Capitalizing on Customer Interactions: Best Practice Marketing Strategies in the Retail Finance Industry

After a decade of growth driven mainly by mergers and acquisitions, the retail financial services industry is now looking inward, focusing on maximizing the value of existing customer relationships. Cross-selling, up-selling and customer retention are the order of the day. Companies are focusing on managing their customers across multiple points of contact, divisions and channels - to deliver personalized service with consistency and precision. Best practice companies are placing increasing emphasis on multi-channel inbound marketing. RETAIL FINANCE AT THE CROSS-ROADS Financial service providers now have the ability to sell everything from checking accounts to credit cards to mortgages to securities to insurance. But the vaunted "convergence" financial organizations have sought through M&A activity remains elusive. A key challenge lies in cross-selling to gain greater "share of wallet" from existing customers. One recent survey by GartnerG2 found that 30% of retail financial service companies now rely on cross-selling as their primary means of driving revenue growth. However, organic growth presents multiple challenges. First, companies must obtain a single view of the customer in order to determine which cross-sell offers to present and when to present them. Marketers must contend with massive product and service portfolios, disparate customer data, and the sheer complexity of their consolidated organizations. Operational silos (e.g., credit card, mortgage and loan divisions) often operate independently, with their own customer data and marketing initiatives, making consistent and coordinated cross-selling efforts difficult to execute. Companies also face the challenge of retaining customers. Because most customers use more than one financial services provider and switching costs are low, defection rates run in the 15-20 percent range annually. "Customer retention should be the highest priority in your CRM strategy," wrote one analyst at GartnerG2. Gartner estimates the cost of attracting a new customer to be $280, compared to $57 to retain an existing customer. New customers are five times more expensive than existing ones. Moreover, loyal customers spend more, purchase higher-margin products, and are more likely to refer additional customers. Customer retention is clearly a critical imperative. Companies must constantly evaluate their customers' profitability and potential, and take the necessary steps to ensure their loyalty. Managing customers consistently across a wide array of touch points is another challenge. Financial service providers interact with customers through call centers, web sites, e-mail, ATMs and retail branches, and every customer has preferred and secondary channels. To strengthen relationships with customers, companies must learn to interact with customers in a consistent and coordinated fashion at all points of contact. Every interaction should reflect previous interactions, drawing on a profile of individual needs, preferences and priorities. In this way, the dialogue with the customer becomes seamless, consistent and context-sensitive. Customer care at this level earns the trust of customers and contributes to the development of an enduring relationship. Today's customers expect two things: easy access and consistent treatment and information. Unfortunately, disparate technologies, inaccessible customer information, and disrupted business processes result in incoherent treatment and frustrated customers. Consistent multi-channel care is what will differentiate best practice companies from weaker performers. INBOUND MARKETING DRIVES SHARE OF WALLET Inbound marketing revolves around managing inbound interactions whether they occur through a call center, website or retail branch. For marketers, inbound channels represent key advantages. During an inbound interaction, companies have the customer's time and attention, and are more likely to receive permission to extend a marketing offer. …