Why Personalization at Scale is within Reach
The drive for customer-centricity and greater personalization is not new. In the last six months, we’ve seen our customers, particularly in banks and financial institutions, feel the pressure to reach their customers in more meaningful ways.
Our customers who are growing with the best efficiency ratios know that personalization, at scale, is essential to grabbing and holding recipients’ attention and spurring them to act on offers. The more effectively institutions can get these offers to the right people at the right time with the right message and in full compliance with regulatory requirements, the more successful they are in achieving their revenue generation objectives.
The importance of personalization applies most acutely to communicating with current customers. Targeting a current customer to cross-sell another product or service is significantly more effective than targeting a new prospect. Offering a new product to a current customer has a 60-70% chance of converting. That drops to just 5-20% when targeting a new prospect.[1] Compare that to another study that found 80% of future profits will come from 20% of existing customers[2].
In a recent article[3], 90% of consumers feel that personalization is “very/somewhat” appealing and that 80% of consumers are more likely to do business with a company that offers personalized experiences, and you can understand why financial institutions are so focused on moving from mass marketing (e.g. “Dear Valued Customer”) to much more knowing and neighborly communications.
Obvious but Complex
Personalization might seem like a straightforward and relatively simple undertaking in this advanced technology age. After all, existing customers comprise a captive audience of individuals who have already demonstrated their preference for dealing with a particular institution and about whom the institution has quite a bit of information. In practice, delivering effective, action-provoking offers, even to existing customers, is rather complex and time consuming.
The typical marketing workflow and the number of different individuals participating in the process – from offer conception to approval to offer delivery and the ultimate conversion of an offer into a new deposit, credit card or some other type of account – can be lengthy, convoluted, and error prone. Additionally, the prompt and proper fulfillment of the offer incentive that drove the recipient to act is absolutely critical.
Delays in delivering offers to targeted audiences – both existing and new — open the door to competitors. Delays in incentives to offer recipients can create frustrated and disaffected customers.
The impediment to creating and delivering new revenue-generating offers stems from the numerous manual processes that typically litter today’s financial marketing workflows. Current, multi-step workflows are almost entirely manual, relying on the use of spreadsheets and a great deal of back-and-forth communication via email between the various individuals involved.
In working with our customers over the last ten years, we have seen the biggest barrier to personalization being the inability to centralize and manage all of their pricing, product, rules, timing and stipulations related to an offer. Personalization needs to start with the strategist but tie all the critical information with the offer as it moves from strategy to operations Today, this is not happening.
Setting up the Rules and Metadata Associated with Offers
Each company has their own unique data models yet much of the work can be templatized and managed from a single repository. This is where we have started the offer management process so that LOB strategists and marketing operations have one source of truth for all their offers. From here, they can assign the proper metadata that defines their offers, have centralized visibility to manage the status of offers in the lifecycle and better accountability over the entire workflow of an offer from creation through fulfillment.
We see that the drivers for automating offer management are to:
- Build more enduring and more profitable customer relationships,
- Increase the productivity of their marketing and compliance teams,
- Reduce their risk, and
- Achieve near real-time visibility into their offer performance, and gain critical insights into the reasons for the levels of performance for the numerous offers they’re fielding at any given time.
“We know how critically important precise targeting, credible personalization and proper timing are to successful cross-selling and upselling existing customers,” one bank marketing strategist told us recently.
“And it’s equally true when extending offers to prospects. To be effective and competitive, you need the kind of agility and insight you can only get through the use of an automated, full-cycle offer management solution like Naehas Offer Management. Everyone in the financial services industry knows that customers are always open to a good deal presented by another institution. If your objective is to grow your market share and bottom line, you’ve got to employ an automated solution to personalize your portfolio of offers.”
Consumers expect to be approached as individuals and expect financial institutions to know enough about them to deliver offers that are appropriate to them. It’s a reasonable expectation on their part given the amount of information available on nearly everyone, and the technology capabilities for matching the right customer information with the most relevant product and service offers.
To round out the complete picture, we need to talk about customer service and fulfillment but we’ll leave that for another blog. In the meantime, you can learn more about Naehas Offer Management.
[1] Paul Farris et al., Marketing Metrics: The Definitive Guide to Measuring Marketing Performance, 2010
[2] Emmett Murphy and Mark Murphy, Leading on the Edge of Chaos: The 10 Critical Elements for Success in Volatile Times, 2002
[3] The Financial Brand; 94% of Banking Firms Can’t Deliver on ‘Personalization Promise’; https://thefinancialbrand.com/74986/banking-personalization-targeting-trends/
