Using Digital and Physical Engagements to Drive Share of Wallet and Market

Using Digital and Physical Engagements to Drive Share of Wallet and Market

Gain and retain members or customers in a competitive financial services environment by providing frictionless engagements. Building consistent user experiences and making it easy to engage with your financial institution across all channels, in person and online, demonstrates your value to your members or customers, and emphasizes that you understand that their time is valuable.

This blog post will cover the following key considerations when evaluating your enterprise financial institution, and how you can gain and retain your member or customer base using the next stage of customer engagement:

  • Why is it important to prioritize member or customer experience
  • How digital and physical engagements help the bottom line
  • Considerations for rolling out an acquisition and retention strategy centered on personalized engagements

Why is it important to prioritize member or customer experience 

Last quarter, we created several white papers about the importance of humanizing banking by way of better member or customer experience. In those reports, the evidence pointed to the fact that members and customers who feel valued stay, spend and advocate on behalf of your financial institution. Combined with the fact that barriers to entry are crumbling and the increase in digital-only banking is dialling up the pressure on experience, traditional banks and credit unions must use every available tool to not only keep their existing members and customers, but attract new ones in an increasingly competitive marketplace. 

How do digital and physical engagements help the bottom line

Financial institutions are facing challenges for revenue growth: not only attracting net new members or customers, but retaining their existing high value members and customers and capturing additional share of wallet.

In our previous research we found that your members or customers want to be met somewhere in the middle of the digital/bricks & mortar continuum – encouraged to use digital options when low value transactions can be completed, but welcomed into their local branches when advisory and life milestone discussions need to happen. We found that the majority (51%) of individuals prefer a digital experience through a mobile app, followed by in branch at 29%, and finally a desktop digital experience at 20%. But the most interesting part is that 71% of those same respondents believe it’s important to build a relationship with bank personnel. 

Attracting new member or customers

Historically, financial institutions relied heavily on physical locations (and the signage, branding and foot traffic it promoted) to create awareness of their offerings. As the reliance on visiting branches has decreased, financial institutions now have to place more emphasis on marketing to potential members and customers outside of the branch itself. Locations can’t simply exist to service existing members or customers, but need to refocus to act as a marketing beacon for the larger unpenetrated market. Novantas has found that the primary checking purchasing drivers in 2019 were branch sourced at 43%, followed by marketing and branding at 38%, and digital at 11% (the remaining comprising ATMs and others). By 2024, they estimate that marketing will be the source of 50% of purchases, followed by a distant 23% from branches and 19% from digital. 

According to Novantas SalesScape Comparative Analytics Survey, fielded September 2020, increasing new bank customer acquisitions was viewed as a top priority from nearly 30% of respondents. Compare this with the fact that 14% of recently surveyed bank customers and 8% of credit union members stated they were likely to switch their primary bank in the next six months.

What should be obvious with member and customer acquisition strategies is the reliance on data, understanding the performance of individual locations, and how prospective members or customers are interested in engaging with your brand. Are you able to track the walk-ins of individuals who are not yet members or customers at each location? Can you definitively state the best digital sources of high value engagements with prospects? Do you make it simple for potential members or customers to book an introductory appointment with a knowledgeable staff member over video conference? If not, these foundational engagement tools must be in place in order to establish baseline metrics and begin the customer experience evolution at your financial institution. 

Keeping existing members or customers & growing share of wallet

Banks and credit unions need to get more sophisticated in how they segment their existing base, in order to focus attention, resources and engagements appropriately. Ideally, FIs will know, through data, buyer journey tracking and predictive analytics, how each cohort of members or customers behave in order to personalize engagements and encourage certain behaviors.

So why is the share of wallet so important? It mainly comes down to the ease of collecting incremental revenue from happy, engaged members or customers. Bain & Company found that a 5% increase in customer retention produces more than a 25% increase in profit. But in order to create the right conditions for capitalizing on these strong relationships, banks and credit unions need to become the “primary financial institution,” or PFI, for that individual. The more products a member or customer has with their PFI, the longer the relationships tend to be, and the more likely they’ll consider that institution for their next product. 

A PwC report found that financial institutions are typically only dealing with 10% – 20% of a customer’s wallet – with best in class banks and credit unions securing up to 60%. Anything your financial institution can do to increase this proportion, particularly in the form of excellent member or customer experience through convenient engagements, simply adds dollars to your bottom line. 

Inoculation against competitors

FI leaders know the highly competitive state of the market: neobanks, fintechs and other more traditional competitors are vying for members or customers in a consistently escalating battle. Inoculating your existing base against offers from your competition becomes a careful selection of reasonable fees and rates, personalized products and convenient ways to bank. The duration of the relationship between member or customer and financial institution is a function of the depth and the perceived value derived from that relationship. PwC has estimated that customers with one product typically stay for 18 months. As more solutions are sold to that individual (presumably due to increased perception of value and usefulness), that duration can be increased to seven years for three or more products.

Considerations for an acquisition and retention strategy using personalized engagements

Cultivate a member or customer-centric mindset

Your members or customers have preferred channels, what we call ‘channels of comfort’, that vary individual to individual, and can change based on the query they are trying to resolve. These channels include mobile apps, call center support, social media, ATMs, phone appointments, video conferences and face to face meetings in branch, with most individuals using between three and four channels.

A recent report by The Financial Brand revealed that 75% of financial institutions prioritized enhancing the digital experience for customers as their primary strategic objective for 2021. As the competition across the financial services industry increases, member or customer experience has become a key differentiator between organizations. One of the biggest barriers to providing a great experience is a frustrating member or customer journey – often financial institutions don’t actually know which parts of their digital experience work well, or don’t. 

Identify and understand your member or customer segments

Not all prospects (and members or customers) are created equal – in order to allocate resources and efforts to the individuals with the most potential to become high value members or customers, financial institution marketers need to identify the key member or customer segments, and then understand how to best engage with them.

For example, for “relationship oriented members or customers” Novantas recommends providing these individuals with messaging around convenient experiences, relevant touchpoints for longer-term conversations, white-glove serve and fair rates. For those who have few products with their FI or are price sensitive, they recommend adding solutions through deeper conversations on purpose and goals. The cost of finding a new member or customer can be between 3x to 25x more expensive than cross selling to your existing base. 

Adopt technology to create omnichannel touchpoints

Your members or customers expect that their digital interactions with your brand will be seamless and convenient: whenever and wherever they’d like. Delivering digital member or customer experiences requires companies to minimize friction, maximize convenience and ensure that every encounter is tailored and personalized to meet individual needs in real-time.Studies show that improving customer experience requires enterprise organizations to eliminate customer pain and anticipate their needs while giving them more control. For example, more than 70% of millennials prefer scheduling meetings online and receiving digital reminders than booking an appointment by phone. This new generation of members and customers is defining what a brand is based on their experience with a financial institution across all touch points—online and brick and mortar locations. Firms that invest in improving the digital member or customer experience will reduce costs and improve efficiency while growing the bottom line. 

Improving your member or customer engagement is necessary to gain and retain market and share of wallet. Engaged members or customers are key to growth in 2021 and beyond, especially considering the complete digital transformation currently underway in the financial services space. Equipping your staff, prospects, customers and members with the tools and processes they need to engage, across both digital and physical channels, encourages better, more valuable conversations, key to not only gaining but retaining your base in a time of unending change.