Inside the lifecycle of a financial services customer, in 4 charts
- With increasing commoditization of banking products, marketing becomes even more important.
- A new study looks at how the best firms acquire, retain, and keep customers loyal.
For the most part, core banking products like debit cards and bank accounts all look pretty much the same. This means banks, asset managers and upstart fintechs are all competing over similar customers with similar product. In a world of increasing feature convergence, marketing acquisition, retention and loyalty become competitive advantages.
Yes Marketing recently published a white paper, Inside the Lifecycle of the Financial Services Consumer: Guiding Customers Through Acquisition, Retention and Loyalty. The firm surveyed 1,000 financial services customers in April 2019 in order to understand what drives consumers to become new customers, why they stay with a financial services company, and why they become loyal for the long-haul.
Why customers choose their financial services providers
It's a competitive market and many customers still base their decisions on rates and fees. These people are practical shoppers. 42 percent of consumers report that competitive rates and fees are the most significant factor when considering new financial services companies.
Having competitive rates isn't enough. Nearly a third (31 percent) of consumers ranked trust among their top three loyalty drivers to a financial services company.
Getting over the trust hurdle by being transparent about rates and fees
Working with a new financial services provider requires getting over a high trust hurdle. Being clear and transparent on rates and fees goes a long way.
It's not all about being the lowest cost provider or paying the highest rates on savings accounts. Today's consumer wants his banks and other financial providers to be clear and transparent on the rates and fees they charge. This engenders trust -- 57 percent of consumers are most likely to trust a company if it provides specific information about rates and fees up front.
Factors that lead to trust
At the end of the day, trust is built on word of mouth recommendations. With so much at stake over money, savings, and investments, people want to make sure they work with high quality financial institutions. Recommendations carry a lot of weight.
More than 40 percent of customers selected their last financial services company based on the recommendation of family and friends. Additionally, more than half (53 percent) say they chose not to use a company because of negative feedback from family/friends. Organic search results from Google carry only a 9 percent weight.
Also, two-thirds (67 percent) of Gen Zers (18-21 year-olds) say negative word-of-mouth has deterred them from using financial services companies they haven’t previously used.
Finding the right communication frequency
How often a financial services company chooses to communicate can severely impact trust levels it engenders with its customers. It's imperative to the right balance between communicating important information and not overly saturating customers with marketing communications.
Forty-two percent of consumers rarely or never receive relevant marketing communications from financial services companies they’ve used before or are currently using.
Nearly a quarter (22 percent) say they hear too frequently from companies across channels including email, SMS, push notifications, social media and display ads on average, while 8% say they do not hear from those same companies often enough.