Customer Data: A Key to Banks’ Loyalty Program Success

Oct 25, 2013


Customer Data A Key to Banks Loyalty Program SuccessA longtime partner to major financial services brands, Kobie Marketing has always had a strong position on banks’ need to improve their quality of program engagement. Today’s hyper-connected consumers want a seamless omnichannel experience offering more than gimmicks and one-time sign-up perks. A recent Datamonitor surveyCustomer Loyalty in Retail Banking: Strategies for Success” features Kobie’s insights on banks’ options for driving customer loyalty, which I have included below.

Loyalty is a complex emotional state and according to Datamonitor, improving retail banking loyalty involves a three-pronged approach:

  • A greater focus on customer service – Banks must shift from product selling to customer-centric need fulfillment. Proper staff training and advanced analytics enable banks to boost their reputations by providing individualized service and an improved loyalty experience.
  • Rewards differentiation to stand out from the competition – Focusing on rates and prices is shortsighted and undermines the usual tactic of introductory bonus rates. Instead, banks must make their customer rewards programs more engaging through account customization and tiering. Transaction-based rewards will encourage greater use of personal accounts, driving loyalty.
  • Channel proliferation opens new prospects for engagement – Mobile enables banks to be constantly present in their customers’ lives while social media brings banks closer to their customers. Branches will play an increasingly important role in promoting closer relationships.

Don’t Let Big Data Get too Big

Identifying the need for these changes is a great first step, but what is the connective tissue that links these together; allowing banks to implement loyalty-promoting measures?  It comes back to the importance of certain data characteristics: e.g., collected amounts, their sources and the volume processed. Too much of a good thing – especially qualitative, unstructured data from external sources like social media – can easily backfire.

Although such sources can yield valuable longer-term information, banks and financial services brands should focus on easily quantified, structured data for now, as this will have a much more immediate impact on customer service. Banks should avoid becoming too preoccupied with generating and amassing data from multiple sources, as they risk becoming overwhelmed with information that is peripheral, not genuinely useful.

Data that can be clearly linked to behavioral and attitudinal drivers of loyalty such as hard numbers on demographics, product holding, channel usage and transactions, should be prioritized.  By looking at all these data, banks can build holistic, 360-degree customer views, gaining a fuller understanding of their financial requirements.

Big Data, Baby Steps

Once banks have mastered the use of internally-generated data, partnerships with companies in other verticals – such as retailers and entertainment – can be formed, allowing further access to high volumes of customer data and business insights.

Case in point: Citizens Bank runs a large number of branches within retail stores – including approximately 170 operating inside Stop & Shop supermarket outlets. The bank is starting to make use of Stop & Shop’s detailed customer transactional data helping the bank fill gaps in its customer debit card information that go beyond transaction times, locations and total value.

Even with restrictions on how they can use customer data, banks still have plenty of opportunities to leverage it for a more complete picture of customers’ wants and needs. It’s an invaluable tool that can elicit desired reciprocal and status-based behaviors – driving long-term engagement.

How else can banks drive customer loyalty while not being overwhelmed by the data they collect? Share your thoughts in the comments below or email us at