Boost wallet share by knowing your customer

Growing share of wallet (SOW) is a priority for most banks — and it’s a constant struggle. It requires a deep understanding of your customers’ needs and how those needs are being served (or not served) by your competitors. It also requires the ability to target customers with cross-sell potential or who are at a high risk for attrition.

Until recently, that sort of information has been difficult to come by, much less act on effectively. After all, the occasional focus group can only tell you so much. Fortunately, the digital age has brought with it new tools for both understanding your customers and serving them. By deploying these effectively, you can design experiences that surprise and delight your existing customers, reduce churn and tempt new customers away from competitor banks.

Conduct user research to uncover your competitors’ appeal

Historically, banks have looked at general measures of customer satisfaction such as Net Promoter Score (NPS) in evaluating their SOW strategy, but today it’s no longer enough to gauge how your products stack up relative to your competitors’ offerings. You need to get deeper to understand the products, digital experiences, and rewards other institutions are offering.

In particular, you must figure out why seemingly satisfied customers switch to other primary banking providers. Did the other bank make them a credit card offer that was too good to refuse? Were they provided a better, more streamlined digital experience? Does the bank have a branch or an ATM located closer to the customer’s home or work? Is the other bank more responsive to customer complaints? (Poor service is the number-one reason people leave their banks.)

Digital survey and feedback tools make conducting user research into these factors relatively easy today. The answers can give you a better picture of how your bank measures up against the competition and where it can improve to grow SOW. If consumers rave about another bank’s credit card rewards, think of ways your bank can improve and differentiate its own rewards program to compete. On the other hand, if consumers complain about another bank’s high fees, promoting your bank’s lower fees may entice potential customers to see what you have to offer.

Target customers most likely to switch banks

Once you’ve identified why customers are likely to switch to another bank, the next step is to zero in on who is likely to switch. By focusing your energy on a few high-risk groups, you can target them with offers and promotions specifically tailored to them.

Some of this may come down to demographics. A recent RFi Group study found that life stage may be an important indicator of likelihood to switch banks. Younger customers are a higher risk than older ones: 13% of 18- to 24-year-olds, 16% of 25- to 34-year-olds and 14% of 35- to 44-year-olds said they’re “very likely” to change their main bank in the next 12 months, compared to 10% of 55- to 64-year-olds and 8% of those over 65.

However, with modern analytics technology, your bank can also look at more subtle behavioral triggers. Maybe customers who have recently bought a home tend to leave your bank soon after. Or perhaps customers who don’t have direct deposit set up for their checking accounts are your biggest flight risk. 

Whatever triggers you identify, your response should be the same: find out what a particular group of switchers needs and give it to them. Maybe customers aren’t using direct deposit because your bank doesn’t have a good automatic bill pay feature. Adding or improving that feature may be the difference between losing or gaining SOW.

Engage existing customers digitally

Banks stand to build SOW when they engage with their existing customers more deeply and more often, especially through digital channels. According to the RFi Group research, highly digitally-engaged consumers tend to have more products with their primary bank (4.4 on average) than consumers in other categories. 

However, there’s a downside. The same group of consumers is also more likely to switch banks: 16% say they will do so in the next year. How can banks engage digitally-savvy consumers without driving them away? The key is to serve them timely, relevant content and offers that delight rather than annoy. 

Hyper-personalization is one possible solution. Informed by contextual intelligence like geolocation, browsing history, and real-time behavioral data, hyper-personalized experiences go beyond default “personalization” (e.g. using the customer’s name in an automated email) to target consumers with offers and information that are useful to them in the moment. A mobile app with hyper-personalization capabilities, for example, might show a customer an article about auto financing while they are visiting an auto show. 

Since they don’t have to tune out irrelevant or ill-timed content, customers are more likely to engage with hyper-personalized offers. In fact, one North American bank that implemented a hyper-personalization solution saw a whopping 43% increase in engagement. 

Cross-sell, cross-sell, cross-sell

You can use similar tactics to cross-sell to customers via digital channels. Once you’ve identified customers with cross-sell potential, target them with relevant, hyper-personalized offers you know they’ll love. 

In today’s crowded financial services landscape, growing SOW is both a challenge and an opportunity. Banks must lure customers not only from other banks but from upstart fintechs that may have a leg up in the digital space. However, banks that take the time to know their customers will make swift progress even in a crowded field. One thing is true in any era: If you give your customers what they want, when they want it, they’ll be eager for more — and happy to reward you with loyalty.

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