Seismic changes in technology, digital, consolidation and FinTechs have rocked banking. Some of us adapt to changes faster than others, but most agree that to stay competitive in the marketplace, continual updating marketing programs is a must.
When watching the disruptions, it’s easy to miss small-but-fundamental changes in human behavior that have resulted. In many ways—big and small—consumer attitudes, behaviors and expectations are different than what they were twenty years ago.
Some changes seem obvious: Customers aren’t visiting branches as much. Half of consumers conduct product research on phones while in stores. Mobile phones, which accounted for minimal transactions ten years ago, now constitute a majority.
Yet despite behavioral changes, many marketing assumptions haven’t changed. Thus sound strategies a few decades ago are no longer relevant.
Here are eight consumer behaviors that may require marketers update their programs, assumptions or expectations.
- Don’t count on the benefits that used to come from being a customer’s primary institution. That relationship doesn’t carry the weight it once did. Customers are increasingly buying products elsewhere. According to a 2016 report from Accenture, 40 percent of bank customers feel less dependent on their financial services provider than at any point in recent history. They are purchasing low-margin products from their primary bank but shopping around for higher-margin services. The majority of consumers (61 percent) indicated that they choose other sources for brokerage accounts; 70 percent choose other sources for auto loans; and 52 percent choose other sources for home mortgages. Advice: Boost your acquisition and cross-marketing efforts.
- Bank loyalty is eroding. Fourteen percent of consumers in 2016 reported they were not loyal to any bank, a 56% jump from 2014 levels, according to a study from NGDATA. This increase coincides with the growth of digital banking, which weakens the bonds of personal relationships built over years of face-to-face interactions. Advice: Look for ways to combat loyalty erosion and reduce bank vulnerability to the advances of FinTechs and big banks.
- Adjust to increasingly hyper-connected and more easily distracted customers. Since 2000, the consumer’s concentration span has dropped from 12 to 8 seconds. That’s even lower than a goldfish, which comes in at 9 seconds. Consumer impatience should be a factor when you design websites or process transactions. Up to 40 percent of web visitors will abandon a site if it takes more than three seconds to load. Advice: Review the speed and efficiency of all customer interactions or they’ll drift away to speedier, more convenient competitors.
- Banks aren’t meeting expectations.More than three-quarters of customers globally say their bank is not meeting their expectations, according to a recent survey by FIS, a banking and payments technology company. That’s a huge number of unhappy customers poised to flee to more attractive providers. Dissatisfaction may stem, in part, from the fact we don’t personalize our offers. Younger customers are particularly unhappy. A majority of respondents (51 percent) between ages 18-34 would be happier if their bank understood them better. Advice: Make your communication more personalized and relevant.
- Consumers don’t respond to bank branding. Distinct colors and logos do little more than help a financial institution stand out graphically. Branding can shape initial perceptions, convey attributes and claim a distinct niche—but in service cultures the influence is minor. Customer interactions carry much more meaning. One small employee interplay with a banker can easily unravel a carefully crafted image, which is why banks are among the least effective branding practitioners. Advice: Leave branding to detergents; focus on service.
- Don’t swallow consumer research wholesale. Millennials list all four of the biggest U.S. banks among their 10 least loved brands. Despite their dislike, it turns out that millennials are actually the most likely demographic to choose a big bank for financial services—more likely than Gen X or boomers. Preference for the latest technology supersedes any anti-big bank sentiment. Advice: Use caution. Even if the customer response is accurate, other larger issues may invalidate answers.
- Ease up on praising yourself. Consumers want to hear from peers, not you. Product review websites and social networks are gaining importance as referral sources. Research from McKinsey shows that peer recommendations carry ten times more weight than recommendations from salespeople. That’s why social media could well make up 22 percent of marketing budgets in five years as retailers increasingly look to peers for purchases recommendations. Advice: Boost your bank’s spending on Facebook, Pinterest and Yelp.
- Consumers don’t think we care about their complaints. Only one in three consumers think that their financial services company “absolutely cares” about their problem when they share a complaint. According to Protiviti’s 2016 Consumer Banking Survey, nearly as many say their banks either do not care or are unsure if they care about the complaint. Only 36 percent of customers report that their bank responds every time with a resolution when they share a problem. Advice: Review your complaint and response channel, and retain a big slice of your base.
Last year approximately 8,000 FinTechs launched and individual big banks spent upwards of $2 billion on new software. This puts unprecedented competitive pressures on community banks to listen to the customer and respond to their needs. If smaller institutions don’t listen and strengthen customer relationships, an increasing number of financial alternatives that will.
Continually review and adjust your marketing strategies or they will gradually lose effectiveness. “Business as usual” isn’t an option—unless you are resigned to “lack of business as usual.”
Kevin Tynan is a thought leader and frequent commentator on community bank marketing. He’s senior vice president of marketing at Liberty Bank, Chicago, and can be reached at email@example.com.