A sound way to increase deposits is by strengthening relationships with existing customers. In this first story in a two-part series, we lay out the four steps for growing deposits with a small but influential segment—affluent households.
If you want to know where your most profitable banking customers are heading in their financial journey, then you should become adept at looking for a trail of breadcrumbs.
If you’re watching carefully, you’ll spot events that are coming around the bend that will direct your clients to unexpected paths. And those most likely to change their paths, even their banks, are more affluent households. For instance, 34% of emerging affluent customers (those younger than 40) said they would consider leaving their bank within 12 months, based on 2016 research by J.D. Power.
Where there is attrition peril with this segment, there is also growth opportunity. One sure way to prevent this segment from leaving is by deepening their involvement with your institution now, namely by giving them reasons to increase their deposits when they’re not even thinking about it. Those reasons, however, must be specific to the customer, informed by data indicators that reveal their activities both within and outside your bank.
I call it breadcrumb banking, but despite the folksy name, it requires a lot of advanced analytics.
Here’s why: Consumers bank in different ways, depending on personal situations and outside events, some of which they might not even realize. Take rising interest rates. Your clients may not be scouting about for investment opportunities, but what if a too-good-to-ignore offer presents itself, and it’s not yours? Suddenly, their loyalty is put to the test.
Fortunately, your clients leave a trail of breadcrumbs that reveal their financial activities. Here’s where the analytics come in—enabling banks to identify and engage the most promising affluent households, while keeping track of competitor actions.
Ready to expand your influence and grow your relationships among your most affluent clients? Follow these four steps:
1. Checks and balances—finding affluent households.
Using segmentation techniques, banks can separate and tier affluent households to locate the most promising client prospects. Through our Global DataView™ analytics tool, for example, we can recognize which consumers live in high-net-worth neighborhoods, a reliable indicator of potential opportunity. Further, we know from our analyses that the more affluent the families, the more likely they are to have accounts at multiple banks. And as these families do business with different institutions, they leave evidence (a.k.a. breadcrumbs) such as shifts in account balances or new account openings.
2. Catch their interest.
Few people sit around on a Saturday afternoon thinking, “I want to move my money around.” It’s up to the bank to initiate the buyer’s journey by making him or her take notice. The traditional way of doing this is through advertising; such as promoting a great rate on an interest-bearing account. However, to keep acquisition costs stable, these promotions should be targeted to the few, not the many. Using the data to identify the households likely to invest in your product, you can select who to make aware of the rates and invite them to participate.
3. Determine what will appeal to them, exclusively.
Selective marketing not only benefits the bank financially, it is more likely to resonate with customers who prefer exclusive opportunities. Based on the customer’s activities within and outside your bank, find the incentive that would captivate their interest. A limited-time rate on a high-net money market account, for example, could resonate among those approaching retirement and looking for safer investments. By observing the customers’ actions, you can help them recognized that they have jobs to do rather than waiting for them to realize it on their own. Once more, the key is not taking cues from the customer, but to cue them up and arouse interest. If the customer responds, such as by going on the bank website to check rates or learn more, then they’ve confirmed for you that there is a “job to be done.”
4. Keep in touch, across touchpoints.
Once the conversation is started, it is essential to remain keenly attuned to what customers do next. Again, it’s in the breadcrumbs: Did they click through the promotional email and go on your website or social media page? Did they access a banner ad? It is critical to follow that feedback loop closely at this juncture because you’ve woken the customer up to an opportunity, and they could choose to pursue it elsewhere. It can take an average customer up to six months to decide whether to move from a bank, and in that time, they’ll use up to nine resources to research banking options. Be sure to engage them continuously, to reduce the amount of work required to take your offer, and to reinforce the reliability of your services.
Always remember: The journey doesn't necessarily end at your bank.
Your Customers Have Other Suitors
In fact, even if your best customers are responding to your offer for new deposit options, you should expect that other banks are also wooing them. Banks leave trails as well.
So, before you even initiate a conversation, perhaps before identifying your best prospects, be sure to have the marketing technology in place to support the data feedback required to stay engaged.
Similarly, you should be prepared to intervene on conversations your customers could be having with competitors. If a customer is researching deposit products with your bank, it’s possible a rival had approached them and triggered their interest. Time to jump in.
After all, even one crumb of evidence can lead to bountiful results.
In the second installment of this two-part series, we follow the steps to acquiring new deposit customers in advance of the peak checking acquisition season of August and September.
You might also find value in this piece: The Role of Jobs-to-be-Done in the Bank Branch Customer Experience.