Do CRMs Really Work for Banks & Credit Unions?

Many financial institutions dismissed CRM after dabbling with it briefly years ago. Has CRM technology finally advanced to the point where its initial promise and potential can be realized? Is CRM a powerful tool for acquisition, onboarding, cross-selling and retention?

Ask anybody in sales how they manage their sales contacts and they will tell you that they use some type of system. Some may still use a note card system. Plenty use an Excel file to organize calls and conversations. Other have invested in more sophisticated software that automates their contact outreach program.

Technology has made it easier for consumers to get their business done — 24/7 from just about anywhere. People want information, and they want it now. They want to feel unique, and not be treated like a number. They use social media to validate who they think they should be doing business with. Bottom line? Consumers want instant gratification.

As consumer behavior continues to transition in this direction, financial marketers have to adapt to their demands. Companies in many different industries are using software programs like Customer Relationship Management (CRM) to deliver a highly differentiated customer experience.

Companies such as Hilton, the Hard Rock Café and Sonic have been utilizing CRM systems for many years. Financial institutions have been slower to adopt this technology. Traditional and non-traditional competitors are forcing banks and credit unions to take a closer look at how they manage relationships. There are many CRM systems in the market — Salesforce, Hubspot and Marketo are common solutions. Some systems are generic and will work in just about any sales environment, while others are more industry specific. Over the past decade, CRM systems have become more cost effective, customizable and user-friendly for both banks and credit unions.

When executed correctly, CRM can deliver on a variety of initiatives — acquisition, retention, onboarding and cross-selling. Consider the following datapoints:

  • The odds of selling to a new prospect is only 5 to 20%, while the probability of selling to an existing customer is 60 to 70%.
  • It cost 10 times more to sell a new customer compared to cross-selling an existing customer.
  • Most companies don’t have a process for re-engaging and nurturing leads once a sale is complete.
  • Retaining 1% of your best customers can improve your bottom line by 17%.
  • CRM can offer an average return of $5.60 for every $1.00 spent.

Why Aren’t There More CRM Success Stories From financial Institutions?

An estimated 25% to 60% of CRM projects fail to meet expectations, according to studies conducted over the past decade. How can there be such a gap between expectations and results? To get a better understanding why CRM doesn’t yield greater levels of success, let’s examine some of the expectations financial institutions commonly have for their CRM initiatives.

Expectation #1 CRM will help us increase our loan and deposit demand. Due to increased competition and the lower loan demand, financial institutions are looking for anything that will help improve employee productivity. The problem is that most banks and credit unions tend to wait for new business to come walking through the door, when they really need to be proactively seeking new customers. Traditionally, financial institutions don’t operate like true sales organizations. It is unrealistic to think that by implementing a CRM system, it will automatically generate more sales or instantly create a sales culture.

Expectation #2 – CRM will force the sales team to follow our processes and to document its client work. Wouldn’t it be nice if there was a place where all customer interactions could be stored electronically? Something staff can refer to and help them pick up the sales process where they left off a couple of days ago? Notes that will help another employee assist a customer based on their past interactions? CRM can do all that, but the reality is that old habits die hard. Most salespeople are very protective; they don’t want to share what they know. In their mind, it makes them more valuable to the organization. Even though CRM can provide an enterprise-wide view of customer interactions, the data still needs to be added to the system first. Motivated by self-preservation, some salespeople will complain the CRM “process” is time-consuming and cumbersome. That’s the excuse sales people use to dismiss CRM — not the real reason.

Expectation #3 – CRM will ensure that our marketing programs are effective. Having a CRM system will allow you to push out marketing messages and marketing campaign information for all employees to see. It can help with internal communication showing how marketing is helping to drive sales. But does CRM make any particular marketing campaign more effective? Doubtful. If the information just sits in the system for all to view, it will not increase your marketing ROI. However, if the information is being leveraged proactively — to follow up with customers, have conversations, and determine needs — CRM can absolutely help in the effectiveness of your marketing programs.

Expectation #4 – CRM will allow you to seamlessly integrate sales and marketing.
Your new CRM system will not cure any conflicts that may exist between sales and marketing. Interdepartmental relationships are created, thwarted and sabotaged by people. It’s a cultural issue. Building and sustaining cross-functional integration requires effective leadership, not some magical CRM elixir.

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Expectation #5 – CRM systems are relatively simple and intuitive. Anybody can learn to use them on their own. On the surface, some systems seem simple and intuitive to use — with only a little training and some limited coaching, you can get your entire staff to use it. The reality is that not everybody is either sufficiently engaged and/or technologically sophisticated enough to grasp all the functionality of a robust CRM system. If you only train folks once and expect it to stick forever, you will be sorely mistaken. You need to ingrain new habits, which requires intensive training, reinforcement and inspection (measurement and evaluation).

Expectation #6 – CRM is software that needs to be managed by IT. Even though IT needs to be involved in the evaluation process, IT should not dictate the use and functionality of the system. Most CRM champions come from the marketing or sales side. Find your internal champion and hold them accountable.

How do you make CRM work? Don’t give up! And steer clear of these common pitfalls:

  • Map and reengineer your sales process.
  • “Sell the benefits” of the system and how it can help internal constituencies do their job better.
  • Involve other departments when defining your CRM goals.
  • Assign ownership to Sales & Marketing, and consider creating a Chief Customer Officer.
  • Deploy CRM in phases.
  • Create accountability for the users of your CRM system.
  • Train. Inspect. Repeat.

The value of CRM is a deeper understanding of the customer, building strong relationships, and providing good customer service.

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