For many financial institutions, their success and survival depend heavily on their ability to gain new customers and retain those they already have. Hence, maintaining relationships with existing customers is a necessary aspect of profitability and growth. In spite of many business leaders starting to acknowledge the benefits of delivering value to customers, many remain unaware of how to increase revenue through monetizing the customer experience.
While financial institution (FI) leaders may not understand the connection between improved customer experience (CX) and profitability or how it relates to profits directly, it is certain that loyalty scores do not suffice to substantiate the benefits of customer experience investments. Analyzing customer data will be necessary to demonstrate that monetization of customer experience is possible. The customer-centric approach must be incorporated into business models if business leaders hope to effectively monetize customer experience. To be successful, effective coordination and leadership are required for this.
There is a strong correlation between customer experience and three critical aspects of customer loyalty, including likelihood to purchase more, hesitation to switch brands, and recommendation. Businesses can boost profits by setting strategies in place that will improve customer satisfaction and retention. The retention of long-term customers generates increased profits for businesses across a wide range of industries, including financial services.
Today, the average customer uses between five and six touch points to complete their purchase, which means FIs have the same number of opportunities to enhance CX. Consumer's attention is arguably the most coveted currency that brands are striving to capture as a means to achieve their business objectives in an age of rapid communication and information overload. So for this reason, providing a superior and engaging customer experience is essential to acquiring and retaining loyal customers. The Forrester Group reports that 72% of companies consider improving customer experience a top priority, in spite of that, many brands still do not have the capability to enable experiential commerce, a single, unified, and engaging shopping experience.
There is often a lack of cohesive and intuitive paths to carrying out transactions for consumers, where brand experience is curated and immersive, but product selection and ordering are often performed in a siloed and non-engaging way, and the opportunity to retain a buyer's engagement is lost.
A successful CX strategy begins with identifying customer pain points, leveraging data, and providing valuable insights
Providing quality experience to customers is the first step to effectively monetizing the customer experience. This quality experience should consist of timely offerings, valuable products that address customer pain points, and informative engagement that will ensure the customer has a complete understanding of the product, etc.
To accomplish this objective, financial institutions need to focus on utilizing data and all of their customer information to provide best value. Today's customers are well-informed about the capabilities of technology, so they expect businesses to facilitate all business transactions by making use of it. Using generic customer segmentation strategies or mass marketing campaigns no longer beneficial for financial institutions considering the amount of data they hold on every customer. With a surge in customer touchpoints and an overload of information and communication targeted towards them, there is a tendency for miscommunications to develop from mass marketing. For this reason, the best way to capture and retain your customer's attention is by implementing personalized communications at all touch points in order to increase customer customization.
The benefits of offering a hyper-personalized customer experience
Hyper-personalizing the customer service offers a number of benefits;
- First of all, it makes the shopping process simpler for customers by removing any obstacles in the sales funnel.
- Second, it eliminates the issue of choice fatigue, wherein a customer seems to be overwhelmed by the variety of choices available. In light of the fact that 54% of customers abandon a website and purchase from a competitor after being overwhelmed with options, hyper-personalization can be used to address this challenge by presenting them with only the items that they require.
- Finally, as the average attention span of a person has declined from 11 seconds to 8 seconds, it has become increasingly challenging to capture a customer's attention. In order to address their pain points and reduce time wasted, hyper personalized forms of marketing are needed.
It is important to note, however, that monetizing an enhanced customer experience can only be successful when it is implemented within the appropriate context. In fact, excellent CX and hyper-personalization cannot exist without one another. As financial institutions look for new ways to differentiate themselves in this digital age, those that can provide superior customer experience will be those that succeed. Customers are the most valuable asset as well as greatest advocates. For financial institutions to cultivate monetizable experience, the right technology has to be applied at every touchpoint to strengthen relationships and engage with customers in a personalized, relevant way - turning customers into brand loyalists.
Also, a hyper-personalized approach is one of the most effective means of addressing customers' individual needs. As a marketing initiative, it also offers the advantage of being cost-effective. Personalized offers have a greater probability of converting to sales than a message that may or may not be relevant to the recipient. Financial institutions can offer well-targeted products at the appropriate time to consumers in order to increase conversion rates, while at the same time providing superior customer experience because the customer knows their needs are being considered. Hyper-personalization enables customers to feel appreciated and know that you value their business and more;
- By communicating with customers at the right time, financial institutions can improve a customer's financial management by establishing proactive, customized communications.
- The Boston Consulting Group has found that banks can also profit from personalization at scale - when done correctly, it can increase revenues by 6% - 10%.
- The bottom line of a company could be adversely affected by something as simple as customers being unable to access information required to make a purchase.
Furthermore, hyper personalization has both operational and strategic benefits. Creating meaningful insights requires breaking down data silos in order to achieve a more comprehensive view of customers. With sophisticated data aggregation and advanced artificial intelligence, operations managers are able to measure efficiency, service channels and customer satisfaction more precisely, as well as expanding their ability to measure KPIs.
With more connected devices and large data, financial service providers need to find ways of collecting data and communicating with customers in a helpful manner. Chatbots are one example of how technology can be used to provide operational efficiencies - while remaining 100% customer-centric. A Juniper Research report notes that "Chatbots will be responsible for saving $8 billion per annum by 2022” with powerful artificial intelligence programs capable of conversing fluently with humans. During uncertain economic times when financial services call volumes can get very high and customer service staff may be stretched quite thin, messaging transactions are estimated to save employees approximately 4 minutes and 70 cents per transaction.
With more connected devices and large data, companies need to find ways of collecting data and communicating with customers in an efficient manner. Direct business text messaging represents a new level of hyper-personalization, especially for financial services, most of whom are also facing serious competition against high-tech industry disruptors.
Personalization will be essential for the success of financial institutions in the future. Customers desire financial institutions that offer convenient and device-independent omni-channel delivery wherever they may be, at any given time, during their financial journey. There are many data sets available to FIs - including online interactions, location data, and payment details - which help them build a more comprehensive picture of consumer behavior. These insights can assist FIs in predicting the current and latent needs of their customers making it possible to reap significant rewards from advanced data science capabilities and timeliness.
On a final note
When done correctly, hyper-personalization can result in lower churn rates for existing customers, increased revenue and cost savings from operational efficiencies in call centers, errors resolution, and other operational costs. In the event that financial service leaders develop a deep understanding of their customers, they will be better positioned to identify customer pain points. Thus, allowing them to formulate actionable strategies and resolve them so that they can offer timely communication that will prevent their customers from defecting to their competitors. Statflo offers this opportunity to communicate the right information at the right time to the right customer.
If you would like to learn more about how Statflo can assist you in building quality digital financial customer experiences, please visit our demo page for solutions.