Financial institutions seek loyal relationships with account holders almost more than anything else. A bank or credit union can gain that loyalty while removing marketing overhead and generating fee income through marketing partnerships promoting insurance products to their account holders.
Customers whose relationship with their bank or credit union extends beyond a checking and savings account into a mortgage, a car loan or insurance products are far less likely to change their primary financial services relationships, Jasmine Joseph, vice president of Data Analytics and Modeling at Franklin Madison, tells The Financial Brand. They’re also far more likely to add products and services with that institution.
“The more products they have through the financial institution, the longer their customer tenure,” Joseph says. But how does an institution get that to wider product usage and the trusting relationship correlated with it?
More institutions are turning to advanced data-based targeted marketing to build customer loyalty. But their approach comes with an important twist. They’re partnering with companies that take on marketing costs and conduct marketing on the institution’s behalf to broaden relationships with account holders. And when marketing activities succeed and account holders enroll in insurance, the institution earns noninterest income for years.
Franklin Madison, which partners with financial institutions to market bank- and credit union-branded insurance products directly to their customers, has extensively researched the topic. Here’s what Joseph and her team have found.
Engaging Customers with a High Propensity to Buy
Insurance is a common product banks and credit unions overlook in their quest for deeper relationships. According to data collected by Franklin Madison, 45% of bank and credit union customers say that they would be “very” or “extremely” interested in insurance coverage from their financial institution, including Accidental Death & Dismemberment (AD&D) insurance.
But it’s not as easy as simply offering insurance to account holders. In fact, disconnected and generic communication inundating their inbox often causes people to ignore an institution. Even if a depositor needed a financial product, irrelevant marketing has a counterproductive effect, particularly if another institution is sending them relevant messaging?
A Product Customers Need (And Want):
The percentage of customers who say they would like to get insurance coverage from their banking provider:45%
Data helps deliver the right message at the right time and through the best channel. However, a bank or credit union would need to develop its analytics, marketing tech stack, and messaging to engage those with the capacity and propensity to need insurance.
Partnering with a company that’s already developed the marketing muscles to engage in relevant messaging for fee-income-creating products saves institutions the cost and management required to build their own operations. Companies like Franklin Madison take the operational work and pay recurring fee income to the institution when their relevant marketing creates premiums from account holders.
Banks and credit unions can then easily add a broader “financial wellness” element to their engagement. For example, middle-income customers tend to appreciate additional protection from AD&D insurance, especially in higher-risk professions. Education on how a policy would protect an account holder’s family is both valuable information and highly relevant to those customer segments.
Gen Z and Millennials often say they want more financial wellness help from their financial institution. They tend to be reluctant to share their personal financial details with their employers, meaning they are less likely to take up insurance products marketed as employment benefits.
As a result, banks and credit unions could enjoy an advantage when marketing insurance products to them, especially when that engagement is tailored to the recipient’s need for education regarding clients’ personal finances.
It’s All in the Data
When Franklin Madison partners with a bank or credit union, they typically reach an agreement under which the financial institution supplies some data. The mainstay, however, comes from the company’s decades-long tenure in marketing insurance. Often, it supplements both with data from other sources used under license.
“During our tenure providing insurance, we’ve gathered powerful data on what makes for success in engaging account holders,” Joseph says.
The result is a fine-grained assessment of a client’s customer base that allows Franklin Madison to, for example, identify consumers who have purchased insurance policies through a depository institution in the past and have a high propensity to do so again. It also helps identify people in transitional life phases, for whom a reassessment of their insurance coverage is an important part of maintaining their financial wellness. And, it cuts costs by weeding out “chronic non-responders,” on whom direct marketing expenditures would most likely be wasted.
“During our tenure providing insurance, we’ve gathered powerful data on what makes for success in engaging account holders.”
— Jasmine Joseph, Franklin Madison
“Consumers have many options out there, so the financial institutions really need to know their customers,” she says. “The first step, before they offer anything, is to understand their customers’ needs based on where they are in their life stage. Are they starting a family? Getting married? Or a student just graduating and starting their career?
“They also need to understand how their customers prefer to communicate. Some people respond to direct mail, and some prefer email or social media.”
She says Franklin Madison’s detailed assessment of customers’ clients and their preferred means of communication can often upend conventional wisdom within banks and credit unions about the characteristics of their own customers.
“Sometimes, we have to show them the data and say, ‘What you’re saying about your customers is the opposite of what we’re seeing,'” says Joseph.
Learn more:
- How to Maximize Revenue and Loyalty with a Robust Insurance Suite
- One-Stop Shop: Consumers Want Insurance from Their Banking Providers
Knowing How to Market
Once clients interested in insurance coverage are identified, Franklin Madison applies its data to the marketing approach that offers the best combination of cost and effectiveness.
Surprisingly, years of experience have shown that direct mail is more or less effective depending on the month. During summer months, it tends to have a lower ROI, for example, because people are traveling or have kids home from school, says Joseph.
“We have a fixed schedule for different products based on the seasonality. For certain months, we offer a particular product via mail; in other months, we know they don’t even open their mail.”
In some cases, direct mail solicitations are followed up by email reminders, but email is the primary delivery mechanism for other clients. Franklin Madison also works with clients to serve digital advertisements for appropriate insurance products to customers logged in to a bank or credit union website. Younger, wealthier customers are typically most responsive to digital ads.
In the event the company has captured the IP address of a device that a customer uses to access their account, it becomes possible to use what Franklin Madison refers to as a “surround” strategy, in which digital ads for bank- and credit union-branded insurance products are served to them on sites like Google or Facebook.
Big Numbers from Data-Based Marketing
Recently, 21 credit unions assessed the impact of marketing insurance products when supported by Franklin Madison.
The results were eye-opening. After the switch, the average number of customers enrolled in insurance products jumped by 23%. But that was hardly the biggest change. Average billable premiums soared by 193%, while the average premium-to-total membership ratio more than doubled.
Joseph says the results are the product of continuous data analysis and modeling improvement.
“We continue to refine how we can personalize the message at the individual level based on their demographics,” she says. “We are constantly enhancing our approach.”