There has been a subtle power shift toward control by the consumer and away from the marketer. With plenty of time at home, consumers have started paying closer attention to their finances, and begun to redefine their attitudes and strategies toward money.
Even before the pandemic, consumers were already moving toward telling financial institutions what they wanted instead of waiting for banks to tell them what they needed. While this behavior seemed concentrated with Millennials at first, we now see that it spans generations and groups.
Customers are also using their bank accounts differently. Before, they set up multiple accounts. Now, they feel like they only need one or two because their lives and purchases are dominated by cards — not checking accounts. Since March, checking account sales are down 200% in the U.S., according to Raddon. Credit usage is also down, while debit card usage increased by 8.6%, according to the Federal Reserve. That’s a sea change.
What behavioral insights can we draw from this data? Consumers want to avoid instability and debt. They may also have concerns about income and the role of recurring subscription payments, a larger component of consumer spending than just a few years ago. All that opens a door for financial marketers to pivot their strategies after the pandemic subsides.
To stay relevant and meet customers’ changing needs, banks and credit unions should include the following three strategies in their marketing plan:
1. Mine and Interpret Customer Transaction Data
In the age of big data, finding information is not the issue. Rather, the struggle is knowing what to do with the avalanche of available data —separating the useful from the noise — and how to implement the resulting insights.
At a transactional level, even if it’s on an aggregated basis, banks and credit unions need to understand what is happening with their existing accounts. Once you understand the types of transactions occurring, you can begin to draw correlations. Consider how many checks your customers write, how many debit card transactions they make, and how many of those transactions are automated debit payments every month. These insights indicate how engaged your customers are with your institution and, importantly, how they are engaged with others.
We live in a subscription-based world, from Amazon to Disney+ to online pet food retailer Chewy and so many more. If customers aren’t using your institution’s card for their subscriptions, they’re using someone else’s. You need data to understand how to convince customers to view your card as their first choice. That way, they’ll put subscriptions on your institution’s card and never think about them again.
What you need are accounts that aren’t just parking money. You need accounts that generate non-interest income and create other value for you — whether that’s through debit card interchange or additional fees. These elements are the lifeblood of banks and credit unions, especially given the ongoing low interest-rate environment and slow lending market.
2. Establish Your Marketing Baseline
Once you review and analyze your available transaction data, you can establish your baseline. Evaluate which subscription services are getting charged on your cards, for instance. Maybe the only recurring charge you see is Netflix. But what about the Amazon and Spotify services your customers use? People rarely use just one subscription service. You should create marketing messages to encourage them to move all of these transactions onto your card.
One idea: Incentivize people to put other subscriptions onto your card by offering to pay for one month of service.
As you zero-in on existing customer behavior, you can start to segment based on that behavior. Your segments should focus on how customers act rather than how much money they make or where they live. For example, a college student could be a devoted Spotify listener compared to his city-dwelling parents who use Amazon Music. You just don’t know until you look at the data and determine your baseline.
This baseline will serve as a jumping-off point for your tactical strategies, helping you figure out how to send marketing messages to consumers. You might use social media to reach the college student mentioned above and use email to reach his parents. In both cases, you’ll want to deliver similar reminders of the incentives for moving their subscription accounts to your card. This will create more engagement with your existing customers, but it should also encourage new customers to open accounts.
3. Pick Your Marketing Messages Carefully
Finally, you should determine which marketing messages will align with your data and baseline.
Consider the case of Ohio-based Huntington Bank. During COVID-19, the bank shifted its marketing to an all-out conversation about managing overdrafts. The bank has had an underlying theme of “fair banking” for several years, but the unusual conditions warranted a greater focus. Now, if customers overdraw their accounts, Huntington Bank gives them until noon the following day to replenish their accounts and avoid penalty charges.
Considering most banks charge customers who overdraw their accounts overnight, this move puts more control into customers’ hands. Huntington Bank decided to capitalize on this niche, basing all of its messaging — radio, TV, billboards, etc. — on that key differentiator.
This is also a great example of connecting what financial institutions do with the realities customers face in everyday life. In this case, Huntington Bank’s messaging likely resonated with many customers who faced fluctuating income due to the pandemic.