Get Personal With Banking Customers and Ditch Phony ‘Personalization’

Better communication based on a real understanding of where customers are in their lives, rather than in touchy-feely 'personalization,' can help retain customers. Putting this approach ahead of sales will ultimately produce better results.

Customer lifetime value is the truest barometer of organizational health for financial institutions. Because consumers have more choice than ever when it comes to the channels they use to handle digital banking, it’s up to banks and credit unions to focus their marketing on improving and maintaining customer engagement.

Digital transformation initiatives within the past few years have enabled financial institutions to meet their customers on the channels they use the most — email, text message, web portals, mobile apps and more.

But digital transformation efforts have lowered the bar for what a “bank” is. Now neobanks and digital-only banks, which operate with no physical branches —are leveling the playing field for both banking institutions of all sizes.

Consumers have more options than ever, which makes it hard for financial institutions to create meaningful experiences with customers. This leads to more churn than ever.

Banks get into trouble by stressing marketing efforts designed to produce desired business outcomes, rather than catering to each customer’s unique needs. This leads to customer disengagement, because consumer trust has been totally eliminated through a lack of effective communication. When brands break that trust, customers disengage and churn.

Making Things ‘Personal,’ Instead of Pursuing ‘Personalization’

To evaluate their current outreach strategies, banks need to gauge if their interactions are effectively enhancing the lives of their customers, and if their engagements are based on meaningful touchpoints that have already been established. Additionally, the rate of engagement must be considered — if banks are constantly making touchpoints with no customer engagement, it suggests the customer feels they’re being spammed by their bank.

Ditch the Buzzwords:

Many customers want digital engagement to feel personal — meaningful, contextually relevant and timely, rather than personalized.

For CX teams, knowing the difference between “personal” and “personalization” is crucial.

• “Personal” engagement is one-to-one. It’s about knowing where a specific customer is in their lifecycle and the choices they’ve made in the past, and creating mutually beneficial, catalytic experiences for them as a result.

• “Personalized” content, on the other hand, is one-to-many and transactional in nature. It may append some customer data to an otherwise generic engagement but doesn’t use the data a customer has previously shared or the decisions they’ve made beforehand.

A marketing automation email, for example, can be personalized but it is not built to establish the deeper, personal relationship that personal engagement allows.

This presents a huge opportunity for banks to take a one-to-one approach towards communications and marketing, rather than broadcasting a series of transactional campaigns to customers that “nurture” them at various points along some pre-defined “journey.”

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Figure Out What You Are Really Measuring For

One way to derive true value out of a relationship is to establish touchpoints that are meaningful to where the customer currently stands in their life. These touchpoints are especially important during times of instability, such as the economic situation brought on by the pandemic, because they enable financial institutions to show they have their customer’s best interests at heart.

As noted earlier, there is still a balance to be struck, however, between establishing meaningful touchpoints, and not bombarding customers with communication.

Don't Wear Out Communications:

Being spammed with messaging in any channel can lead to customers opting out of communications and potentially taking business elsewhere.

A Forrester study found that only 15% of customers will stay with a brand after frustrating experiences. This is where significant danger lies for digital banks and other financial institutions.

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Understand the Risk of Disengaged Customers

Opted-out customers have essentially erased the line separating them from non-customers, as they’ve effectively cut themselves off from learning about opportunities or new products. Because of the time and effort it takes getting them back in the loop, disengaged customers cost more to manage than prospective customers.

Consider this case of how not to market: A customer logs onto their bank’s website seeking information on home loans. Thereafter, the bank begins sending them marketing messages about unrelated auto loans or college savings plans as part of a cross-selling campaign.

Instead of guiding the customer on their homeownership path, the bank has usurped the engagement. It has done so in an attempt to achieve additional business outcomes, rather than focus on addressing their customer’s unique needs.

This is where presenting content in a personal way, such as dedicated 1:1 customer feeds, can help improve customer communication. As an example, Citizen’s Bank leveraged 1:1 digital channels as a way to drive beneficial experiences with customers throughout their loan-buying process. The result was a 40% increase in customer engagement — this had tangible business benefits too, as completed loans were up 10% as well.

Meaningful and effective outreach strategies are the pillar of establishing trust with customers. It takes hard work, but ultimately those financial institutions that can prioritize meaningful customer experiences will find themselves the best setup for success.

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