Why Financial Marketers Need to Blow Up Their Onboarding Program Now

Many onboarding strategies that financial institutions use today are obsolete. Financial marketers obsess over cross-selling and trying to push additional products, but more emphasis needs to be given to account activation.
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When is the last time you really looked at your financial institution’s new account onboarding process? Many banks and credit unions are still using the old “2 x 2 x 2” program. But times have changed and that approach should be put out to pasture.

For those unfamiliar with the 2 x 2 x 2 strategy, it goes like this: Once a new account is opened, a series of communications follows a cadence: two days, two weeks and two months. The program involves a variety of messages delivered across a range of communications channels — phone, direct mail and email.

More often then not, differing parts of the organization are responsible for different steps — phone calls originate from branch personnel and the call center, emails are orchestrated by the marketing team, and the boilerplate “welcome letter” from the CEO is pumped out by an automated system managed by no one in particular. There are many different shades and flavors of this approach — e.g., a hand-written note from the branch, or an email from the CEO — but the basic concept is the same.

Why Most Onboarding Programs Fall Short of Their Goals

Are today’s onboarding programs still relevant? Do they adequately address what they supposed to do in the first place? Arguably not. The truth is that many onboarding strategies fail to deliver the intended results. (To be clear, our definition of “onboarding” includes those communications that occur in the first 60 days after an account has been opened — not the actual process of opening the account.)

Think about what the objectives were behind the decision to launch an onboarding communications program. Likely it was to:

  1. Welcome the customer and communicate the company’s values/mission.
  2. Evaluate if the customer is satisfied and whether they successfully “activated” their account/product (e.g., online/mobile banking and direct deposit).
  3. Cross-sell by identifying any missing or unfulfilled needs the bank or credit union could help with.

Those are all great objectives. But let’s break down each step. Mailed letters typically are not personalized (i.e. “Dear Valued Customer”), which immediately kills the “warm and fuzzy” vibe that was intended. Plus, there is zero ability to tie the letter back to any action the recipient might take in response to the message.

Phone calls primarily go straight to voicemail, and due to privacy laws, the message your staff leaves lacks any real substance.

“The persistent problem with most onboarding programs is that more often than not there is little data to support success or failure.”

The email component has the greatest opportunity for measurement, but typically the message is generic and the action step is simply “ your local branch.” So the persistent problem with most onboarding programs is that more often than not there is little (or no) data to support success or failure in meeting those important objectives.

Onboarding communications have evolved, which is certainly encouraging. Elaborate email campaigns — fed by data — are run through if/then scenarios to cross-sell services. Data aggregators use algorithms that blend third-party data with the institution’s data to help pinpoint future needs and deliver messages with superb accuracy.

These are big improvements over the crude strategies of yesteryear, but the modern onboarding communication program skews too heavily towards cross-selling; messages about account activation are light, if present at all.

Key Insight: When done correctly, shifting the focus of onboarding communications to account activation increases the chances for success with subsequent cross-selling efforts.

More Details:

Assessing Your Onboarding Program

If your onboarding communications program is ineffective or you do not communicate with new account holders at all, you can expect 20-40% of them to leave your institution within the first year. Multiply that by the average $300 spent per account on marketing to acquire the account, and that boils down to very expensive churn.

How do you know if it is time to re-vamp your onboarding program? First, dig in to find out how much your institution is spending. That alone may prompt you to start looking for alternatives.

Then see if you can quantify results. That does not include counting how many phone calls were made and generic voicemails left, nor open rates on email campaigns. It means knowing how many of your new customers have activated all the ancillary services needed to be fully engaged, and how many have done nothing. If you can’t prove all this effort is generating results, why should you be investing in it?

Lastly, talk to your newest customers. Find out if the process to switch to your institution was easy or difficult. Did they think your outreach efforts were helpful or not? For those that never activated their account, why did they abandon the process, and where?

Bottom Line: Keeping something alive even though you know it is not really doing much happens all too often. The reluctance to stop old habits frequently perpetuates programs that simply don’t work, and chews up resources that will eventually be needed by other, newer solutions. Sometimes blowing up an old program is the best decision you can make, even as you are hunting for — or creating — a new replacement.

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