Banking customers today, are increasingly aware that they have a choice. A choice between banks – and even non-bank entities – that can help them manage their money or conduct financial transactions. With the array of online tools available to help them compare services, it can be tough for your institution to stand out from the crowd.
That’s why it’s more important than ever to hang on to the customers you have, while continuing to attract new ones. Social media and online video can work alongside traditional direct mail programs to create a personal connection with each customer, and build trust.
According to the 2012 Edelman Trust Barometer: US Financial Services and Banking Industries, banking is one of the least trusted industries in the world. And in the United States, the numbers were even more troubling, with the trust rate only at 41% in 2012 following an all-time low of just 25% in 2011.
This abysmal trust rating has a direct effect on customer loyalty and has helped cause an average 15% yearly attrition rate among U.S. banks with each point of attrition costing between 1% and 2% of next income. The annual attrition rate doesn’t tell the whole story either – many banks lose up to 40% of customers in the first 90 days just churning through those losses with more costly acquisitions. Those lost customers aren’t disappearing silently, either. Social media has become a major force, and reviews from disgruntled ex-clients can affect your ability to attract new banking customers.
So, how can you stem the tide and build both trust and customer loyalty?
First, you can make a clear effort to improve your institution’s transparency through your social media channels. Engage in conversations with current and prospective customers to learn what they like or don’t like about your bank — and then show you’re listening by taking action on that feedback.
You can also improve your bank’s transparency, and build customer trust, by blogging or tweeting about topics important to your clients. For example, when Wells Fargo and Wachovia merged, the corporate communications department started a blog to keep customers informed during the process.
The blog addressed customer concerns and responded to customer comments and questions, explaining in detail how the merger would affect them. By being direct and proactive, they were able to allay some of the fears of customers and prevent huge losses. The Wells Fargo blog continues to be a focus channel for customer relations and education.
Getting a Boost from Video
ComScore research shows that 180 million U.S. internet users watched over 36 billion online videos in January of 2013. Almost 25% of those videos were promotional in nature, communicating with both new and current customers. Another survey, this time by Digitas, revealed that 51% of online video viewers aged 18 to 44 would look up a new brand they saw in an online video. This is basically consumers making a choice to watch “commercials.”
The key, as with social media content, is in making your video content personally relevant to end users. For the banking industry, this can mean a personalized welcome message for new customers, an explanation of features and benefits of an account, and cross-selling promotions tailored to a customer’s needs. This approach is being embraced to introduce complex financial products, combined accounts, lending, loyalty programs and credit cards.
Banks need to make a personal connection with each client and prospect in order to avoid the high cost of churn. They must use every tool available to provide transparent onboarding processes and actively communicate with customers in the first 90 days. J.D. Powers studies have shown that satisfaction and sales increase with increased communication that emphasizes product engagement. Social media, along with video content can provide the tools banks need to ease reduce customer attrition and improve long-term loyalty. Engage – your customers and your bottom line will thank you.