The Power of CX in Determining Primary Financial Institution Status

Driven by the principles of asset-liability management, too many traditional financial institutions allow marketing and the customer experience to suffer. Their goal should be customer loyalty, and a combination of data, personalization and marketing are key to CX success.

Consumers typically spread their accounts over multiple banks and credit unions. Depending on the research you pick, consumers on average use approximately three institutions to meet all their banking needs. This means the possibility exists that two thirds of your customers do not consider you their primary banking institution. How can banks and credit unions turn that situation to their advantage?

Optimizing your customer experience is one of your best opportunities. Customer experience (CX) is one of the many tools that bank marketers use to differentiate their brand in order to gain a competitive advantage. But what is meant by CX can vary by institution.

In the broadest terms, CX is the management of all the marketing and sales content each customer sees and interacts with when they communicate with your financial institution digitally, in person or through other means. The primary objective of all CX activities is to improve profitability at the customer level by increasing the number of accounts per customer and/or customer longevity.

Put another way, the ultimate goal of optimizing your bank or credit union’s customer experience is to increase customer loyalty through personalized messaging and product recommendations, so that you become their primary bank.

Don’t Let Risk And Funding Determine Product Marketing

For the most, part financial institutions manage their business on a basic product level. This means they make loans with specifications that fit their revenue and risk requirements and then offer consumers the types of deposit products needed to match their loans. This “asset-liability-committee” thinking many times gets handed down to the marketing and sales teams to create product-driven marketing. To create an effective customer experience, financial institutions need to stop focusing on product and create programs that build strong relationships with customers.

Simple in concept, but the customer journey is long and incorporates a significant number of messages from a variety of  customer-facing touchpoints — many of them digital. If that is not tough enough, customer expectations have increased significantly around the level of personalization they expect from service providers. Research by Accenture found that 48% of repeat customers expected more personalized customer service for being a good customer.

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Personalized CX Is Hard, But The Payoff Is Big

How can banks provide a better, and more personalized, customer experience? First, they need the ability to develop a single customer view. This is the result of bringing together data from all their customer facing systems and processes and making it available at each touchpoint to drive personalized messaging and the recommended product.

For banks and credit unions that have service distribution through multiple channels — their branch network, website, mobile, live contact center and automated telephone service — managing CX can be a real challenge. This is highlighted in the Digital Banking Report, where 93% of banks surveyed provide little or no personalization in their customer experience programs. This is not a long-term model for success. A Wall Street Journal article recounted how customers of several former Bank of America branches acquired by a community bank began leaving because the acquiring bank couldn’t provide comparable service.

The good news: If you can create an effective customer experience using personalized content and product offers, you can not only minimize customer attrition, but gain a significant competitive advantage over the other financial institutions your customers are using.

Successful CX programs harness a banking provider’s customer data to deliver pro-active, personalized messaging and product recommendations that drive stronger loyalty and higher revenues. Even if you don’t have an MCIF or standalone marketing database there is data you can glean directly from your core system to get you started.

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A Simple And Effective Way to Get Personal

One simple way to begin a CX upgrade is to focus on those customers that have a checking account at your institution. You can use ownership of a checking account as a surrogate variable to identify consumers who most likely identify you as their primary banking institution. Then further refine this measure by looking at higher average account balances and the number of monthly transactions. The non-checking customers can be approached with product offers and other marketing messages by segmenting them using product, balance and longevity with the institution as factors.

In addition, this rough breakdown of customers can begin to provide insights into the opportunities a fully functional CX program can create for your institution. Quantification of the opportunities matched with an acceptable return for your investment in the program can provide a ballpark budget for building a more complete CX program at your bank or credit union.

Implementation of a CX program can seem intimidating at the outset. However, the project can be structured with a set of milestones delivered over time so that each step can build on the one before it. The development of a customer analytics platform that functions as the driver of the program is a logical place to start. Following that, integration of all the consumer touchpoints to not only distribute content but to collect response/non-response data can be implemented in a logical series of steps.

This step-by-step process not only provides learning that makes each subsequent step easier to implement, but can create a self-funding project where the incremental revenues from early steps help fund the later stages of the project.

Frank Koechlein is President of Empower Your Analytics. He has over 40 years of financial services marketing experience including senior positions at Rhinebeck Bank, EverBank, Dreyfus, and Prudential Direct. Sarah Snell Cooke is Principal at Cooke Consulting Solutions. She has 20 years of experience in the credit union community, including publisher and editor-in-chief of Credit Union Times.

This article was originally published on . All content © 2019 by The Financial Brand and may not be reproduced by any means without permission.

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