Once upon a toaster, banks wooed customers with kitchen gadgets, piggy banks and points rewards on credit cards. Some still do it. But the fintechs? Not so much, if at all.
Toast itself is more like it.
SoFi, for example, holds “payoff celebrations,” where members celebrate their debt payoff. And Final Four parties. And wine tastings. Other promotions include free beer for a month. And finally, they’ll send avocado toast to customers—for all we know, courtesy of some other bank’s toaster.
SoFi doesn’t do weddings and bar mitzvahs (yet). But remarkably, it’s sponsored matchmaking events in Manhattan and in 2016 mulled over creating a dating-finance app (an idea since scrapped).
While all of this might smack of gimmickry, traditional banks will want to note the calculus. A new generation of creative thinkers and marketers has stretched the definition of promotion from tchotchkes to gathering affinity groups based on their tastes, whether for food, fun or good old fashioned community.
Yet in SoFi’s case the clever marketing can only go so far, especially in the face of mistakes that have hurt its reputation. That leaves the door open to traditional institutions such as Washington-based Umpqua Bank.
Umpqua epitomizes this feelgood marketing approach to attract and keep customers. As their voicemail greeting cheerily explains, "From seminars to soirees, business meetings to book clubs, Umpqua stores are community hubs.” Want to host your own event? The message invites you to “ask us how you can, too.”
Pleasing customers with perks isn’t new, of course. “Loyalty programs are established concepts crucial to the success of financial institutions,” says Ciaran Chu, principal product manager at ACI Worldwide.
But the twist for 2018 lies in how much the right program attracts clients for keeps, “especially with consumers now much savvier to money-saving tactics,” Chu says. “They’ll engage with multiple products to get the best deal.”
He adds: “Retaining a spending client is between six and 25 times cheaper than recruiting a new one.”
Equating the lifetime dollar value of that to, say, blenders per customer is possible in theory. But the point is that no amount of appliance abracadabra is going to do the trick with today’s bank customers, who find such promotions… Just. Plain. Stale.
And not very interactive, either.
SoFi: Looking for HENRY, finding trouble
SoFi’s chirpy Twitter feed—now closing in on 55,000 followers—has done a particularly good job on an oft-overlooked front: telegraphing a message about customer values as opposed to customer value.
The bank’s feed is alive with Tweets hashtagged #WhyISoFi. One says: “Networking events—not bank branches.” Another: “Overheard at the #BigEastTourney: SoFi understands my priorities—they understand that I don’t want to have a transactional relationship with my financial company.”
This tunes into and resonates with SoFi’s HENRY customer: High Earner, Not Rich Yet. Famously, SoFi calls its borrowers “members” and its Twitter feed gives the impression of a cross between a bank and an events company.
This not only speaks to customer affinity, but also to offering financial options—and a message of “you matter”—to potential clients who would otherwise have neither of those things.
So a SoFi borrower might not have or need a great FICO score if she has a startup job with a blazing paycheck that argues for her ability to repay. Finding these HENRY customers and keeping them happy clearly ranks at the top of SoFi’s priorities.
And here is where financial institutions too often fall short: They fail to give the customers they covet a voice that isn’t airbrushed by a slick marketing campaign. SoFi’s “debt parties” last September in Denver and Philadelphia inspired tweets like this: “Having an amazing night at the #SoFiDebtParty! Food, drinks and prizes fuh [sic] days! My student debt finally came in handy!”
A community bank wedded to its customers
A community bank founded in 1953 by business leaders in Canyonville, Oregon, Umpqua has grown throughout Oregon, California, Nevada, Washington and Idaho.
In December, the bank promoted a “Freeze Day” at its branches, urging employees and customers to join in freezing their credit after the Experian data breach. After a chapel next door to a Vancouver, Washington, branch burned down, employees hung decorations to make an impromptu chapel so a planned wedding could go on.
The bank opened a branch in West Roseburg, Oregon, in 1996 that had a computer café with free internet access and a customer phone with a direct line to the CEO’s desk.
Calling it a store and not a branch, Umpqua opened it to community groups for business meetings, book clubs and yoga classes—and soon had a number of imitators. The bank also invites local businesses to sell their wares in bank branches.
A toast to creative marketing
There are many ways to play the newfangled perks game, and a certain agility is welcome. For example, last year Australian real estate mogul Tim Gurner famously opined that millennials are not buying houses because they spend all their money on avocado toast.
Umpqua’s response: A post on its blog written by a loan officer, titled “Have your avocado toast and eat it too: 5 steps to buying a home.”
SoFi quickly fired back too, with an offer that anybody who bought a home with a SoFi mortgage during July would receive a month’s worth of avocado toast, delivered to their door.
"Pundits have unfairly besmirched avocado toast as the reason younger Americans aren't buying homes. We know that's wrong—it's because the traditional mortgage product hasn't evolved," said Joanne Bradford, chief marketing officer at SoFi.
Recipients, of course, will still need to toast the bread themselves.
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Jeanne Pinder is the founder of ClearHealthCosts.com, an award-winning startup bringing transparency to the healthcare marketplace.
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