Published: 07.08.2021



Data and Audience

Research, Trends, and Insights

The Power of Utilizing Actionable Data for Customer Retention in the Finance Industry

Proactive, personal, and relevant to cross-sell.

While the COVID-19 pandemic made for a turbulent year across a wide range of industries and markets, Q4 of 2020 and into 2021 was profitable for financial institutions both big and small. Yet attrition problems for bank account holders and credit union members (collectively referred to from this point forward as “customers”) are stunting the growth needed in this rebounding economy. Financial institutions must focus on retaining customers who stuck with them through a trying time but may abandon them soon. 

Banks and credit unions annually lose 10 to 15 percent of gross revenues to attritioniAttrition rate is a term often used as a staffing measurment tool that assesses the rate at which employees are leaving a company. But it is also a term commonly used in marketing used to measure a company's customer base and assess the number of returning customers vs. those who are not recurring. Also referred to as "churn", customer attrition can indicate a problem that... Read More, and the average customer attrition rate among financial institutions is 15 percent per year. These financial institutions simply cannot afford to be negatively impacted by customers leaving, especially if the opportunity to keep them around is within their grasp. 

To combat attrition, and boost retentioniCustomer retention is the actions a company takes to maintain its current customer base and prevent them from switching to a competitor. Customer retention is widely seen as being less expensive than aquiring new customers, so it becomes an important element of a company's marketing efforts that are often focused on building a relationship and enhancing loyalty rather than... Read More, financial institutions must be one step ahead of customers to understand who is leaving, why, and what they want. The key to this equation is access to actionable data. 

Put Data to Work

Banks tend to track only the most visible forms of attrition, like the loss of customer totals, because they’re simply easier to monitor. Most fail to dig deeply into their attrition numbers and identify likely attritors and ways to keep them. Financial institutions’ inability to know or understand the full picture of their attrition numbers is likely due to siloed or lack of actionable data. 

By successfully harnessing data to identify banking customer habits and propensitiesiPropensity modeling is employing a statistical approach that identifies who in your audience or customer base is most likely to take a certain action such as making a purchase, unsubscribing from an email or signing up for something. The propensity is the probability that someone in your audience will do something. From there, marketing efforts can be focused on those lead... Read More, financial institutions can strategize on proactive ways to engage those account holders through cross-sell opportunities. Conversely, by putting products and services in front of audiences that the data says is based on their banking behavior, those account holders will likely stick with a bank or credit union. But how would institutions understand what customers are looking for and how to reach out to them to compete and win in the retention game? 

1. Analyze

Banks and credit unions first need to analyze data resources to determine who among their existing customers is likely either out the door completely or doing more banking with somebody else. Harnessing and understanding first-party dataiFirst-party data is information about a consumer collected directly from that person's online habits. It is an important piece of information that can help you understand your customers because it is based on actual interactions with your brand. In other words, it's not hypothetical trends but actual habits by a real consumer. This data can include everything from purchase... Read More mean they can determine:

  • What existing accounts are stagnant and not doing anything? 
  • What existing accounts are draining balances? 
  • What existing accounts are being closed?

For example, take a customer that has been with a particular bank for five years. He is 32 years old; he’s newly married; his income level is likely known based on his living situation in New York City, but he’s not doing a whole lot of active banking and his balances are gradually draining. 

Using data, the bank can analyze and identify the extent to which a person is likely to leave. It’s time to then target them for more products or services to encourage them to stay put.

By successfully harnessing data to identify banking customer habits and propensities, financial institutions can strategize on proactive ways to engage those account holders through cross-sell opportunities.

2. Target

Beyond recognizing what customers may attrite, financial institutions must take analysis awareness a step further to target the right customers to conduct cross-selliCross-Selling is the act of selling an additional product or service to an existing customer. Maybe you have a banking customer who has a checking account with your organization. It would make sense to also offer that same customer your mortgage services, especially if your data shows this customer is saving up to buy a home. This is a productive method used to increase bu... Read More campaigns. This involves further data options.

Keeping with the example from above, and introducing data-backed third-party dataiUnlike first- and second-party data where a company has either had direct contact with a consumer or has done so through a trusted partner, third-party data is simply information about a consumer that is acquired from an organization having no direct affiliation with a particular company or brand. Often, third-party data can include information about a consumer that has be... Read More intent signals, the bank can identify that this person happens to be searching online for car loans. Data shows they don’t have a current loan or a car, so he’s likely in the market for both. Given his likely attrition, he is now the perfect cross-sell target.

At this point, the bank can either:

  • Let him go find a car loan elsewhere and do less and less banking with that institution to eventually add to the attrition numbers 
  • Determine the right time to present the customer with a car loan cross-sell

But which relevant product and service would encourage them to be interested in the cross-sell and when should they learn about it? This brings us to the next step.

3. Communicate

Banks and credit unions not only need to analyze their opportunities and target the right candidates but take pre-emptive measures to retain these relationships with the right offers. 

About two-thirds of Americans say they want their banks and credit unions to reach out to them proactively with personalized and relevant messages on how to manage their finances. That level of convenience has become a driver for a great deal of customer behavior, including how people want to bank. It is a much better strategy to proactively build the retention relationship before customers get to the point of attrition. This includes making them aware of product and service opportunities to meet their lifestyle needs and get the best overall experience.

Using data, the bank can analyze and identify the extent to which a person is likely to leave. It’s time to then target them for more products or services to encourage them to stay put.

But what is the best overall experience? For banks and credit unions this means: 

  • Delivery and ease of transactional services
  • Staying on top of what the targeted needs are, with retention in mind

The deeper the relationship, the less and less likely that they would leave; the better the data, the higher the retention. Banks and credit unions must be able to use marketers like Amsive to let data work for them to stay on top of what account holders are looking for. Only then will they be able to segment banking behaviors of certain demographics to help indicate cross-sell needs for next-best products, and boost retention by being proactive, personal, and relevant so those customers stick around for years to come.