It could be 5 - 25% more expensive to acquire new customers than to retain existing ones. New customers have to go through your entire customer acquisition funnel before becoming a customer, which is expensive and time-consuming.
On the other hand, customer retention is not only cost-effective but also profitable. According to Frederick Reichheld of Bain & Company, a 5% increase in customer retention could increase profits by 25% to 95%. This could be because it’s easier for existing customers to keep coming back to you.
However, increased customer retention is a by-product of enhanced customer engagement.
How Customer Engagement can help Financial Institutions
Keeping your customers engaged through your communications or product helps you build a healthy relationship with them. It enables you to increase recall and boosts trust because of consistent interactions.
Actively Engaged Customers are likely to give you More Business:
Fully engaged customers bring $402 in additional revenue per year to their primary bank than those who are actively disengaged. They have:
10% greater wallet share in deposit balances
14% greater wallet share in investments.
They average 1.14 additional product categories.
You become their preferred Service Provider:
Highly engaged customers are also more likely to consider you first before anybody else for their future needs. They are also your customer evangelists who will never leave any moment to refer to you or to talk good about you in public.
Fully engaged Vs Actively Disengaged
26% of actively engaged customers are likely to switch an account from another bank to you compared to 1.8% of actively disengaged customers
36% of actively engaged customers are likely to signup for a new service to support their existing account compared to 1.5% of actively disengaged customers
49.6 % of actively engaged customers are likely to increase the overall balances of their existing account compared to 4.5% of actively disengaged customers
Additionally, a highly engaged customer set also gives you a competitive edge in FinTech, where the user is spoilt for choice. If done right, It will be far less likely for your customers to switch to any other financial service provider over you easily.
How AI and Data Intelligence help drive Engagement
Data can prove to be a potent tool to help you make educated moves in driving meaningful engagements. Insights can enlighten you about your customers’ needs and empower you with their behavioural patterns to make the right offer at the right time.
For example: With the help of data-driven insights, Wells Fargo was able to study their customers and craft personalised messaging that helped them increase their digital acquisition for credit by 56% last year.
Financial institutions must seek to leverage data to back their every move to avoid shooting in the dark. Not only this, but data intelligence can also help you with new product ideas considering what your customers are seeking.
The quality of engagement could further be optimised using Artificial Intelligence. AI can help you create highly personalised, contextual messaging with little to no human intervention. Successful implementation of AI can help you in:
4 Customer Engagement Tools
1) Conversational Approach Banking -
As we move towards a digital world where in-person interactions are on the verge of disappearing, a conversational approach helps you constantly communicate with your customers across mediums.
It entails meeting your customers on every channel possible and interacting with them to answer their questions and guide them through their obstacles. You need not worry about appointing human resources because more than 50% of the conversations here can be automated through chatbots, IVR’s and wherever human intervention might be required, the support managers can take over.
Conversational platforms help streamline your communications with your customers and keep them engaged.
2) Mobile Communication
All the interactions with your customers on mobile channels, including push notifications, offers on their home screens, and other recommendations, will come under mobile communications.
These touchpoints are critical in creating an engaged set of customers because people are likely to spend time on your mobile applications considering banking, payments etc is becoming a digital-first for most.
Use data intelligence to formulate personalised, relevant and contextual nudges and suggestions
3) Personal Finance Management tool
With FinTech coming into play and personal finance taking the front seat in people’s lives, a plain banking or payments app won’t be able to cut through.
Personal finance management tools like budget trackers, investment automation, card management systems, goal setting tools etc., are becoming high-demand services; you can either look to create their own personal finance management software or tie-up with external software tools to give customers a holistic experience.
Installing such a tool can expedite your customer engagement multiple times as they find more value in your offerings.
4) Omnichannel Strategy
An omnichannel strategy includes aligning all your communications across channels (online + offline) and syncing them to give customers an uninterrupted experience.
Users often switch between multiple channels before they take action. When you lack an omnichannel solution, every time a user comes back, they have to start with the procedure all over again, which isn’t a sound experience.
But with an omnichannel strategy, all the data from the previously performed steps are stored, and customers can pick from where they left.
To Wrap up
A highly engaged customer set is a sign of high trust and support which is a solid accelerator for long term growth. Data and AI being the core factors in driving meaningful engagement, almost every touchpoint from product to communication can add to your customer engagement.