Growth is the lifeblood of business, and many growing banks and financial services firms owe their success to a smart customer acquisition strategy. Finding new and more effective ways to reach out to potential customers and win their business is a major competitive advantage.
So what are leading banks doing to earn new business? Are there proven, repeatable tactics that can be deployed to turbocharge customer acquisition efforts?
Let’s take a closer look.
How the customer acquisition game has changed
A few decades ago, banks seeking to grow their retail banking customer base had a few tried-and-true options. They could run a promotion and give away a toaster, start a mail campaign, or air TV ads, for example. Customers were predictable and easy to find. That’s important because one of the fundamental rules of marketing is, go where your customers are.
Given today’s dispersed landscape, finding potential customers is more challenging. The sheer number of channels and platforms available to marketers has grown considerably. Yet banks with the ability to operate effectively in these niches are in a strong position because they don’t have to rely on a scattershot approach.
Digital marketing offers a significant benefit that traditional approaches don’t: the ability to use analytics to measure ROI. Ultimately, however, it’s not enough to find your audience and calibrate an effective pitch. It’s also imperative to understand why customers switch banks and when they are likely to do so.
What motivates people to switch?
While people change banks for countless personal reasons, research from Oliver Wyman, a global consulting firm, has shown that there are a few core events that are responsible for most shifts. Responding to a study exploring checking account acquisition, 40 percent of account switchers cited an ad or sales promotion as the impetus for their move, while another 40 percent of switchers cited a negative experience at their current bank. Twenty percent, meanwhile, switched due to a life event.
Which strategy is most impactful?
Along with determining why people switch, the Oliver Wyman study offers interesting insight into the relative efficacy of various acquisition tactics. Perhaps somewhat surprising, in today’s digital world, direct mail still ranked at the top, with 32 percent of respondents citing it as the primary factor for their switch. Digital outreach (online, mobile, etc.) was a close second at 31 percent, and television was third at 21 percent. Two more conventional approaches, newspaper and radio, came in at 11 and 10 percent respectively.
The value of reputation and experience
Offering cash inducements or a slick promotion may pique the interest of potential account switchers. Ultimately, however, the power of your brand and your overall customer experience will exert more influence on acquisition and retention. The Oliver Wyman study cited above showed that brand reputation and word-of-mouth recommendations are critically important for convincing new customers to switch.
Although digital marketing has transformed customer acquisition strategies, some conventional methods — particularly direct mail — remain highly effective. Ultimately, brand reputation and customer experience are often the deciding factors regarding acquisition and retention.
That means, banks merging savvy, targeted marketing efforts with an understanding of the customer switching journey are in the best possible position to win the battle for new accounts.
What constitutes savvy, targeted marketing? A few examples:
- Data-driven communications that demonstrate your knowledge of individual customers, their personas, and their wants and needs
- Communications that emphasize how you will help customers navigate through the switching process
- Next Best Product analyses to determine which products to bundle to which customers, and when
- Personalized web experiences and a killer onboarding process
Jim Dellavilla | Chief Client Officer
As CCO, Jim directs strategy for all of Catalyst’s accounts. This Siena College grad has spent time on both sides of the fence – on the client side at Chase Manhattan Bank and on the agency side as a manager/director of all client relationship teams at Sigma Marketing.