By Steve Grout,Director of Loyalty at Collinson
With increased competition across the financial services industry, loyalty is front and centre of a bank’s strategy to retain customers. It is no secret that building a more personal relationship with your customer is an important ingredient for loyalty. However, our recent research found that just one in three (34%) consumers felt that their bank treats them as an individual and not just an anonymous customer.
Customers are growing numb to brand communications given the volume of marketing they receive. They expect a personalised, contextual experience. This means communicating the right message, at the right time, at the right place and on the right channel – whether that’s information about the customer’s account, payment reminders, special offers or anything in-between.
There’s no context without data
Data is the cornerstone of contextual engagement and banks have the tools to obtain granular detail about their customers on how and when they are spending. They can even find out what items they are buying, not just basket spend. With this information, banks can make a strategic judgement on how to best engage with customers and offer highly personalised and relevant experiences.
There is still work to be done on this front though. Our research also revealed that less than a quarter (23%) of consumers felt they receive a customer experience from their bank that is personalised to their interests and preferences.
Rather than relying solely on their own existing data, banks can augment it by partnering with organisations and acquiring data (second-party data) or purchasing it from third parties. When third-party data is applied with first- or second-party data, a more robust picture of your customers and their preferences emerges, equipping you with even more information to make a strategic decision and provide a highly relevant offer.
Contextualisation in action
With a deep understanding of what makes customers tick, banks can identify moments when they can contextually engage to genuinely add value. But with limited opportunities to engage directly with customers, using the power of digital is vital. With the right mix of contextual engagement opportunities – whether advice, content, trends or insight – customer interactions increase tremendously, especially given the prominence of mobile devices in our daily lives.
Travel is rich territory. If a customer purchases plane tickets, or logs into the mobile app aboard, the bank could upsell travel insurance, or offer access to an airport lounge for their return journey.
Contextual engagement can be even more proactive. Customers’ purchases or bank interactions provide clues about their life stage, which present opportunities for long-term engagement. For example, a customer buying baby products could be open to a conversation about alternative financial services, such as life insurance, to meet the needs of their evolving personal situation. Alternatively, if a customer starts to combine bank accounts with another person, they could be in a long-term relationship and open to a new range of products and services aimed at couples, such as mortgages.
It’s an effective, but often delicate line to walk. Banks must be careful not to stereotype and erode the trust of the customer in the process. Buying baby products, doesn’t necessarily mean someone became a parent recently. They may simply be a gift. Again, data is key. By aggregating different data sources and recognising consistent patterns, you will understand more about your customer and interpret clues more accurately. AI and machine learning platforms enable banks to accurately assess whether these purchases are spikes or more long-lasting trends.
Communication is also a focal point for contextualisation. It’s all about understanding how customers bank and spend, and mirroring this when personalising offers or products. Ensure you use the channels they prefer – there is no point sending someone who always banks on an app, an offer by post.
For our Greek bank client, Alpha Bank, its new loyalty program application, “Bonus app”, has become an important contextual engagement tool, rewarding customers for their everyday spending. Based on customer purchasing behaviour,preferences, spend and geolocation, the bank serves relevant, real time offers and rewards from its ecosystem of 4,000 retail partners.
Bonus app brings the program into the hands of the customer and provides personalised content, online redemptions, transaction history details, and all the necessary information about the program, in this way covering key customer requests and improving customer experience.Since launching Bonus, Alpha Bank has enjoyed an impressive 15% increase in market share. With 1.5 million redemptions made in 2018, the rewards app places the bank front and centre of the customer’s mind every time they spend, boosting engagement and loyalty to the bank.
While currently only skin deep, contextual engagement will soon become the norm. Offers and experiences need to be rich, individualised and founded in data. Consumers don’t want an afterthought. Instead, pre-emptive hyper-contextual engagement is the way forward.
When done well, the potential for contextual engagement to boost interaction and loyalty with your customers is extremely high. Remain mindful of the fine line between intelligent use of data and being intrusive and make sure to target your customers at a life stage, as opposed to an individual event. The key is to ensure you’re providing genuine value in your communications and offers, that help to meet customers’ heightened needs. With enough data and insight, and an interesting collection of appealing rewards and benefits, the blueprint for contextual engagement to win over your customers’ loyalty will become clear.