3 Key Components for banks to win the customer onboarding race

Reported by: |Updated: August 21, 2018

Virender Jeet

Even in the second decade of the 21st century, the digital divide between banks and customers remains palpable. Banks still treat onboarding as a process and not as an organization-wide brand defining strategy. Banks must remember that in the absence of a well-defined customer onboarding strategy, they stand to lose a lot more than just revenue.

In the race to win over customers, thorough planning and execution is of paramount importance. It demands a comprehensive onboarding strategy whose expanse and intensity should be of the level of organization-wide sales and marketing strategies. Let us look at the three key components with which banks can win the customer onboarding race while strengthening customer relationships:

 

The First 90 days: The ‘Make or Break’ Period of Customer Relationship

Of customers who reported an issue, 17% of them were in their first year as a customer. The first 90 days have often been touted as the ‘make or break’ period of a successful on boarding. According to a Forrester research, during the first 90 days, the cross-selling capability drops from 3.5% (during the first month) to 0.5 % (during the third), while attrition rate, which was at 3.5%, increases marginally.

The importance of the first 90 days can also be assessed from the fact that customers who have been with a bank for more than a year report fewer problems as compared to those who haven’t. This makes it essential to support and guide new customers during their initial days. Banks should make a dedicated effort to make new customers feel comfortable with their products and services by ensuring that they have comprehensive product/service knowledge. According to a report one is probably familiar with his own information architecture, but the new customers aren’t. In fact, ‘ease of use’ is the most common area where new customers get stuck, with 24% of them reporting problems in this area.

Ease of use of a product and ease of access to information have been the key pain points for many new customers; especially in digital channels. Eliminating these would enhance the online banking experience for new customers manifolds and would inculcate a sense of confidence in the service provided by the Bank; thus, encouraging retention.

Power of Regular & Contextual Communication Building: Brand Advocates with an Optimized Communication Strategy

Ensuring relevant, timely and consistent communication across channels is imperative to ensuring a positive experience as new customers transition into mature loyal brand advocates.

Delayed communication or lack of communication not only creates a negative impact, but also reduces customer retention. Being able to provide relevant communication at the right time makes customers feel that their Banks are aware of, and attentive to, their needs.

However, Banks must be mindful of the frequency of contact. A research by J.D. Power Insights demonstrates that customer satisfaction levels escalate until the fourth contact, beyond which, they tend to fall. According to the report- “more communication is actually better (up until the fourth touch). In fact, both satisfaction and cross-sell potential is optimized with more, rather than fewer, touches.”

Segmentation and Cross-sell: Offering Targeted and Useful Products and Services

According to a report by Harland Clarke, one of the most prominent drivers of early stage attrition is selling the wrong product. Effective customer segmentation should be harnessed to empower cross-selling abilities. Segmentation refers to dividing a large heterogeneous market into small homogenous parts, to serve each customer differently. Effective segmentation not only increases customer satisfaction, but also drives down costs by supplementing a closer match of organisational resources and the requirements of individual segments.

Effective segmentation when combined with cross selling strategy can empower a financial institution to pitch “sticky products” to customers. Sticky products are products or services that are of great value to customers, so much that they become tied down to them. According to a Harland Clarke report, “An essential characteristic of a successful on-boarding strategy is its ability to engage account holders to utilize ‘sticky’ products and services when they are most willing to buy.” This is where segmentation plays a poignant role.

Financial institutions should harness technology to group customers into segments and offer products and services that require and are most likely to purchase. Moreover, financial institutions should leverage account holder data captured during on-boarding to identify niche segments of customers, and their future product requirements; thus, maximizing their share of their customer’s wallet.

Banks must remember that in this digital age, where switching to competition is convenient and incentivized, delivering a superior customer experience is of paramount importance. As competition intensifies to win over customers, these 3 key components will help your bankoutpace competitors to the finish line.

  • Virender Jeet, is senior vice president (Technology), Newgen Software Technologies


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