Acquiring and retaining customers in a crowded, digital-centric brand ecosystem: Conclusions from the Tearsheet Acquire Conference

As the industry moves into the second year of the coronavirus pandemic, financial services brands are facing a tipping point. Companies in the space are contending with consumer behavioral shifts, including a forced migration to digital communication and transaction channels and an acceleration of the march toward cashless payments. At the same time, consumers expect financial brands to deliver experiences on par with direct-to-consumer leading brands from outside the financial services sphere, including Amazon, Uber, Google, and others.

These circumstances also underscore the need to serve populations who feel the traditional financial services industry hasn’t catered to their needs. Indeed, the coronavirus era has also spurred the growth of niche-market fintechs catering to specific areas of the market, including Gen Z-focused propositions and digital community banks.

Companies’ strategies to acquire and keep customers were the focus of the Tearsheet Acquire Conference, which convened virtually in February. Participants from large, established brands and newcomers alike reflected on their outreach and retention approaches, with some employing product-focused marketing strategies and others concentrating on nurturing trust and other intangible aspects of brand building.

Among the conclusions:

The “customer for life” is still the goal.
PayPal, which garnered a critical mass of customers through peer-to-peer payments on Venmo, the PayPal app and other platforms (377 million active accounts), emphasized that digital acceleration during the coronavirus era is facilitating an opportunity to enmesh itself deeper in consumers’ lives through product expansion and brand building plays. Product offerings released during the pandemic include “Venmo it forward,” an initiative to encourage charitable giving, payment through QR codes, the Venmo credit card, installment lending, crypto offerings, and more.

“PayPal has a broader set of life stage segments [than Venmo],” said Jill Cress, vice president of marketing at PayPal. “There’s a little bit of crossover and many people use both [PayPal and Venmo]. As we expand the utility of Venmo, it will be interesting to see how we engage the audience in a way that gives them access to even more solutions.”

As PayPal launches more products, the objective is to keep customers invested in the brand and its offerings.

“One of the big metrics that we’re focused on is the number of products per consumer and number of merchants per consumer, so we’re really trying to focus on both our product awareness and consideration metrics, as well as our ubiquity message,” she said.

In addition, challenger banks targeted at Gen Z customers – including Step and Current – benefit from a lower cost of customer acquisition than traditional brands because they’re often customers’ first bank accounts.

“[For] half of our customers, we’re their first bank account,” said Adam Hadi, vice president of marketing at Current. “We take advantage of both having this very high retaining product, while also, having a reasonable customer acquisition cost.”

Brands are aggressively growing their product ecosystems.
For Marcus by Goldman Sachs, the route to a robust product ecosystem is an emphasis on a user experience reminiscent of tech and direct-to-consumer brands outside of the financial services realm, and partnerships that help support that. 

“As we think about our goals, it’s really to redefine the distribution and consumption of financial services the same way Amazon has done with retail or Apple has done with music, building a bank on your phone and bringing together into one seamless online experience all of your financial services in one place,” said Elisabeth Job Kozak, co-head of consumer lending at Marcus by Goldman Sachs.

Partnerships are an important part of the Marcus growth strategy, both through direct-to-consumer and banking-as-a-service channels.

“As we think about our partnerships aspect of the business, that has been a key part of our strategy, and we’ll continue to focus on building banking-as-a-service and embedding our product capabilities into the ecosystems of other organizations,” Kozak said. 

On the direct-to-consumer partnership side, she added that Marcus aligns with brands that share its customer ethos and consumer-first orientation.

Meanwhile, Charles Schwab, a long-established player in the financial services space, noted that its approach has shifted away from a product-by-product strategy and towards a model where its online-to-offline toolset can help customers at varying stages of evolution.

“One of the things you have to think about is ‘what is the client trying to do?” said Sara Tresch, senior vice president of digital transformation and user experience at Charles Schwab. 

Schwab, which has products running the gamut of banking, saving and investing offerings – with digital-only as well as human-assisted options – said it’s benefiting from the digital centricity that the pandemic has unleashed, and differentiating on the comprehensiveness of the choices it offers its clients.

“When people come to Schwab, or come to a digital experience, they might come for one specific need, but that can sort of mushroom into a few other things as they’re spending time with you,” said Tresch. “It’s never about pushing product.”

Tresch added that the company has been increasingly investing in product testing and data analytics capabilities.

“We have this metric where we think about minutes saved, not just for people who are serving clients, but for our clients themselves,” she said.

To understand the pulse of the customer, product teams need to work in tandem with marketing, brand and customer service functions.
Companies are increasingly intertwining marketing with product development functions.

Banking and investing app Stash, for instance, focuses on shared KPIs among various teams to move the needle on common objectives.

“There’s a general understanding of the tactics that you need to do to grow – you have your referral, you have your new customer experience, you have your onboarding, you have your paid acquisition, and any number of things after that,” said Tyler Pennell, vice president of growth marketing at Stash. “What ends up happening is there’s a lot of executional risk within that, and there’s a lot of potential churn and wasted time when you don’t have a product team and a growth team and a growth marketing team that are aligned and working together.”

As Stash builds its product suite, Pennell explained, one of the most effective ways to assess customer acquisition efforts is the notion of payback, or an analysis of how and when a relationship with the customer has become profitable over time.

“'[Payback] a pretty standard KPI for subscription businesses, it just basically means if we pay this much money for a user, or customer, or that [if] we spend this much to enhance our funnel, how long and how many months will that become profitable?” said Pennell. “We can have this high level metric that we’re acquiring these customers at this customer acquisition cost, which pays back in this many months. But then you can also look at it on the micro level and say, in Q4, we have three different things we want to do, [and] which is actually going to have the better payback?”

He also described how the company used financial education and social media outreach initiatives – including giveaways called “stock parties” – to drive engagement and enthusiasm around the brand. The goal is to promote “The Stash Way,” which is the company’s approach to long-term, diversified investing habits over time.

Meanwhile, for Tally, a credit card consolidation platform, connecting product teams to the “voice of the customer” expressed in customer service interactions is a priority.

“The interests of product and service are actually very much aligned,” said Anthony Schrauth, vice president of product at Tally. “When you combine those groups, even if it’s not through reporting lines, but through a clear partnership, you end up getting a nice tight feedback loop and end up creating a better digital product.”

Influencer marketing isn’t only about acquiring more teen customers.
It’s no secret that influencer marketing delivered through channels that Gen Z customers spend their time on – including Instagram, TikTok, Snapchat, and other platforms – can generate brand affinity among customers and would-be customers. For youth-focused challenger banks Step and Current, along with those with broader reach like PayPal and Square, influencer marketing helps drive messages around why a particular product proposition matters. 

For Gen Z-focused challenger banks, influencer marketing suits the needs of a demographic that is less trusting of advertising and more interested in endorsements from peers. 

“There’s an understanding that unlike maybe, a couple generations ago where [people] were like, ‘Oh, well, if this company’s advertising, that must mean they’re legit, right?’” said Current’s Hadi. “The endorsement that comes about by working with influencers is a really big deal.”

Step said a deliberate approach to selecting influencer partners and those who develop user-generated content is key.

“We look for people that have similar values and that we believe might be a good fit for us,” said CJ MacDonald, founder and CEO of Step. “We have a lot of discussions and look for people that are passionate about what we’re doing, and might be a good platform to tell our story.”

Meanwhile, for brands geared at a broader set of demographics, users are a powerful set of influencers who can explain product propositions in a relatable way. For example, Square features business users of its products as influencers in its marketing campaigns and materials.

“Hearing from business owners is probably one of the best ways people trust what they hear from other business owners,” said Lauren Weinberg, global head of marketing at Square.

Branding is increasingly becoming about positioning, and trust is a priority. Taking a stand on issues that matter to customers can have an impact.
N26, a global digital banking brand that arose in Europe and is making forays into North America and South America, said building trust through an understanding of the local market is a core area of focus.

“You have to have the local teams that really understand how we take those global insights and bring them to life in a locally relevant way –  it drives how we manage channels, it drives a lot of the complexity that we have to deal with,” said Patrick Stal, vice president of global marketing at N26. “[It’s about] delivering on what you promised. There’s an institutional part of trust, but there is a trust that’s driven by your actions and what people see.”

For Zelle, education is a core component of building trust with peer-to-peer payments, supported by partnerships (including with EverFi) and brand spots detailing use cases for product offerings.

In addition, at a time of social and economic transformation spurred on by the consequences of the coronavirus pandemic and other recent events, brands are becoming more comfortable taking positions on issues that matter to their customers. They’re also offering customers opportunities to express how they feel.

“By at least starting a narrative and telling people what you stand for, and what you’re hoping to achieve, it creates almost a vessel for people to contain all of your other messages,” said Halle Hutchison, chief brand officer at Varo Bank.

The need for a differentiated brand voice is pushing some brands to become publishers in their own right.
Once only the preserve of large incumbents, the need to build a voice through self-published content is now a common vehicle for newer, digital-only challenger brands. MoneyLion, which is building a brand around the needs of the underserved customer, said its focus on marketing attribution was the rationale for a renewed emphasis on content development.

“We’ve really focused on converting traffic [to MoneyLion’s site] through creating reasons for people to hang out and read and understand and get to know money in a different way, and convert that traffic into good customers,” said Bill Davaris, chief marketing officer at MoneyLion.

Alongside paid marketing and social opportunities, organic traffic is important. For MoneyLion, the focus is on building intent among a group of interested customers and driving interest through that engagement.

“Organic traffic was turning out to be a really good customer, because they had a really solid understanding of the product, so when they stepped into our onboarding, there were no bumps on the road.”

Instead of a vehicle that pushes product, content is seen as a way to help customers get acquainted with the brand voice, and engage more purposefully.

“It’s just like meeting someone for the first time at a cocktail party – you have that first impression,” said Davaris. “[Brands are] creating another version of themselves that’s not commercial, but more of a thought leader destination, and essentially becoming publishers, and they’re starting to realize that the engagement and understanding is incredibly valuable.”