U.S. banks have successfully provided their existing clients with great online methods for managing their day-to-day money matters. But when it comes to shopping for a bank relationship, the industry is falling behind what consumers experience in other realms of their life. There are great opportunities to bring together the channel and marketing silos into an integrated approach to build brand awareness and provide multi-channel shopper support and smooth account opening.
A recent study sponsored by Oliver Wyman and AOL highlights several shifts in consumer mindset, shopping research patterns, influences on bank selection and triggers for account opening. The study combined survey response data from more than 1,700 participants who were either switchers, first time account applicants or abandoners, along with their actual online clickstream history during the 90 days prior to beginning their account opening applications.
Here are four areas where consumer behavior calls for a change in bankers’ thinking:
Your brand must be in the small consideration set, all of the time. Two out of three potential switchers have only one bank in mind when they start thinking about switching to a new bank. Of those who were certain of their interest in one bank brand as they began to think about a new bank, 90% did in fact open an account at that institution.
The game is no longer about finding a bank shopper when shopping is in progress; that is often too late. The game now requires “always-on” branding that brings a bank brand into the small consideration set so it is there when switching begins to be considered. No wonder there are frequently disappointing response rates to new prospect cash offers for checking accounts. While 40% report being influenced by an offer, it is inefficient to try to find “hand raisers” if your brand’s differentiators are not already well understood. For marketers, this means reallocating advertising tactics towards building ongoing awareness of your bank’s value proposition – very clearly highlighting differentiating features – and less towards campaigns with commoditized promotional incentives.
Your brand is in the hands of your clients and their network. The most frequent trigger for bank account switching is “negative experience” with one’s current bank. Conventional wisdom has been that a life event is the prime reason for switching, but that is cited at half the rate of negative experience. So, the perceived quality of the client experience at your bank will be paramount to attract new accounts.
How do prospects make this assessment? Personal recommendations from friends, family and co-workers have more influence by far on bank switchers than any other factor, including advertising. And your own social media pages are not the answer. In fact, virtually no bank switchers visited bank Facebook pages on the path to deciding on a new bank. They are learning about your bank via their own network, and that does not include your bank’s social voice.
Many banks are measuring their Net Promoter Score. Cultivating advocacy is as important to acquisition as it is to retention. Does your bank use member-get-member programs to activate the advocates? Real people talking up (or down) their experience with their bank supersedes your advertising voice as an influence on bank switchers.
There are as many paths to purchase as there are individual consumers. All the touch points have a role and need to work in concert. Prospects do visit your bank product pages. Is your branch staff aware that a prospect has already done so when they stop in? Do your branch, phone and online channels know when a prospect has opened an email or engaged their social network about a potential new bank on the path to applying online? If the customer is willing to apply online, can you have all the documentation ready for them when they visit a branch?
Isolating cohorts of those who have opened a high value account with you and looking at the places they visited, people they spoke to, sites they viewed, etc., on their path to account opening will provide guidance not only on the allocation of marketing dollars but on required operational enhancements to build “organizational awareness” of a prospect whose shopping is in progress. And analysis of your marketing return on investment needs to carefully attribute the right influence of each touch point.
Don’t think that consumers open their account in a branch because they prefer to. More than seven out of ten bank switchers report that they opened their checking account in a branch. Seems like a good case for the important role of the branch. The reality is that the more convenient online alternative is either not available, too cumbersome or does not meet needs. About one in five first-time checking account clients wanted to open online and ran into problems. Of those who abandoned the bank shopping process, 40% said it was too much of a hassle. Among those who persevered and switched banks, 60% said they did so in a branch because they had questions and preferred speaking with a person. Thirty-eight percent actually described opening an account in a branch as a habit – it was just the way they were used to doing it.
Speaking to a person for advice and to answer questions used to be the raison d’etre for travel agents, tax preparers, book store staff, clothing salespeople, etc. The newly empowered consumer tolerates the bank shopping experience but is by no means satisfied. With credit card account opening mostly happening online, there is ample evidence checking can follow if the experience is improved.
Mr. Kadin is head of category development for New York City-based AOL. He can be reached at firstname.lastname@example.org.