Digital Shopping Has Transformed The Bank Purchase Funnel

Historically, customers came into a branch to research financial products prior to purchase. Today, the majority of customers have done significant online research before entering the lobby, transforming the bank and credit union purchase funnel. 

Unfortunately, these digital shoppers get confused as they try to navigate tedious web pages or become unimpressed when they encounter unprepared branch personnel, requiring financial institutions to develop an improved multichannel sales strategy.

When respondents to the Novantas 2012 Multi-Channel Sales Survey were asked to identify their preferred channels for product research, online was cited as the top avenue by 63 percent of respondents with only 13 percent of the respondents stating that the branch was their primary research source. A majority of these same respondents, however, preferred to open an account at a branch, with only 36 percent preferring to open an account online.

The Novantas research found that preferences differed based on the account the customer was researching, with customer using the online channel more when shopping for a new checking account (69%) than for a mortgage (57%) or investment product (55%). Again, the branch channel was not the first choice for initial research.

Multichannel Purchase Funnel

But the online channel was not the only channel used by consumers shopping for bank or credit union products. In fact, Novarica research in conjunction with FindABetterBank found that consumers who were about to open a new checking account in the next 90 days expected to use several channels before deciding on a new financial institution.

The customer trend towards 'having it both ways' (digital shopping and branch-based opening) has a variety of implications, especially when the impact of mobile marketing through smartphones and tablets is taken into account. According to a recent Novantas Review feature entitled, "Winning With Online Shoppers", banks and credit unions must realize that their websites need to drive sales traffic to the branch and help complete sales online.

Gaining Visibility Online

Now more than ever, banks need to gain visibility online, since more and more consumers use search engines like Google to start their research process for a new product or new financial services provider. It is important for a bank or credit union to be visible as close to the top of searches as possible to have a chance in today's marketing warfare. As Novarica managing director, Robert Rubin put so succinctly in an online interview, "Improving online visibility in search and on third party sites is imperative. These are the online resources consumers use to shop. If they can’t find you, how will they know you exist?"

Despite all of the hype around paid digital placement, the Novantas research found that most consumers (roughly 80%) only clicked on organic search results that depend on keywords and search relevance. To consistently rank in the top five organic results, a bank or credit union must optimize their website so that: 1) the site has greater relevance to keywords used in local searches; and 2) the site reflects indexing activity of search engines. Novantas also recommends a program that establishes inbound links from related websites to stimulate traffic.

Although only 20% of online shoppers click on paid links through search engine marketing (SEM), the links still provide visual cues and reinforce brand presence. The value of SEM can only be determined through testing and ROI evaluation. As mentioned, the power of engaging third parties for referrals and mentions is one of the most powerful tools to reach online shoppers.

Improving the Internet Banking Sales Experience

Expanding the relationship of current customers who are comfortable shopping online is probably more important than many of the prospecting strategies discussed above since the cost of expanding a relationship is lower than finding a new customer. 

According to a recent study from Mapa Research entitled, "Digital Sales: Enhancing Existing Customer Relationships," personalization of the buying experience is core to successful conversion of customers. In reviewing the sales strategies from over 30 providers in 10 different countries, Mapa found that relevance is imperative in both the targeting of customers and the tailoring of offerings. 

The sales messages can occur at any point while the customer is engaged in their online banking activities. Obviously the account activity screen is often used for customized messaging. The key is to provide pertinent offers without being obtrusive or interrupting normal digital activities. While some of the personalized messaging is in a static position on the account summary page (NAB Bank 'My Offers'), other institutions were found to use pop-up windows to draw additional attention (NatWest). 

With Bank of America, Mapa found that when a customer wanted to open a new checking account they were shown additional 'go with' services within the account opening process. If the customer does not want to open an account online, they can schedule an appointment with the phone number provided.

Providing support options at key moments of the sales journey is also important according to Mapa. For instance, Natwest provides a link to an advisor if a customer looking for a new service wants to abort a sales process, while Citibank also provides assistance prompts throughout the sales journey. Many examples of integrated sales support are offered by the larger banks as part of their internet banking sales experience.

The 85 page Mapa Research report (available for free review and purchase here) also provides many visual examples of institutions that cross-sell products to existing customers upon the log out of internet banking. While some organizations provide several product promotions on the log out screen, the best limit the products promoted to those relevant to the customer.

Selling Through Mobile

The frequency of engagement via mobile is higher than with either internet banking or tablet engagement, yet the length of engagement is significantly shorter on average. This makes the sales journey using a smartphone much different than through other channels.

For several institutions reviewed as part of the Mapa study, the sales message preceded login or was integrated within the login process, with product information, news and links to the bank's website provided at the onset of the mobile experience. Where this was done, it was important to provide a 'one click' option for the customer to receive more information or begin the sales process.

As with internet banking, there are many ways banks are beginning to provide customer service and agent access through the mobile device, While less prevalent in the U.S., many organizations overseas that have integrated customer service within their sales process.

Similar to the internet banking examples, Mapa provides many visual examples of banks that include selling as part of the logout of the mobile engagement. This is to avoid any interruption in the primary reason the customer is using their mobile device (balance check, transfer funds, etc.) 

The good news is that any message on the mobile device will usually be seen multiple times during any period due to the number of times many customers use their mobile device and since many customers access their accounts using multiple devices (desktop, smartphone, tablet).

Additional coverage of mobile sales and servicing innovations can be seen on my previous post entitled, "Banks Accelerate Mobile Banking Innovation".

Tablet Banking Sales Experience

Since many tablet applications continue to be non-customized versions of a bank's internet banking experience, the integration of selling using the tablet has lagged other channels. 

Despite the slow start, there are some examples of how banks have leveraged the tactile experience and social interaction capability to provide a better sales dialogue. Tablets also provide a much better graphically oriented tools that can build engagement. Since the time spent on during a tablet engagement is significantly longer than a customer spends on a smartphone, the potential for sales success is greater with this channel. 

The tablet also is a much better media to integrate live chat and other forms of customer support that can improve sales results. While the tablet should not be considered the channel to place all product information, it does provide a very valuable stepping off point to a bank's website. Through links and redirection, the tablet can be a great asset to any bank wanting to improve their digital sales results.

Closing The Multichannel Sale

The advantage of cross-channel integration is the possibility to sell with each interaction through each channel in a consistent and relevant manner. In other words, each interaction becomes a sales opportunity. The objective is for banks to allow prospects and customers to switch between channels, at will, without breaking the sales cycle.

In conjunction with online visibility and internet and mobile/tablet marketing, it is clear that most financial institutions need to significantly simplify the customer journey from online or mobile inquiry to completed sale. According to both Mapa Research and Novantas, the majority of banks are lagging other industries in their multichannel shopping experience, potentially losing potential customers who get frustrated. There is definitely a revenue consequence to not investing in process and site simplification (e.g. fewer clicks and clearer communication).

Complexity and lack of personalization in products and/or process creates an immediate wall for consumers that are increasingly mobile, less tolerant of difficulty in completing a process seamlessly online, and more sensitive to non-customized offerings. In addition to improving the channel experience, forms must be simplified as well as links between channels.

In addition, once a shopper is engaged, the best strategy is to provide a number of channel options for fulfillment since research shows that shopping and buying can be disjointed. Integration of channels is necessary. Do we enable online account opening? How about through mobile channels? Can customers connect directly with a live agent? Can the ATM channel assist in the process? Has social media been considered as part of the digital sales strategy?

Robert Rubin provides this advice, "Look for opportunities to present add-on offers within a sales process. Also, PFM solutions from vendors like Intuit and MoneyDesktop provide opportunities to cross-sell within the online banking interface. For example, letting the customer know that your credit card has a better rate then the card they’re currently using."

Finally, banks and credit unions should consider segmentation around channel use since customers differ so much with regard to how they interact with their financial institution. According to Novarica's Rubin, "Consumer behavior is changing and branches are a very large fixed cost for financial institutions. Successful cross-selling requires channel use segmentation to allow the ability to provide customers the combination of 'right time, right offer, right channel'. Understanding how customers use channels is essential."

Need For Management Buy-In

A relevent sales experience needs to meet the content and functionality needs of the customer. Both Mapa Research and Novantas believe a shift in management mindset is required to eliminate current channel silos and to support the investment in the overall sales process regardless of where a sale begins or ends. This will require improved measurement of sales results across channels and a rethinking of products suites based on the needs of the online and mobile customer.

Note: The Mapa Research report provides some excellent examples of global banks that are succeeding in integrating channels for improved multichannel selling. In addition to ABN AMRO and ASB and others, the report provides a case study of Commonwealth Bank's personalized sales process.

Additional Resources

Winning With Online Shoppers - Novantas Review (June 2013)

Digital Sales: Enhancing Existing Customer Relationships - Mapa Research (April 2013)

Winning With The Multichannel Consumer - Novantas (March 2013)

Winning in a Multichannel World - Novarica (April 2013)

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9 Steps to Improving Bank Cross-Sell Performance

With an increasing need for banks to increase revenues and decrease costs, optimizing every marketing contact has never been more important. In addition to leveraging multiple channels to generate a steady stream of new customers, one of the easiest and most steady sources of new businesses and related revenue is to reach out to current customers for additional business.

With the cost of acquiring new retail, small business or commercial customers being five to ten times the cost of retaining an existing one, and with the average spend of a repeat customer being 50-100% more than a new one, bank marketers need to remember that the most efficient investment of marketing funds is to market to customers that already bank with you.

Here are 9 time-tested, common sense techniques that many bank marketers sometimes forget: 

1. Ask questions: Consultative selling has been discussed the focus of the banking industry for decades. In a nutshell, the process begins by clearly analyzing a customer’s situation before presenting services or products. From the outset, a failure to cross-sell a brand new customer is a failure to develop a consultative relationship and a failure to ask the right questions.
   
   Without these questions (which are close to impossible to ask later), the opportunity to open the right services initially or later in the relationship is made more difficult. In addition, as opposed to going through a long set of questions that make the banker (and customer) feel uncomfortable, the dialogue should be free flowing and natural. Another option is to engage the customer with tools that can be used to complete the profile easily such as a tablet device.
   
   
2.  Start with the lowest hanging fruit: The easiest sales that can be made to current customers are engagement services that help a customer use an account they already own. These 'sticky services' include a debit card, online banking, direct deposit, bill pay, automatic savings transfer, personal line of credit and security solutions such as privacy protection. These services help to ensure the customer will use the products they own more frequently, will significantly improve retention and will help to improve the overall customer experience.
3. Stay connected: I have opened a number of accounts over the past year (sometimes as a ‘secret shopper’) and am always very impressed with how much love the bank gives me when I opened my accounts. I am amazed, however, that I rarely heard from them again except to tell me about new fees or a regulatory change. This is despite the fact that each bank got my home address, my email address, my cell phone number and my home phone number. Nothing but crickets except for GoBank, that did a great job of informing me of next steps.
   
   
   While some banks have very successful onboarding programs to help stay connected with new customers, a surprising number of banks still rely on the customer to onboard themselves. And unless the customer either opens a number of accounts initially or is successfully onboarded soon after they open a new account, their bank may never include them in a model-driven cross-sell program. This is because model-driven marketing programs usually focus on customers with broader relationships.
4. Continually evaluate upsell opportunities: Rather than using product-driven programs that are done seasonally, consider funding more customer-focused programs that evaluate each customer's propensity to open one or more of the products and services you offer. With some of my clients, we evaluate each customer's transactional, product ownership and even behavioral characteristics to determine what would be the most likely next purchase and whether the propensity to purchase is high enough to make an offer.
   
   In some of most successful programs, this evaluation of opportunities is done monthly, with smaller mailing universes, but much higher response rates. As the ability to use 'big data' increases, the movement from sales 'programs' to sales 'processes' becomes a necessity.
   
   The goal is to offer the right product, at the right time, to the right customer through the right channel. This takes customer data analytics.
5. Personalize your communications: A recent report from Gallup revealed that 66 percent of the most engaged customers at banks believed the marketing communication they are receiving was 'general in nature' and not at all personalized. Worse yet, 53 percent of the households surveyed said that the offer received was for a product they already owned.
   
   With consumers becoming aware of the ability for all companies to micro target, they are expecting their financial institution to be one of the best due to the insight organizations have. Therefore, now more than ever, banks need to build segmentation programs that reflect customer needs as well as current product ownership and use this insight to drive communication.
6. Empower your customer contact teams: For most customer-facing employees of your bank, their primary responsibility revolves around efficient processing of transactions and/or customer service. To leverage the thousands of customer engagements these employees have each year, you need to provide easy ways for them to extend their conversations to include relationship expansion opportunities. Many banks provide prompts on their employee's computer screen around recent sales communications received by the customer, most likely products that may interest the customer and even special offers that can be made as part of their transaction or service conversation.
   
   The best programs don't stop there, but include tools for the customer to take advantage of the offer. This may be an immediately generated custom printed sales document, a follow-up email or sales call or a referral form.
7. Ask for referrals: One of the easiest ways to generate new business and increase loyalty of current retail or business customers is to ask (and possibly incent) for referrals. If a customer is happy with the way they are treated at your organization, they usually want others to know. This is especially true with satisfied small businesses, private banking customers and with retail customers that are part of a bank-at-work program. And it doesn't hurt if you provide an incentive to your current customer.
   
   At a time when new customer acquisition offers often exceed $100 and when the overall cost of acquisition is more than $250, offering a 'bounty' of $50 would be less expensive and would most likely generate a more loyal customer.
8. Leverage all channels: Never assume that customers understand all that your organization offers or absorb communication the same through all channels. Remind your customers continuously that you know who they are, understand their needs, are looking out for them and that you are willing to reward them for their loyalty.
   
   And use as many direct channels as possible to reach out to your current customer base, including email, direct mail, statement inserts, banner ads on your website, ATM messaging, outbound calling efforts, etc. Digital retargeting of customers who visit your website or are part of your direct mail or email programs also is a highly effective and very efficient way to cross-sell customers.
   
   Finally, it is time to start building cross-selling messages within your online and mobile bank applications and to not assume customers will not want or read an SMS message if it is well targeted..
   
   

   

   
   

   Source: Novantas 2013 Multi-Channel Sales Survey (Total US Respondents = 4,813) 
   
   

9. Measure and reward what you want done: By providing ongoing measurement of the cross-selling objectives you want to achieve and paying for the achievement of these objectives, you have a much better chance of reaching your goals. This continuous reinforcement of your cross-sell mission allows your team to be focused on what's important.
   
   You can also turbocharge your results by communicating how you are assisting in their efforts. Provide opportunity reports of the customers where they may have the greatest opportunity for success. As part of these reports, it is also helpful to provide background as to why the customer is being selected for a specific offer.

Finally, remember that current customers like to be rewarded for their loyalty. One of the best ways to do this is to remember to include an offer with any cross-sell or upsell message. Without an offer, you may be perceived as simply 'pushing product' without leveraging the relationship value already in place. A strong offer will not only generate a better response to your communication, but also remind the customer of the value of doing business with your organization.

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Online Banking Key To Satisfaction and Growth at Credit Unions

According to recently released research, credit unions continue to score higher than banks in six key areas that have been found to drive customer satisfaction.

Interestingly, however, while lower rates and fees are still a significant component of a positive member experience, the impact of improvements in the online/mobile channel delivery will have the greatest impact on increased customer satisfaction in the future.

CFI Group, a customer satisfaction technology and analytics firm, in an inaugural study entitled "2013 Credit Union Satisfaction Index," measured six primary drivers of customer satisfaction on a 0-100 point scale and found that credit unions consistently scored high in all categories, with each driver scoring in excess of 80 points. This score was higher than many other industries including retail banking. 

CUSI Satisfaction Driver Scores

Of the six drivers of satisfaction measured, however, the 2013 CUSI found that only four play a significant role in driving member satisfaction and, therefore, should be the focus of the industry. At the top of the list for primary drivers that could impact future satisfaction were "online banking," "branch staff," "branch convenience," and "information/communications." 

The chart below illustrates the contribution of each primary driver towards increasing member satisfaction. The two missing drivers of satisfaction ("rates and fees," and 'products and services") have already 'maxed out' as a driver of additional satisfaction according to the study, thereby limiting any the impact that an improvement in these two drivers would have on future member growth.

Driver Contribution to Increasing Satisfaction

When viewed in terms of the "impact" of each satisfaction driver, the study also provides quantification of each driver's potential to improve the overall satisfaction score. For instance, for each point of improvement in the driver score (left side of chart), the overall satisfaction would increase by the value of the impact (right side of chart). Again, there is nominal impact for any improvement in either "products and services" or "rates and fees".

It should be noted that the impacts of each driver can also go either way, so a decrease in any score on the left will have a negative impact on satisfaction by the multiplier on the right.

This research supports several other industry studies that highlight the importance of a strong online and mobile banking offering. While once used by only early adapters, online and mobile banking are now 'table stakes' in the competition for members and deposits, and are becoming a point of differentiation for many organizations as they continue to roll out innovations (mobile check capture, photo bill pay, ATM locators, etc.).

Because of the importance, credit unions need to be in a position to at least keep pace with the leaders in the marketplace (including major banks), and potentially find solution partners that can provide differentiated applications for online, mobile and tablet service delivery.

In addition, at a time when financial institution branch and employee consolidation is inevitable, credit unions should be sensitive to the potential risk and opportunity for following the consolidation trend. With "branch staff" being the second most important driver of member satisfaction, the potential for cost savings through consolidation should be evaluated against the backdrop of the importance of the front office team to the perception of credit unions as being more consumer focused than their banking counterparts. 

“CUSI is an important tool for benchmarking and tracking its competitive differentiators," said CFI Group CEO Sheri Petras. "CFI Group is proud to have worked so closely with the industry to apply the proven ACSI methodology to evaluate current customer satisfaction, and how that satisfaction level will impact the ongoing success of its financial institutions."

Impact on Future Behavior

The CUSI model also measured the impact of each driver on potential future behaviors using the American Customer Satisfaction Index (ACSI) methodology. By using multiple questions around the importance of each driver and applying optimal weightings, the study was able to determine how the current overall satisfaction within the credit union industry could impact growth opportunities for the industry.

As shown below, all potential outcomes were strong, with retention of a member being most likely and the recommendation to a friend also being strong. While the score for using an additional service was also rated high, it is up to each credit union to take advantage of this future opportunity.

Relationship Growth Opportunities

In addition to analyzing member satisfaction, the CUSI research also determined product and service penetration among those surveyed. Similar to most financial institutions, the penetration of primary financial services (checking, savings, debit card) by credit unions was high across all age categories. For other product types, the penetration was lower than in the banking industry, and differs significantly across age groups (mostly caused by lifecycle needs).

Credit Union Product Penetration

Product Penetration by Age

Of more importance than product penetration, however is the purchase intent of the 400 random credit union members surveyed. Consistent with many other studies conducted for the banking industry, auto purchases are on the horizon for many households in the coming months. What may be somewhat unique to the credit union industry may be the high percentage of households that indicated a CD opening was in their future plans, possibly reflecting the older demographic mix at many credit unions.

Purchase Intent

What is important to note is that 'purchase intent' does not perfectly reflect reality, since people's financial plans and the reality of the economy, etc. can impact new account openings.

In addition, in light of the primary findings in this study, the potential for effective cross-selling can be significantly impacted by households doing more of their transactional banking through online and mobile channels. As online banking grows, interaction with branch staff will decrease.

This phenomenon will make it even more important that branch staff continue to have a strong interest in member’s well being, making sure that they (the members) are well aware of the additional products availability and the benefits of obtaining them through the credit union.

In addition to an increasing level of importance of the branch staff and all direct customer contact personnel, credit union marketers will need to find new ways to connect with members and to present product offers to members at the right stage of their buying cycle. This will require new technology tools and potentially new systems to better understand your customers and their needs.

Additional Resources

2013 Credit Union Satisfaction Index - CFI Group (May 2013)

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