GPS Guide to Customer Engagement

GPS GUIDE TO CUSTOMER ENGAGEMENT AFTER SPENDING TIME AND MONEY TO GET A CONSUMER OR BUSINESS TO JOIN YOUR FINANCIAL INSTITUTION, ONBOARDING IS CRITICAL. THE PROCESS IS COMPLEX AND YOU WILL NEED A STRONG STRATEGY TO SUCCEED. OFTEN TIMES, YOU GET ONE CHANCE TO WIN A CUSTOMER OVER. ONE WRONG TURN AND YOU ARE LEFT WITH INACTIVE ACCOUNTS AND A LOT OF WASTED MONEY. HIGH TARGET AND ACQUISITION COSTS The cost and time to acquire new customers is substantial. Many banks and credit unions focus too much on quantity rather than quality. With acquisition costs so high, it's important to understand exactly who your target customer is and how to successfully attract them. Percent of banks Percent of financial institutions that and credit unions that admitted they couldn't estimate new customer underestimate 60% 90% customer acquisition costs acquisition costs $300 6-7x 15% Average customer acquisition costs (Not including overhead) Cost to acquire a new customer vs. retaining an existing customer Average churn rate for banks and credit unions ONBOARDING DEAD ENDS Deluxe research indicate that 25-35 percent of new customers go inactive in the first 90 days of signing with a new bank or credit union. In order to minimize this loss, it's valuable to understand why people are leaving their financial institution. DEAD END/ Too many fees DEAD END Poor customer service 26% of consumers left their financial institution due to fees they were charged DEAD END Moved to a new area 13% of consumers sited 13% of consumers moved poor customer service as to a new area their reason for switching DEAD END Not close DEAD END Weak online/mobile capabilities enough to home 13% of consumers left because they wanted a location closer to home DEAD END 10% of customer changed Transferring ACH payments financial institutions due to mobile banking 63% of customers say it's too much trouble to transfer automatic transactions DEAD Bank merger 17% switch their END bank or credit union or acquisition - 14% Likely to switch 52% Non-switcher ШI 17% Somewhat - likely to switch MOVE CUSTOMERS FROM NEW TO ACTIVE There is a big difference between a new customer and an active customer. While they cost the same to bring in, the active customer generates revenue. Building loyalty into your customers will strengthen relationship depth, increase profitability, and improve retention. The Top 8 Onboarding Best Practices INTERSTATE Create a strong plan INTERSTATE Centralize your program INTERSTATE 3 Don't over communicate IMTERSTATE Keep it simple oe and refine of INTERSTATE Listen to your customers INTERSTATE React to customer preferences 7 Be consistent in all channels INTERSTATE Determine your metrics_0. & ROI Operational Improvements Capital should be spent in ways that impact attrition, dormancy, and loyalty with your customer base. Here are the top 10 customer interactions where banks and credit unions need to focus operational improvements. Changes to fees and charging structures #1 #6 Complaint handling First time into the debt #2 Account switching #7 collection process Account opening or closing #3 #8 Lost or stolen card # 4 Life events (e.g., marriage) #9 Setting up a payment #5 Change-of-account details #10 Buying a new product ENGAGING YOUR USTOMERS The key to success isn't in the stats, it's in the application. Here are four ways your financial institution can improve to cut down lost profits due to new customers leaving your bank or credit union. Target well from the start Some customers may never be right for your financial institution. Learn what consumers are the right fit and target them carefully with a well-designed marketing plan. Take the focus off quantity and shift it to quality. Give your customers flexibility A strong onboarding process, including tools to assist with the switching process, will lead to higher customer satisfaction and retention. Look beyond multi-channel to omni-channel and give customers a rich experience across all channels: Branch, social, mobile, online, and beyond. Turn your customers into advocates Begin to cultivate relationships and provide a real benefit with customized advice based on what you know about your customer. Create loyalty programs that promote customers sticking around and recruiting the people they know to join your financial institution. Shape business around customer needs BUSINESS Develop great digital assets and encourage (but not force) your customers to use them. Make it easy to shift their ACH payments and Bill Pay information from their old bank or credit union to yours. Target your capital spending to attack the areas that need the most operational improvement. Sources: High target and acquisition costs: Bain & Company, Optirate, Adobe; On boarding Dead Ends: Javelin, Deloitte, Consumer Reports; Operational Improvements: Ernst & Young. DELUXE CORP