In 2011, Javelin Strategy & Research identified a segment of consumers they dubbed the “Moneyhawks.” Since then, banks and credit unions of all sizes have been trying to attract and retain this unique breed of customer. They are wealthy, mobile-minded, tech-savvy, and unfortunately, they’re fickle! At present, 20% of them are at high risk of flying the coop and leaving their primary FI.
Is your financial institution on the loyalty program bandwagon yet? Here’s a new Larky Infographic to show how FIs have been trying to keep customers loyal over the years. What worked? What didn’t? And where are we headed?
We have a new frightening-yet-enlightening video for financial institutions. Watch if you dare!
Businesses like yours are common in today’s marketplace. No offense, but your members may think of you as “just a bank,” “just a credit union,” or “just a commodity with nothing unique to offer.” Ugh.
If you are viewed as just another _______ [fill in the blank], then you're in a precarious position, subject to the whims of your customers, and an easy target for competitors. All they have to do is offer a slightly better deal or a new value-added benefit, and presto change-o, your potential and current customers are heading in their direction.
Could you be more than a commodity?
Almost twenty years after Frederick Reichheld wrote “The Loyalty Effect,” we all understand that customer loyalty leads to…
- Increased retention rates.
- More referrals.
- More spending per customer and less price-sensitivity.
- Decreased costs for servicing customers.
- Increased profits over time. (In fact, by increasing retention rates by just 5%, profits could increase by 25 to 95%, and golly, that statistic really packs a punch.)
But for a bank or credit union, what does “loyalty” really mean?
"You earn reputation by trying to do hard things well."
~ Jeff Bezos
What you do as the leader of a financial institution in your community is not easy. You understand your community in ways that most others just don’t. You help people start businesses, stay in business, and grow their businesses.
First let’s list the wrongs…
- Discounts at the wrong time - Some discount programs are “after the fact.” Customers get rewards, points, or discounts on future purchases after they make a purchase. That means they have to remember to use the discounts later.
- Discounts in the wrong place - Some programs notify people about discounts when those people are in bed trying to catch some Zzz’s, driving down the highway, slaving over a project at the office, or far away on vacation. If the discount notification comes at the wrong time, it’s likely to be ignored or forgotten.
- Discounts that are hard to attain - Some programs require participants to “earn” their discounts – “Spend $10,000 > Get a space-age toaster oven.” Customers have to meet a spending threshold to feel the benefit. Otherwise, they don’t get that nifty oven.
- Discounts that require a change in behavior - Some programs require that people swipe a special card, manage coupons, or show a toggle on their key ring. Without the card, coupon, or toggle, they might not get the discount. And all those darn loyalty cards make for a very fat wallet!
So, what does it take for a discount loyalty program to really work?
Here are two words for you – “contextual technology.” Ponder that phrase for a moment… Are you yawning? Well, stop it. Yes, it’s a ho hum phrase, but “contextual technology” is a huge game changer. It’s bigger than MC Hammer’s pants in 1988, and it’s getting increasingly pervasive every day.
What does “contextual technology” mean?
Contextual technologies are those that “understand” you and your environment – like your location, your daily schedule, your heart rate, or the number of steps you took today. In their book, “The Age of Context,” Robert Scoble and Shel Israel explain how 5 technological forces - mobile devices, social media, big data, sensors, and location-based services – will dramatically change the way we live and work in the future. The change is already well underway, and Larky’s web + mobile loyalty platform is part of that revolution.