Enterprise -> Finance
By: Andy Jones, Director and General Manager, Europe, Xerox Global Document Outsourcing
Published: 26th August 2011
Copyright Xerox Global Document Outsourcing © 2011
The saying is probably as old as the marketing business: It costs more to acquire a new customer than to keep an existing one.
Many companies today focus the bulk of their marketing budgets on acquiring new customers. But what happens after that? Once prospects become customers, they typically receive an ongoing series of routine communications that do little to deepen the relationship or build the brand. Statements and invoices, policy notifications and updates—these “transactional” documents convey important information. But that’s about it.
In a world where competition is intensifying and long-term customer loyalty is increasingly viewed as a prize corporate asset, the failure to maximise the impact of these valuable touchpoints represents a missed opportunity to improve the bottom line.
This customer opportunity can be most commonly seen within the financial services industry. If a bank has a 20 percent customer attrition rate on average, the firm must acquire 20 percent net new clients each year just to remain in the black. The cost of customer acquisition averages 200 euros per retail account. So it’s easy to see why using marketing spend effectively to maintain customer loyalty is essential to revenue stability and, ultimately, growth. Not only this, customer experience will be a key competitive battleground for financial institutions going forward; customers will join for a superior experience and customers will leave over a poor one.
We offer the following tips to financial services institutions to make the most of customer communications:
1. Strike early: Most cross-selling opportunities occur during the first few months of a customer relationship. Research shows that banks that communicate with customers early and often in the relationship improve cross-selling results and lower attrition rates. Customer welcome packs are a common means of building on the initial relationship; they need to be crafted carefully and tailored to the customer and product needs.
2. Be responsive: By scanning and electronically storing the documents needed to open an account, banks can provide a faster, more efficient account-opening process, obtain information for more personalised communications, ensure greater data accuracy and increase compliance. Looking through paper records or shunting them off to storage facilities will not be deemed adequate in the future. Start thinking now about back file conversions, information repositories and comprehensive workflow capabilities to make servicing the customer a natural and seamless act for your customer service agents.
3. Take inventory: Any communication with a customer—by phone, web or face-to-face—is an opportunity to acquire data about their life stages, attitudes, needs and preferences. The information can then be centralised and integrated into the bank’s inventory of brochures, catalogues, fulfilment literature, direct mail and statements so that details about individual customers or targeted segments can be placed in a bank’s own document templates to deliver greater impact. Analytics will be crucial; banks can take a page from what retailers do in this regard, in order to know your customer well enough to both sell and service him.
4. Get personal: While most information from banks today appeals generically to a mass audience, they are more likely to generate sales if they personalise every document, e-mail, etc. Incorporating variables in documents such as the customer’s name, product type or life event is the key to generating response rates that far outstrip the typical 0.5–2 percent expected from direct-mail campaigns. Of course you also need to know if your customer will welcome personalised communication or if it will be considered an invasion of privacy.
For example, getting personal can go hi-tech with quick response codes (QR codes), modules that marketers print on communications for customers to scan with smartphones, directing them to a personalised landing page with tailored information about products and services, case studies, helpful tools, etc. In order for QR codes to be effective, marketers should stay true to the basic principles of marketing. People will only engage and interact with the content if it is relevant to them. The content on the initial communications piece must be relevant in order for the person to be interested in navigating to the landing page, and the content on the site must be relevant in order for the person to spend a meaningful amount of time there.
5. Keep it simple: Keep product information—including rates and fees—as simple as possible (and feasible given regulatory requirements) so bank staff can explain them and customers can understand them.
6. Be creative: Customers say they would be more responsive to more informal and creative communications from their financial institution; get the marketing and legal departments to work together to produce understandable and compliant communication.
7. Change the channel: Different customers prefer different communications channels (direct mail, e-mail, online, text messages, etc.), so ask early in the relationship which method the customer prefers and stick with it. Communicate offers in terms that customers or prospects will readily understand, through the channel they prefer, and at a time when they are open to receiving it.
8. Embrace social media: Don’t be afraid. In the modern communications landscape, customers are increasingly expecting their service providers to communicate with them via social media. Bank executives must ask themselves: What are our consumers’ expectations and requirements around social media? What information do they want shared via social media, and what conversations do they want to participate in? To address these questions, banks have begun to create social media teams charged with transforming traditional methods of doing business. Beyond social channels, however, banks must decide whether to build the infrastructure and processes to manage the social media communications, or to “borrow” the infrastructure and process instead (meaning: outsource it). Social media channels are fabulous opportunities to learn what your customers are thinking about.
Personalising customer communications promises to be an effective way to maintain customer loyalty and win new customers when done efficiently. The document supply chain is crucial to this end: In many cases banks keep a large marketing inventory, employ multiple service providers, and duplicate many processes—slowing down the document supply chain and incurring unnecessary costs. To be able to reap the benefits of personalised communications knowing when to engage a third-party solution provider who specialises in optimising business processes is becoming more important.
Lloyds Banking Group, the UK’s largest retail bank, understands that a strong business process outsourcing partner can automate workflow, consolidate vendors and improve touch points with their customers. Working with Xerox, the bank has transformed its document supply chain and is now supporting its excellent customer service with high-quality, targeted marketing materials while at the same time streamlining business processes and realising savings in cost and time. Suppliers can bring innovation, use technology and process enhancements in customer care, transaction processing as well as document and digital asset management capabilities to improve efficiencies.
Power is changing hands in the industry, slowly but inexorably. Power is moving to the customer. Customers will insist on dealing with their financial institution when and where they choose, with their preferred channel and on their terms. Customers will want to be in control and know that their financial institution consciously put them in control with their needs first. Improving the customer communications process is a vitally important step for attracting and retaining the right customers.
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