It seems as though whenever we’re talking about growing community financial institution business and revenue that we’re always talking about bringing in new business in the form of bringing in new consumers. Little attention seems to get paid to “keeping what you have,” which is unfortunate given that the cost of acquiring a new customer is seven times higher than the cost of keeping an existing one.
Wheelhouse Advisors summed it up well in their article on retention: “Customer acquisition is popular among marketers because there is something very satisfying about gaining a new customer. Perhaps it’s because it is great to finally see a pay-off from all of the money, time, and effort that is ploughed into marketing campaigns. However, the truth is that, especially for established businesses, it’s often better to focus your efforts on customer retention. After all, what’s the point of investing time, effort and resources into customer acquisition, only to waste the potential of their relationship once you have them on board?”
That’s why we think it’s important to talk about how to keep the customers you already have. A 2019 survey of 1,000 financial services customers conducted by Yes Marketing – “Inside the Lifecycle of the Financial Services Customer – provides some insight, represented through the below chart, into what keeps FI customers loyal, “from the first time they hear about a brand through their first engagement to brand loyalty.”
Of the 1,000 surveyed, 42% said that rates and fees were at the top of their list of reasons to stay where they currently banked. After rates and fees, more than a fifth (22%) said the variety of available services is the most important consideration, with the proximity of physical locations (e.g., banks or ATMs) coming in third at 10%. And while trust in an institution has always been viewed as extremely important, the research showed that it’s perhaps not as important as we thought. Only about 1 in 12 respondents reported that their top loyalty driver is the trust they put in their bank for protecting their data.
The Inside the Lifecycle article goes onto say that while the numbers in their graph did not change significantly between demographic groups, some shifts were worth noting. Younger customers, for instance, emphasized trust less than their older counterparts. Only 14% of 18-21 year-olds and 19% of 22-37 year-olds included trust in the company to protect personal information in their top three choices, compared to 34% of 38-52 year-olds and 47% of 53-71 year-olds. Another shift was in the area of digital experience. While the ability to use a mobile app was not the most popular factor for any generation, younger consumers were much more likely to prioritize it. Forty-two percent of 18-21 year-olds include the factor in their top three considerations, as well as 37% of 21-37 year-olds — compared to 34% of 38-52 year olds and only 18% of 53-71 year-olds who say the same.
The lesson learned here? It’s not easy keeping up with what customers want, and when.
Keep up with your customers.
According to the February BAI Report, “while customers used to be satisfied with a reliable, easy-to-use app, they now want more of a relationship. They want to be treated like the regular at the corner café, where the staff knows them and how they take their coffee.” Now that we know what’s important to our customers, now we can do just that; build that relationship.
Life happens. A new job, a new home, a marriage… these are just a few of the life changes that can change what a customer wants and needs from their bank or credit union. Financial services providers should keep in mind the life stages or “buyer journey” that are part of a consumer’s maturation process. After all, how can you sell a potential customer a product or service that’s not relevant to where they are in their life? Customer “mapping” enables you to be relevant to your customer, at every stage of their life. This is especially important when marketing to younger individuals, who are experiencing life changes at a rapid rate.
Keep in touch with your customers.
It’s important to understand what those who bank with you want at every stage of your relationship with them, and to keep them engaged with your institution with frequent, informative, and relevant messaging. It’s important to remember, too, that it’s a moving target. The ways you keep in touch will look different for consumers across generations, as well as their stage of life. It will also require a mix of media; reach your younger consumer via social media, your older audience via in-store messaging and print advertising. It’s not easy, but if you always keep your customer’s needs in mind, based on their stage of the buyer journey, your messaging will always be relevant. Keep that message relevant, and you’ll always keep your customers.
I hope this helps and, as always, I welcome your thoughts.