The Most Obvious Opportunity in Banking Today



It doesn’t take much to come up with this answer. Think about it for a minute. Customers deal with their bank all the time. Yes, maybe the channels are changing with more and more digital options but the frequency of these interactions is still right up there. The branches are still doing plenty of new account onboarding and other face to face servicing. And the remote channels continue to grow – online banking, website visits, emails, social media. Then why, according to several studies, do banks only provide on average two to two and a half of the ten financial products owned by their customers? More than 50% of customers have only one product with their current bank. Fixing this problem is, in fact, obvious to senior managers. They continually rank it as a top objective whether it’s called share of wallet, organic growth, or simply cross-selling.

There are plenty of reasons that management has such a focus. For one, cross sell revenue hits the bottom line like a boat anchor hits ground. The expense to bring in a new customer is behind them. According to a study from Bank Intelligence Solutions (BIS) it costs about 8 to 10 times more to acquire a new customer than to cross sell an existing one. And customers that own multiple products stay on board longer. Another study from BIS showed that a customer with only one product has a life span of about 18 months. A customer with one additional product has a life span of four years and a customer with three products has a life span of 6.8 years. Not only have the customer acquisition expenses been made, but the costs associated with building and maintaining the branch and digital channels have also been made.

So what’s the problem? The problem lies in how a bank communicates, not where or when. More and more communications are only transactional in nature. A survey of 4000 retail bank customers done by Accenture shows that 74% of bank customers consider their banking relationship to be transactional rather than relationship driven. This is due in large part to new technologies. While they are driving down the cost of transactions they, at the same time, are driving up customer remoteness. And when customers do go into a branch there is another problem. A mystery shop of 134 banks done by Econiq revealed that 88% of the time the customer was offered a single product and only 11% of the time an add on savings account and only 1% of the time a non-deposit related product.

There is a new approach to cross selling that can solve the problem that will engage customers beyond the transaction. It is called content marketing and based on a simple concept. People are looking for answers and will buy from the one who provides them. According to a study from Next Media, people are five times more likely to buy when education comes first than a direct product offer. Home Depot knows this. That is why they teach people how to build a fence. Where are they likely to go to buy the needed materials? And these answers need to be presented at the right time. A study done by Forrester Research of 26,000 online households revealed that people are 43% more likely to buy a financial product around a life event. But educational content sitting on a website does not translate to cross selling. It needs to be delivered the right way. That means connecting the content to the exact person that can help based on their branch location and topic of interest in a way that makes it easy to set up sales appointments.

The cost of this type of marketing is low and the reward is high. The branch and digital delivery channels are already in place. It’s just a matter of leveraging them properly. The reward? Do your own calculations. If one in three sales appointments closes and the average net present value over the life of the product is $2000 then the value of a single sales appointment is $660. One more appointment – not sale but sales appointment – per branch per month is worth $7,920 per branch per year. And one per week which can easily be achieved is $34,320 per branch per year. So the issue becomes build or buy a content marketing solution.

Stay tuned for future posts outlining the three critical elements to executing an effective content marketing strategy.


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