The pride and joy of every business is a loyal customer; one who believes in you, and trusts that he/she will get the best possible value every time he/she uses your services. “Trust” is a very strong and intangible emotion, which eventually translates into long term “Loyalty”; therefore every business has a responsibility to proactively care for and continuously improve to help build and maintain trust. In terms of business metrics – selling to a loyal and existing customer also means lower costs than acquiring a new one.
Today, this experience of loyalty is constantly being put to test – the ease of transferring accounts, commoditisation of products and services, and transparency through regulatory requirements, has translated into customer volatility. However, there are a few banks that have tapped into customer behavior and gained the sought after “advisor” status. Over the past 18 months, some of these banks have demonstrated double digit growth in retail customer numbers for a few markets, and have grown their private banking portfolios.
The secret sauce is that they are adapting and listening to their customer through available data, and adopting new technologies to create a richer customer experience.
Mobility: Be there for your customer – anytime, anywhere
Statistics show that 60% of people in the UK have a smartphone, and more than 80% of individuals are in the age group of 18-24. These devices not only enable phone and internet, but the GPS feature provides the ability to locate the device accurately. The “trusted” banks have leveraged this feature to create ‘Geospatial’ banking apps, which the customer can download on their smartphones.
Imagine sitting in your favorite restaurant, enjoying your food, when suddenly you get a ping on your smartphone screen: “Hi John, we see you are dining at ABCD restaurant. As a valued and loyal customer of our Bank we would like to offer you a discount of 10% on your bill today. Please swipe “ACCEPT” to redeem the discount.”
A QR Code is generated on your screen (very similar to the ones generated for the boarding passes), and that can be scanned by the restaurant and a discount is applied against your bill. You just saved 10%.
This application not only creates a unique customer experience, but it also allows the bank to store the location and transaction data. As such, the next time you are in the vicinity of the same restaurant, the app prompts you with a discount and also makes available the details of similar restaurants around your location where it can offer discounts.
Another example of this is the “In Store- Retail” experience, which some banks have tapped into. Imagine you enter a Sainsbury /Boots/M&S, or any other retail store. As soon as you step into the shop, the bank’s geospatial app quickly highlights all the various discounts and sales that you are entitled to. As you buy your groceries or other items, you just tap the item on your phone. After shopping, you swipe a finger to generate a QR code which gets scanned at the Point of Sale machine and the cumulative discount is applied. The payment is then made through the mobile wallet, making the entire shopping experience – personal, economical and within the security of your bank’s app.
In the backend, the banks are partnering with popular restaurants and retailers to get volume discounts, which they can pass directly to customers: thus creating a new business model for banks and retailers.
Everyone wins: – the customer saves money; the bank gets the transaction and the loyalty; and the restaurant/retailer gets a volume commit business from the bank.
Data analytics: Know your customer’s habits and preferences
The data acquired through multiple mobile transactions and geospatial apps are a gold mine of customer behavior. A few banks use this data to analyse spending pattern based on the locations and pro-actively engage with customers.
Example: Dave lives in London and shops weekly for his regular groceries from the retailer who is setup round the corner from his residence. The geospatial app has been helping Dave save money every time he goes to this shop .The data gathered over the past few months enables the app to analyse: shopping frequency, amount spent, typical time of the week/month , travel route to the shop and so on
When Dave threw a party a week ago and he paid for everything using his credit card. When he wakes up in the morning and starts walking toward the grocery store for his regular shopping trip, he gets a ping. “Good morning Dave. You currently have a balance of £1800 on your card and your limit is £1850. Your average grocery bill over the past 3 months has been £75 with all discounts applied. Would you like to pay part of your balance?”
The app just saved Dave an embarrassing trip to the store by analysing all his trips down this route, the frequency of those trips and the typical costs involved during those trips.
Knowing the spend pattern and the location, the bank’s app can use the data to validate if the customer has enough credit limit on the card, and if not, lets the customer know that he needs to pay on the credit card .
There are many examples of this sort where the app analyses the data of the various journeys undertaken by a customer for business on the tube/National Rail. If the customer was to travel a particular route every day/week, the app would use this data to analyse the best possible cost options: a Weekly Pass, Monthly Pass, or a Pay as you Go Oyster. The bank’s app would then send a trigger offering the best possible option which could be purchased through the mobile wallet. Or get a possible discount on long distance train journeys, where the bank would have tied up with the rail service provider, just like the retailers.
There is no magic formula to loyalty – It will always be trust and advice.
But what these banks have been able to tap into, is the use of Mobility and Data Analytics through geospatial applications and innovative partnership models to build loyalty through these channels. Through use of technology to create innovative pay-back to customers, banks can build on the all-important trust factor by highlighting the best economical value and saving customer money, while also providing expert advise with knowledge of customer behavior.
This article was originally published on Banking Technology on October 1, 2013, and is re-posted here by permission.