Mine that data to keep that customer

During the second half of 2015, Collinson Group collaborated with Future Agenda, the open Foresight programme, to run 12 workshops in 8 countries involving 110 industry leaders and loyalty experts to debate what the future of loyalty holds. In our work with Future Agenda we specifically questioned the role that big data would have on the future of customer loyalty. Below are some key insights we gleaned.

The fervour for big data analytics sweeping through retail bank boardrooms at a global scale is intensifying as corporate strategy prioritises a shift towards true real-time intelligence. This is a marked departure from the ‘batch and queue’ approaches mandated by old legacy IT systems, and will accelerate over the next ten years.

The ability for financial organisations to make the most of data, monitoring and tweaking performance as they go will have a major impact on all areas of business, from the supply chain to marketing. However, the big retail banking institutions sit comfortably behind the fintech start-up challengers whose business models are founded in the cloud, and whose customers are willing to place their trust in this new approach.

Real-time data has a big role to play in engaging with consumers, as it enables organisations to understand their customers’ behaviours and attitudes towards their services, and by extension positively influence customer loyalty. High street banks are starting to recognise the need to get better at segmenting consumers into more narrowly-defined groups, and real-time data and the contextual relevance of engagement have vital roles to play here.

We will see an increasing number of financial brands promote their ability to penetrate social groups to provide products and services that meet the demand of these newly identified communities, mining large swathes of customer data in order to do so. In marketing terms, this is being referred to as identifying the ‘composite customer’, whereby brands cater to their customers based on shared interests and their involvement in groups and communities. This moves away from the traditional approach that segments customers by income, age and gender demographics that are becoming less and less effective.

Germany’s Fidor bank is following this approach in financial services. When it launched in the UK in late 2015, it focused on social media to build its community announcing the interest it paid on savings would increase in line with likes on its Facebook page. Starting from a 0.25 percent base, the bank announced every 2,000 likes on its Facebook page would lead to a 0.05 percent increase in the rate, up to a maximum of 0.5 percent. Furthermore, the bank also successfully runs a community forum where it shares new product ideas with consumers and rewards them for getting involved. Social media serves as a platform for conversation with the banks’ customers and user base, and helps the boardroom set its future priorities.

Companies are slowly unearthing deeper insight which they can then deploy on their social media channels. In financial services, companies are making sure that their customers can login and use them securely, so that they become more effective customer service channels, while also a tool to track satisfaction levels. Several banks, such as South Africa’s First National Bank, and India’s ICICI Bank have developed applications where they can reach out to customers on the online platforms their customers choose to use.

For financial services companies and credit card providers the process should be relatively straightforward and manageable, given the transactional information to which they have access. However, translating this into a relevant and personal experience for consumers in order to drive emotional engagement will remain the challenge.

Insights gained from interactions through social media channels will help to improve brands’ understanding of customer behaviour, which ultimately should result in fewer consumers switching their bank providers. If shared experiences are what matter most to the customers of the future, brands will need to understand not only the individual customer, but the interests of their nearest and dearest too.

Final thoughts

Consumers will be members of different communities using a variety of digital personas. Building a picture of this composite customer is only possible with strong data analytics capabilities. Improving customer segmentation through more timely and robust data analytics will require significant investment in the short-term, but it will pay dividends in the not too distant future.

The financial services brands that are able to crunch this data at an individual level stand to gain considerably as cross-selling products and valuable additions will boost their revenues. Mining the data and comprehensive analysis of these online behaviours will add relevance to loyalty initiatives and help banks retain their profitable customers—especially important as retention marketing costs half as much as acquiring new customers.