Customer Data

Loyalty in the Age of the Digitally Native Consumer

Customer Data | February 14, 2017

In just about any industry, customer loyalty is driven by the amount of trust a person has in a brand. Does the brand consistently do what it says it will do? Does the brand do it well? Does the brand go out of its way to give the customer a satisfying experience on his or her terms?

Unfortunately for banking and finance, even in the world of credit unions, trust is at an all-time low. The trend rings particularly true among millennials. According to the millennial disruption index, 71% of millennials would rather visit the dentist than listen to their banks, and 73% would rather handle their financial services needs through Google, Apple and Amazon.

This means financial executives are now faced with the complex task of meeting all regulatory standards – privacy, security and reporting – while still trying to move in time with digitally native consumers who are used to elevated levels of personalization and convenience. In order to truly foster loyalty with today's consumers, credit unions can consider three essential modern marketing tactics that act as the backbone for a member-centric communications program.

Think Agile to Drive Innovation

Agile methodology, as inspired by the Agile software development principals established in the tech boom of 2001, asks marketers to work, think and adapt in shorter “sprint cycles” as opposed to long, annual campaign planning. Doing so allows marketers to nimbly adjust their strategy and tactics based on the data-driven feedback loops they put in place. With an Agile mindset, marketers are given a venue to experiment with innovative, interesting and creative tactics. The benefit of these short, data-driven cycles and feedback loops allows financial marketers to quickly see what is working, scale it up, and – as Silicon Valley taught us — fail fast and immediately drop initiatives that aren't working.

In 2016, Capital One earned a place among the more future-forward and consumer-centric financial institutions. Commenting on the company's Agile approach, CIO Rob Alexander notes they work backward from market demand, listening first to what people valued and how they behaved, then pivoting to plan and execute their strategies. This ultimately led to the production of new flagship products like the Wallet app – a central place for card management and reward redemption – as well as Second Look, a feature that leverages cutting-edge artificial intelligence and machine learning to monitor for erroneous card activity.

Personalize Marketing and Content (Without Being Creepy)

According to a recent survey, 50% of consumers do not feel their bank knows them, while 92% of banking executives think they are providing an acceptable or high level of personalized experience. Retail institutions, including credit unions, have the potential to leverage their customer and member data to develop truly interesting and engaging content.

For example: What if, after a member inquired online about how to successfully get a mortgage, the institution promptly emailed exclusive access to a helpful real estate investment tool? It might include a helpful checklist for all the documents you need to collect; a directory of highly-reviewed real estate agents, home inspectors, lawyers, movers or even cleaning companies; and the phone and email of a loan advisor who would answer any questions in person, at the member's convenience? This would be a great way to show your members that you understand what they will need down the line and are, in fact, the right partner for their next mortgage.

Get Creative With Loyalty Programs

Frequently, financial services companies treat loyalty programs like a business exchange. It's only natural. Consumers might rack up points that are redeemable for plane tickets or restaurant experiences by using a credit card, or by referring the institution to friends or family members. Unfortunately, these programs can often feel frustrating or falsely advertised, and can come with hidden fees that appear to benefit only the financial institution.

On this score, Zions Bank broke out of this familiar mold with its 2016-17 Pays for A's program, in which junior high and high school students earned one dollar for every “A” on their report card, which was deposited into a student savings account at the bank. In addition to rewarding hard work and supporting education, the bank enrolled all students in a drawing that offered a chance to win additional $100 and $1,000 scholarship savings accounts. What's even more surprising is Zions’ agreement to give 50 cents per A for students who didn't even have a savings account at the bank, a loyalty move that showed how the brand's support of education extended beyond its own pockets.

When examining the rising costs of customer acquisition and retention in a world of digitally native consumers, this campaign feels especially smart. Zions is now positioned to gain new customers, collect data from all participants for the final drawing, get people coming in the door and deliver great brand association for local branches, all while humanizing the business and taking action to foster increased brand trust among parents and students alike.

While today's digital consumer may appear complex and hard to understand, financial executives who empower their teams to adopt a more Agile structure, personalize content and break the mold of traditional loyalty programs can make tremendous strides to instill member trust and loyalty. People are being empowered to think and re-think about how to move and store their money; the time to adapt is now.

Originally posted on CreditUnionTimes, January 27, 2017.

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