfortable with, nonbank financial providers, notably Quicken Loans for mortgages and PayPal for payments.

Part of the reason may be that traditional institutions are regarded as secure, trusted custodians, but not particularly helpful or easy to deal with.

Flip the Funnel Focus

To overcome this, Nielsen advises financial marketers to focus more on top-of-the-funnel efforts in order to create an always-on, nurturing style of messaging.

“Placing too much emphasis on lower-funnel efforts, such as direct mail and search (which financial services marketers have historically relied on more than other industries), can also diminish brand equity,” the company states. “While marketers should not abandon these efforts, they need to do more to grow brand awareness for consumers at the start of the customer journey.”

When institutions focus on mid- and lower-funnel marketing, they can fail to connect with consumers who need brand-introducing efforts to understand which companies they should consider and what products they offer. For example, more than one-third (36%) of U.S. consumers say it’s important to be familiar with brands so they can determine if they are a right fit for their needs.” Sure, people may be familiar with their financial institution, by long force of habit, but not in a way that inspired further engagement.

The Art of Storytelling

One way to effectively connect with consumers is through engaging storytelling, especially in digital channels. Creating something not only engaging, but also shareable, will stick in consumer’s minds and place an institution in a position of trust, as noted in a blog from Everfi.

“Your marketing strategy should encompass telling a story that captures interest and evokes emotion to interest, excite, and move the viewer,” says Everfi. “Here, your goal is to create relatable and shareable content which can educate, entertain, or help the reader in some way — and hopefully manage all three at once.”

Banks and credit unions should also share helpful information and actionable insights in their marketing messaging. This plays into the theme that many consumers are nervous when it comes to financial matters and looking for a guiding hand.

Instead of presenting statistics in an efficient, but intimidating table or list, create a visually appealing infographic that directs a reader’s eye toward the most important data.

Making It Personal Always Helps

Nielsen also advises financial marketers to put a high priority on personalization and customization. This includes segmenting by media consumption preferences, as the right message delivered on the wrong platform will fail to resonate.

“Consumers see some traditional channels like TV as a place for them to become familiar with a brand, while they view other channels as useful in helping them explore the differences between different products,” Nielsen states. “Tying these consumer perceptions of ‘what the channel is best for’ to the consumers’ emotions and needs at each stage can help marketers know how to resonate with the right tone and message in the right channel.”