For 15 years or more, marketers in retail banking have heard that delivering “the right product to the right customer at the right time” will yield the maximum conversion rate, product penetration and benefits of loyalty and net promoter score that come with a strong multi-product relationship. But this has not come to pass. Why? The answers can be complex, but in reality, boil down to a few simple facts:
- Banks have treated customers as “accounts” vs. individuals, not harnessing the data they capture to implement targeted and relevant campaigns;
- A “one size fits all” approach to campaigns has delivered low success rates;
- Limited understanding of when, why, and how to reach out;
- An almost exclusive focus on the “next best offer” approach, making every conversation a sales conversation that most consumers prefer to avoid;
- Minimal threats from disruptive players and low sales and service expectations from customers.
The “next best offer” is not what customers want in today’s hyper-connected, always-on world. Instead, they want relevant and timely advice and solutions tailored to their actual needs. They also expect something in return when they provide financial companies with their data.
Given that banks today capture and store an enormous amount of customer data, they should align this data with their overall understanding of their customers’ needs. This can be encapsulated in a “customer journey strategy,” which involves understanding the long- and short-term journeys (think individual path) a customer is on, and architecting how you, the financial provider, can engage to add value when it makes sense.
Tale of Two Banks
Today, a bank can segment customers on nearly a one-to-one basis. Big data and the tools of data science to help bankers understand customer behavior from all sources are readily available; Amazon has been doing this for more than a decade! Aligning these insights to customer events (journey stages), and reaching out at a specific event with a relevant “message” is a formula that can yield tremendous advantages.
Let’s illustrate this concept with Eran, a fictional customer of Main Street Bank. Eighteen months ago, she decided to buy a house, made inquiries, saved the money and is ready to purchase. To secure a mortgage, she approached both Main Street, where she had banked for 12 years, and a typical big bank.
Main Street provided Eran with investment advice as her plans took shape. They provided an online needs-analysis facility to understand Eran’s specific short- and long-term financial needs. They gave her a pre-approved borrowing limit, flexible conditions, and aggressive rate offer, committing to it for six months, upon completion of her needs analysis. They sent her an email three months after the needs analysis to check the status of her ongoing interest in buying and saving for a property.
A mobile mortgage officer proactively contacted Eran six weeks later, based on her answer to an email introducing himself and offering his services. The bank next sent another email offering her a “home buying journey” digital app to provide her with the information and budgetary tools necessary to see the transaction through. After Eran downloaded the app and used the tool, Main Street sent her a third email offering discounts on local appraisers, home inspectors, and a link to ratings and reviews of various real estate lawyers in her area.
Two weeks after the call with the mortgage officer, an online application link was texted to Eran. She clicked on the link and had to complete only a few fields, as everything else was already populated. She used the tools in the application to model her preference for rate, term, amortization, payments, etc. Once she completed the inputs on her iPad a few hours later, she received an instant, updated conditional approval, along with a link to a private community sponsored by the bank, where she could interact and share insights and knowledge with other customers and confidentially upload property documents when she entered into a conditional sale. The approval also provided a full pre-approval letter, ensuring she had the financing and commitment to move forward with an offer.
Upon successfully completing a conditional offer, Eran uploaded the documents and was kept fully up to date as the bank, appraiser, and inspector worked in collaboration to firm up the deal and paperwork. One week before closing, the mobile mortgage officer contacted Eran to setup a meeting at her preferred location to review and sign all necessary mortgage documents.
The big bank, by contrast, began by offering Eran the posted rate on her growing savings. When she inquired about mortgage rates, there was no follow-up. She walked into a branch to talk to a mortgage officer and was told to call an 800 number to set up the appointment; she didn’t bother.
Instead, Eran applied online for the mortgage. She received an instant notification and tracking number but did not hear back from anyone for a week. Walking by a branch two days later, she stopped in and provided the reference number. The branch staff had no clue as to the mortgage request and provided her the same 800 number. She called from her cell phone and was simply told that “the application is being processed.” The branch staff advised that sometimes it’s better to fax the application to one of the mortgage officers tied to the branch. The branch agent gave her access to a PC to complete another application, helped her print it out and faxed it to one of the branch-affiliated mortgage agents.
The mortgage officer called her a few days later and requested that Eran send in all manner of documentation: pay slips, tax returns, property listings, etc. She indicated she had provided all of that in the original request. She then received a call regarding the original mortgage application and was told she was conditionally approved and that the bank would mail her the conditional approval. The bank representative told Eran that after she had negotiated her deal on the property, she should take the documents to a local branch that would copy and fax them to the mortgage center.
While discussing the applicable rates and terms, the banker also provided her with a link to the bank’s website, which displayed a matrix of products, rates and terms, and told her to use that site to determine which package worked best for her. Then she should call the mortgage officer and he would use that product in the closing documents.
Now, which of these two banks do you think Eran decided to work with?
Mr. Morris is senior director, Financial Services/Banking, with San Francisco-based Salesforce.com. He can be reached at [email protected].
