Knowing Your Customers = Growing Your Deposits
Though the exact numbers are hard to pin down, most research indicates that the cost of acquiring a new bank customer ranges somewhere between $300 and $400, according to Optirate. Of course, that figure will vary according to the size of the financial institution, marketing and staffing costs, overhead and other metrics. But with slim margins and growing pricing pressure, it’s easy to conclude that even the most efficient customer acquisition campaign is likely to generate an operational loss.
Organic growth is the answer: knowing your customers, deepening relationships, expanding services to your existing clients and driving household referrals.
Knowing = growing
Through their exclusive network of leading financial institutions, IXI Services, a division of Equifax, draws upon over $11 trillion in directly measured consumer assets and investments to provide rich insights into financial capacity and behavior. By knowing your customers — with a clear vision of each household’s profit potential across your entire customer base — you can pinpoint your marketing efforts for maximum effectiveness:
Step 1: Determine which customers have high potential for growth
By analyzing estimates of total assets held by a household, you can compare that number to your current assets under management for that household to determine your current share of wallet and prioritize marketing efforts based on profit potential.
In the example above, both customers look identical through the lens on internal firm balance data. When you compare those values to data from IXI Services, you can see that there is significantly more potential for growth with Customer A since you currently only capture a small percent of their assets.
Step 2: Understand product preferences
If your focus is on growing deposits, you can then dive deeper into the deposit category preferences of Customer A:
You now know that this customer prefers to keep more money in CDs than a standard savings account.
Step 3: Layer on communications preferences
Once you have determined that you would like to promote CD offerings to Customer A, the next step is determining the best communications channel:
- Do they access your website online or do they prefer in-person interactions?
- Which form of communications do they most often respond to? Digital ads? Direct mail? Phone calls? Emails?
By leveraging data that you already have based on your existing relationship with Customer A and additional insights you can add from firms such as IXI Services, you can get a more complete picture of which current customers have potential to increase their deposits with your firms, which products to promote to them, and how to best communicate with them.
Direct-measured data, powerful results
IXI recently analyzed a 3-year history of financial data from its network members. It determined that knowing the customer and identifying high potential from the very outset of new account openings enabled banks to increase deposits by over 200 percent, compared to customers with low potential profiles. By the end of the second year from onboarding, participating financial institutions gained nearly $50 million in assets under management for every 1,000 new customers.
Image source: Flickr
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