7 Steps to Deeper Banking Relationships

August 27, 2021


customer relationship management

Nearly every financial institution has “deepening customer/member relationships” high on the customer relationship management priority list but, with most FIs hovering around two products per customer, not all execute well against the mandate.  Here’s what we’ve found to be the most effective methodology to deepen customer relationships.  Not surprisingly, these recommendations track well to deepening any human relationship.

Step 1: Measure your Net Promoter Score

It’s nearly impossible to do more business with customers or members who are unlikely to recommend your financial institution to a friend, colleague, or family member.  So, before you start any cross-selling initiative, measure your Net Promoter Score and verify that it’s above 40, slightly above the historical average for retail U.S. Banks.  If it’s below 40, focus on improving your score before you waste time and money asking customers or members to do more business with an institution they themselves wouldn’t recommend.  In either case, you’ll need a continuous improvement effort to move that score Northward.

Step 2: Reviews

One output from the Net Promoter interview process is the identification of “promoters”, or brand ambassadors — who enthusiastically recommend your financial institution.  About 20% of these promoters will leave a review, like a Google Review, for you, if asked.  So ask, because, these reviews can represent the bulk of your positive reviews.  See this blog for an example with the numbers.

Step 3: Measure and Prevent Churn

You can’t manage what you don’t measure so, if you want to reduce churn, typically measured as accounts closed per month, you’ll need to measure it. Once you have that measure, use predictive analytics to determine which of your customers are likely to close their account and leave the financial institution and, if they are attractive long-term prospective customers, incentivize them to establish a direct deposit relationship with you because very few direct deposit customers leave the bank.

The use of e-services, like bill-pay, mobile deposit capture, and credit card management services also reduce the probability of churn so, make sure you are continuously discussing the benefits of these free and powerful services with your customers or members.

Step 4: Surface and Serve Life Events

Most financial service acquisitions are won or lost within 90 days of a life event so, you’ll need to be continuously working to spot and service life events like buying a home, getting married, paying college tuition, or retiring.  At any one time, about a third of your customers or members are anticipating or going through a major life event and if you don’t know about it, you won’t be able to help them and the opportunity will be lost… so ask, systematically!

Step 5: Prescreen and Refinance

Americans hold over a trillion dollars in overpriced debt, that is — loans with an interest rate that is materially greater than current prevailing interest rates.  Modern automated pre-screening technology can legally find and surface mispriced debt your customers or members hold elsewhere by comparing your current lending rate to their rate and automatically presenting a firm offer of credit to refinance, including the dollarized savings tables for each customer/member, via email, mobile, and online banking thereby making it easy to lower customer or member borrowing costs.  It’s a good idea to have a continuous process for updating customer or member contact information to reduce direct mail costs to undeliverable email firm offers of credit. And don’t be shy about offering aggressive rates to touch, move, and inspire your existing creditworthy customers to refinance debt held elsewhere with you; these are net new loans!

Step 6: Accumulate Deposits

If your customer is refinancing debt held elsewhere with you, they are saving money.  So, don’t miss the opportunity to help your customers use those savings to achieve a lifetime goal by surfacing the goal and establishing an automatic deposit of those savings.  Moreover, make sure that you have a trigger program in place to spot extremely high balances in checking or regular savings accounts so you don’t miss the opportunity to keep those deposits.  Stories abound of hundreds of thousands of dollars sitting in checking or savings accounts following a home sale that just disappear to a competitor’s CD without a single ask for the deposit business by the primary bank or credit union holding the funds.

Step 7: Prescreen for New Loans

Lastly, regularly prescreen your customers for new loans and use predictive analytics to ensure that each customer who is likely to be in the market for a loan, knows that they are pre-qualified or pre-approved for the loan they are predicted to need with their primary bank or credit union.

And, don’t forget to make it fun.  Several of our clients run educational microinterviews with small prizes given to those who come up with the correct answer.  Some of these campaigns, all of which are delivered digitally (mobile and online banking, email, SMS) achieve a 30-40% click-through rate!

Shallow relationships won’t survive the inevitable mishaps of any long-term business relationship so start conversations, develop relationships, and build trust in all your relationships.