(PoV) Leveraging Card Personalisation Capabilities to Decrease Customer Attrition

Retaining customers is more critical than ever. In our latest thought leadership, we explore how banks can combine data with a flexible product platform to target their customers who are most vulnerable to switching their banking relationship – and to get them to stay.


Consumers today are more ready than ever before to switch banks. There are numerous reasons that they leave their existing relationship and switch to another bank:

  • Competitor products are substantially stronger
  • Customer experience is not consistent and has not met expectations across all channels, particularly digital
  • Bank fees are excessive compared to the value delivered from services and products held
  • Customer simply does not feel valued

Interestingly, customers who switch banks are not necessarily really unhappy with their current bank. In fact, 56% of consumers who have switched banks say that their existing bank could have changed their mind. Yet, most banks did not even attempt to try and keep them despite the high chance of retaining those customers. The reason for this lies on two fronts – the first that the bank didn’t know that a customer was looking to leave and the second that the bank had no flexibility around  retention offers that could be made, if it even had any.

56% of consumers who have switched banks say that their existing bank could have changed their mind

Qualtrics

Given the cost of new customer acquisition – it truly pays for banks to focus on lowering their attrition rates.  To do so, banks need to be leveraging both data (e.g. change in transaction volumes, change in mobile banking behaviour) as well as a flexible product platform to drive attractive offers to retain those customers looking to leave.

Below, Verrency has outlined what is now easily possible to implement when combining these two elements to decrease customer attrition rates:

Introduce Customer Tiers based on Holdings / Profitability

Credit card loyalty programs were designed to deepen the relationship with the customer. This would then allow cross-selling to occur and to enable the bank to make further revenue. However, the benefits in these programs tend to be fixed (due to system limitations) and are based solely on the card the consumer has chosen. This needs to change, particularly when 87% of customers want banks to re-think how they reward loyal customers. This can drive higher cross-sell rates and higher product holdings per consumer. Whilst it can be difficult to determine the profitability of a customer, banks can use product holdings as a proxy to determine the value of a customer. Giving customers who hold more products additional rewards makes them feel valued and gives them very little reason to leave. The card (credit or debit) can become the instrument in delivering the program’s benefits. The program can be managed using customer tiers, like those used in frequent flyer programs. As banks become more advanced, they can modify the rules associated with the tiers as needed. The key is to ensure the rules are transparent and easy to understand.

87% of customers want banks to re-think how they reward loyal customers

KPMG

Proactive ‘Retention’ Campaigns based on Analytics

Having a flexible cards platform with a digitally enabled front end provides banks the opportunity to be proactive about retaining customers who are showing signals of leaving. These signals include reduced spend, card being removed from subscription services, etc. Banks who can detect these signals and understand the end consumer can provide a multi-layered campaign to ensure the customer stays with their existing bank. An example could be as follows:

  • Offer 1: Provide discounts to several merchants a consumer regularly shops at
  • Offer 2: Provide a boost in points earning and burning for a given period
  • Offer 3: Provide customer 1-2 additional benefits to be attached to the card at no charge
  • Offer 4: Move customer up a customer tier for a given period, giving them access to additional benefits of their choice

The digital front end enables these offers to be pushed to the consumers app and allows them to select and utilise the additional benefits provided immediately.

Reactive Save Campaigns based on Customer Profile

Whilst it would be ideal to proactively manage a customer, there are times when this is not predictable. In these circumstances banks need to be ready to intercept a consumer looking to cancel their services with the bank. This includes having the right processes in place to make save offers digitally (if closing an account can be done online) and/or arming staff with the details and systems needed to make the changes to the product required. In similar fashion to a proactive campaign, banks need to have pre-made offers built and linked to the consumer’s profile. The difference here however is that the bank will not have multiple chances to save the consumer. As such, providing consumer offer options to choose from. Once chosen, the bank can activate / push the option to the consumer for benefit selection / use as per previous 

Delivery of the above experience along with those mentioned in our previous articles may sound near impossible, but it is no longer challenging to implement. Technology has come a long in the past decade and has reached a point where enabling these experiences does not require wholesale changes to your card management systems or migration away from existing processors. Platforms, such as that offered by Verrency, provide the necessary capabilities needed to enable a full personalised service yet work harmoniously with existing legacy platforms. This reduces the risk of implementation, prolongs the life of legacy platforms, and speeds up the launch of a new product to market.

Data Sources:
Qualtrics – Reducing customer churn for banks and financial institutions: https://www.qualtrics.com/blog/customer-churn-banking/
KPMG – Building Customer Loyalty in Banking: https://home.kpmg/au/en/home/insights/2018/11/building-customer-loyalty-banking.html
Mastercard – Personalisation is no longer a perk: https://www.mastercardservices.com/en/expert-insights/personalization-no-longer-perk

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