The Financial Services Blog

The recent initial public offering of shares in Visa delivered a healthy cash injection to the balance sheets of some of the largest banks in the world.  This helped the industry at a time when their balance sheets were being hit by devaluation of their loan portfolios.

One way to further build the value of the credit card business is to use the transactional statement to deliver marketing messages.  These can be for other products and services from the bank or they could be from third party vendors.  This is a much more effective way to deliver promotional messages than the common envelope stuffers that come along with the credit card statement.

Here is some more detail about how this could work for you. 

I recently read an interesting report by Forrester in their “Customer Experience Index” series.  It was all about the insurance carriers and what their customers think of them.  They recommended that insurance carriers should appoint an executive who is dedicated to improve the customers’ experience but what really caught my eye was the endnote that talked about customer advocacy.

Forrester argued that it is not customer satisfaction but customer advocacy that encourages a customer to do more business with a company.  They define customer advocacy as doing what is best for the customer even if it is not what’s best for the company’s bottom line.  They describe four components of customer advocacy, simplicity, benevolence, transparency and trustworthiness. 

To be transparent and simple you need to have clear customer communications.  How else can a customer know that you are trying to do what’s best for them?

Working closely with BAI we have refreshed our white paper about cross-selling and customer loyalty. 

Called “90 Days That Make or Break the Deposit Relationship” it’s based on research from BAI.  It describes how banks can improve customer loyalty and business results by focusing on new customers.  In particular the research showed how important it is to nurture a new customer relationship in the first 90 days as this is the time when most problems occur but also when there is the best opportunity to cross sell other products and services.  In fact over 70% of cross selling to bank customers occurs in the first 90 days after a checking account is opened.  Of course, customer loyalty increases as the number of products owned by a customer increases so taking advantage of that 90 day window to increase cross selling efforts will really pay off. 

One way to increase the odds of successful cross selling is to develop a customer orientation program that makes the customer feel welcome and introduces them to new products and services from the bank.  Good programs can increase the number of customers who are more likely to purchase additional products by 50%.  The most important element of these programs is customer communication, either by phone or using personalized marketing material that clearly show how the bank’s products directly address the individual customer’s needs.

You can download the white paper here and we’d welcome your feedback.

The most important time to build loyalty and cross sell new products and services to a customer is in the first 90 days of their relationship with the bank.  In fact nearly three quarters of all cross selling happens in those crucial first three months.

The number of products a customer has correlates with the loyalty of that customer and the most important factor to increase cross selling is to sell the products that best fit the customer’s needs.  It is also important to introduce a customer on-boarding process that welcomes new customers and contacts them two or three times during the first 90 days.  The first contact could be a phone call to make sure that everything is going smoothly, for example did the new checks arrive, and is there anything else that the customer needs.  Follow up communications could be by mail, email or again by phone, in fact through whatever channel the customer prefers.  If those communications are personalized and relevant the chances of cross selling go up and the loyalty of that new customer will also increase.

When I wrote about the research that The Banker published recently I emphasized the importance of personalizing the content of any communication sent to a customer.  Another very important element of the article was that customers aren’t only looking for content that is interesting and relevant to them, but they also want to receive that communication through the right channel.

So that means don’t send a letter to a customer who only wants to receive information via email and don’t try to sell a product over the phone to a customer who wants to come into the branch and sit down for a discussion with a banker.  In fact the branch remains the most important channel with 78% of those surveyed saying the branch played a key role.  It is most important for the banks to develop an integrated channel strategy that will allow them to meet their customers’ needs now and in the future.  Interestingly the research shows that email and online banking, as well as mobile banking, will become more important to customers in the future as the branch and direct mail become slightly less important.

I was reading a report yesterday called “The untapped Opportunity in Financial Services” by Carlson Marketing and the Peppers and Rogers Group.  It was all about organic growth in banking and how a strong customer relationship can drive great business results.

Their study showed that customizing client communications can have a profound impact on the relationship between the client and the bank, increasing the strength of that relationship by up to 35%.  It also showed that relevant and customized communications led to customers buying 47% more than those who received no customization.

Designing great client communications and then being able to customize, print and mail them, easily, is key to delivering these impressive results.  How do you achieve this in your organization?