How to Leverage Customer Analytics and Insights in Financial Services Marketing
Customer engagement, acquisition, satisfaction, and retention may all come down to a financial institution’s (FI) analytics capabilities. Pleasant customer service personnel, easy-to-navigate resources, and relevant financial products are cornerstones of positive customer experiences. Adding financial services marketing analytics to the mix can help brands focus on personalized, timely content and offers while determining other products to take under development.
Even leading banks can fall prey to the need to create more robust customer experiences that meet modern-day expectations. In fact, 88% of bank customers prioritize experience over a FIs product or service offering, and 20% of global banks are losing customers due to poor customer experiences.
Customer analytics holds the key to helping FIs determine consumer behaviors, trends, and demands to better accommodate expectations and retain or grow business. But many banks and FIs lack the technology to bring their data insights together to tell a reliable customer narrative. Only 53% of banks have a single, accurate view of their customer data, leaving them scrambling to offer the personalized attention that 70% of consumers now expect from their banks.
When appropriately collected, organized, and processed, customer analytics tactics can help FIs better understand their consumer base, direct internal decision making, and drive account penetration for improved bottom line results.
What are Customer Analytics?
Customer analytics for financial services consists of evaluating and processing customer data to identify needs and behaviors for specific consumers as well as across various customer personas. In many cases, the data must be collected and collated across various systems and passed through reporting platforms, predictive modeling, and machine learning tools.
The findings from this analysis are called customer insights. Customer insight and analytics in financial services help marketers interpret consumer behaviors to better determine how to engage with them for the greater good of the company. This can take the form of making changes to the customer journey, updating marketing language, offering different products or services, and personalizing content on an individual customer level.
Business analytics can take a variety of forms across companies and industries. Importantly, customer analytics for financial services should be distinguished from broader financial market analysis. Financial services customer analytics refers to the behavior of a particular brand or FI’s prospects and customers based on data collected by the FI. Financial market analysis considers the bigger picture of consumer behavior trends across entire industry and across companies.
To harness customer analytics, FIs can review the various channels where they are collecting information from their target and current customers throughout the customer journey. Often these data points are collected in disparate systems that can be brought together by data analysts and dedicated customer data platforms. Common channels for gathering consumer data to develop customer insights include:
- Website traffic
- Form submissions
- Prior inquiries
- Transaction histories
- Support requests
- Survey submissions
- Subscriber counts
- Loyalty programs
- Email engagement
- Focus groups
As technology continues to evolve, artificial intelligence (AI), machine learning (ML), and predictive modeling influence and reliance are increasing when determining customer insights for financial services. These tools are able to take in massive amounts of customer data and identify trends and consumer sentiments. This can support redefining or refining customer targets and making real-time suggestions to key decision makers. AI can also be used to directly improve customer experiences through personalization, recommendation engines, and identification of issues that could lead to churn.
How to Use Customer Analytics and Insights in Financial Marketing
Putting all of these financial services customer insights to good use is the challenge marketers face when given findings by their data analytics teams. Creating a list of goals that tie into key performance indicators (KPIs) can help narrow down the areas in existing processes that may need updating. While the uses for financial services marketing analytics may seem endless, and will vary from brand to brand, here are some of the most significant ways to use these insights.
Segmentation & Targeting
Marketers rely heavily on segmentation to direct the messaging, timing, and channels they use for their marketing campaigns. After all, what works for one user demographic may not resonate with another. Customer analytics in financial services can take these general buckets to the next level by further refining subsets in groups based on data points previously unknown or overlooked.
Customer data can also be used to target individual users more efficiently, helping brands personalize financial product recommendations where they may have the most impact. Insights into specific user accounts can reveal behavior patterns that highlight missed opportunities or flag accounts more likely to turn over.
Predictive Analytics for Customer Behavior
This ties into how customer analytics in financial services can take predictive data and forecast customer needs before they become urgent or result in an at-risk account. Understanding what a customer may need, even before the customer realizes it, can help marketers deliver customized marketing that anticipates these needs and adds to the value and trust a customer has established with the brand.
Predictive analytics is about more than helping marketers personalize messages; it’s about optimizing the timing and format for content to best resonate and predicting how specific campaigns will perform to reduce churn, increase cross-sells, or improve customer lifetime value (CLV).
Enhancing Customer Experience
At a high level, customer experience is the perception a particular customer has regarding a FI brand. This includes more than just the quality or applicability of the products on offer. Customer experience also encompasses the impression marketing materials, customer service, and resource access make on a user. All of this can add up to affect customer loyalty, referrals, retention, and CLV.
Leveraging marketing analytics in financial services can greatly influence customer experiences by improving different aspects of the customer journey. From determining the timing and frequency of effective marketing outreach to tracking the number of customer service calls that ended with a resolution, customer insights can help FIs determine the most effective ways to engage with customers. As a data-driven approach, customer analytics also helps teams take the guesswork out of decision making for larger marketing campaign initiatives.
Personalized Marketing Campaigns
With a better understanding of customer behavior patterns and expectations, marketers can better personalize their interactions. Increased personalization is known to drive higher engagement. For email, a personalized subject line can lead to 26% more opens and 5.7 times more revenue generation.
Personalization is also an important component of customer retention, especially in younger generations accustomed to the role of technology in their commerce interactions. Twenty-seven percent of Gen Z will abandon a brand if they have an impersonal experience with it. Conversely, companies that implement personalization can not only reduce churn but also decrease their customer acquisition and retention costs by 28%.
Omnichannel Strategy
The financial services industry was slower to embrace omnichannel consumer engagement, but brands are now catching up to consumer expectations to have similar experiences across platforms such as mobile, web, and in-person interaction. Customer analytics for financial services can support these efforts by illustrating how consumers are behaving on various channels.
Customer insights into omnichannel marketing can prompt teams to make real-time changes to improve engagement as consumers move between platforms during decision-making processes. Predictive insights can also help FIs provide relevant offers to individual consumers across channels and provide a seamless experience as users moving through the customer journey.
Compliance and Ethical Considerations
While personalization is an expectation, so is respect for data privacy and usage. When collecting consumer data, marketers should be transparent regarding exactly how they intend to use the information moving forward. The minimum amount of data should be collected at each touch point, reducing barriers that would deter consumers from entering their information.
Customers should also be provided with opt-in choices regarding the types of communication they want to receive from a brand. Using customer analytics to further segment data can help ensure that the right messaging is sent to the right individuals, reducing opt outs due to irrelevancy. Extending truly personalized offers, beyond simply entering the customer’s first name into a template, can go a long way to build trust while providing value.
The Benefits of Customer Insights for Financial Marketing
Core to working with financial services customer insights is the idea that FI brands can improve their understanding of their target consumers and design better communication strategies to acquire, engage, and retain business over the long-term. In short, improved customer experiences can mean improved revenue figures for FIs.
Improved Marketing ROI
Marketers experiment with a variety of content formats, messages, designs, and distribution methods to find what works best on a regular basis. Incorporating customer analytics data into campaign performance review can help leaders make data-driven decisions about what is working best and why. This can empower teams to focus resources on high-performing strategies that can lead to higher conversion rates and retention numbers while reducing spending on underperforming projects.
Stronger Customer Relationships
The average customer retention rate (CRR) across the financial services industry is 78%, largely attributed to the long-term products available such as mortgages and insurance policies. Banking specifically has a CRR of 75% with these FIs seeing a bit more turnover as consumers are more likely to shop around for shorter-term products.
Using customer insights to tailor proactive product offers and timely messaging can further enhance consumer trust and engagement, which can result in higher CRR. Improving retention by 5% can increase profits by at least 25%, yet on average, FIs only have a 20% share of a consumer’s total financial picture. Creating stronger customer relationships can improve these numbers and overall financial outcomes for FIs.
Competitive Advantage
Cultivating those relationships can also push the competition out of the picture for consumers who may otherwise have been prone to shop around for financial products. Using customer insights to drive marketing and product strategies has been shown to help companies outperform the competition by 85% sales growth.
Customers with positive brand interactions and proactive, problem-solving products at the ready are less likely to engage with other brands, improving CRR for the long term. Starting relationships with new prospects by demonstrating an FI understands their needs and can personalize communications can also engage new customers and draw them away from the competition.
Better Risk Management
One component of financial services marketing analytics not to be overlooked is how data can be used to conduct a customer risk assessment. This process can help identify existing accounts that may be likely to close their accounts. Data points can include customer behavior, such as reduced logins or infrequent transactions, viewed in the broader context of the current financial landscape.
Fraud prevention is another area of risk management where customer analytics can be leveraged. Monitoring current activity in the context of historical transaction data can flag suspicious activity at an account level. Additional factors to consider include device information, login location and number of attempts, and transaction sizes.
Examples of Financial Brands Leveraging Customer Insights
With numerous benefits available to FIs able to track and put customer analytics data to good use, many companies are already using customer insights to shape their marketing campaigns and product offers.
In one example, American Express uniquely does not enforce a pre-set spending limit on card holders. Instead, the brand monitors a number of customer data points to set consumer spending power. This includes payment histories, personal credit scores, and business statuses. American Express also uses this information to provide special offers to card holders based on their spending patterns or cash flow requirements. Emphasizing the importance of real-time data processing and analysis, the brand also incorporates this methodology into its Shop Small marketing campaign, reaching out to card holders with localized offers and incentives to make purchases at small businesses in their area.
Another major fintech brand using customer insights to design marketing strategies is PayPal. The online payment system brand supports business transactions for its merchants by curating customized offers for consumers based on behavior patterns. From tracking abandoned carts to predicting actions based on purchase history, PayPal is able to use its customer insight algorithms to drive transactions. The company sends personalized offers and discounts to convert shoppers into customers. This can be based on online activity trends or how others in a particular target segment typically behave. The result is that PayPal is able to predict with 69% accuracy where a customer will spend their money and provide content marketing and advertising to improve conversions.
How to Get Started Using Customer Insights for Financial Services Marketing
FIs not already using financial services marketing analytics may want to get a start on benefitting from their data to remain competitive and improve their business revenue outcomes. With clearly defined goals in place, companies can create a data-centric operations model. Critical to this process is the proper collection, storage, analysis, and processing of customer information.
Invest in the Right Technology
One challenge companies face when looking to implement a customer analytics strategy is working with inaccurate, duplicate, and disparate data. Many FIs use a number of systems for daily operations including customer service ticketing systems, marketing automation platforms, and enterprise resource planning (ERP) records. In some cases, a single customer may have a record across three or more platforms, each with different (and sometimes conflicting) field-level data.
Investing in a data analytics platform that can integrate different systems and create a holistic view of customer data is a major benefit for FIs. These tools can enable data analysis, decision making, and governance while offering easier to use interfaces and self-service reporting. Examples of data analytics platforms include Microsoft Power BI, Oracle Analytics Cloud, and Apache Hadoop.
Build a Data-Driven Culture
Once the data has been collected and collated, team members need to understand how to leverage the customer insights gained from these systems effectively. FIs that implement customer analytics can also invest in training for marketing teams to best understand the information available and how to use it to direct campaign development.
Leadership can also encourage collaboration between business analysts and marketing team members to help shape additional understanding of the data and practical ways it can be used to shape customer experiences.
Ensure Data Security & Compliance
While it may seem beneficial to collect as much data as possible on every customer, more is not always best. By collecting only necessary data, FIs can establish a level of trust with consumers. Additional behavioral patterns can be determined by account analysis and apply predictive analytics.
Marketers also need to adhere to financial industry regulations for data privacy and use. Laws and acts such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR) dictate how companies should collect, handle, share, and store consumer data. Along with these polices come requirements for updating and publishing corporate data privacy policies.
Continuous Optimization
A solid foundation in customer analytics can be a great starting point for developing new marketing campaigns, refining existing programs, and even directing product-centric decision making. However, customer sentiments and behaviors are constantly changing as they interact with brands, meaning that marketers should continue to refine their strategies based on ongoing customer insights and analytics in financial services.
To Wrap
Using financial services marketing analytics to drive decision making, campaign planning, and personalized customer communications can bring many benefits to FIs. These insights can not only help maximize the returns on engagement with individual consumers but also improve competitive market standing and reduce risk.
Understanding customer analytics is just the first step in the process for marketers, who then have to take this information and produce effective, engaging, and compliance marketing campaigns for potential and current customers. That’s where Vested can help. At Vested, our team of creatives are experts in navigating the financial services industry’s nuances and many regulations. We help our clients convert data points into action items that produce quality creative content that is on brand and on task. To learn more and get started, contact Vested today.
