Loyalty programs have multiple factors going for them in terms of engaging consumers, but the fundamental one is this: consumers want more value. In exchange for handing over their hard-earned dollars, customers want something more in return than just the products or services they’re paying for. They want added value, and loyalty programs excel at delivering exactly that.
Some loyalty programs and some industries, however, are doing a better job than others at providing added value. The banking industry definitely has room for improvement, and a great deal of incentive to get better at providing value.
“Banks are at a tipping point,” Accenture proclaims in its North America Digital Banking Survey. “Their historically stable customer base could erode steadily if banks cannot deliver the service proposition that customers demand.”
Consumers are looking for added value even for the simplest transactions
The findings of Accenture’s survey illustrate that consumers want more from a loyalty program than just earning something free once a year or so. They want extended value propositions in multiple formats, including robust mobile banking services. If banks fail to deliver that added value, they risk customers becoming disengaged and using the bank for only the simplest of transactions. They’ll lose the more profitable transactions — loan generations, investment, etc. — to service providers they perceive as being more helpful with major financial decisions, Accenture warns.
Accenture’s report paints a clear picture of what added value looks like to bank customers:
- Just under half (45%) want their financial institution to locate discounts on purchases for them.
- They want merchant-funded offers, everyday purchase discounts and loyalty rewards.
- They want digital services — and this is especially important to Millennials.
- Customers are expecting better Omni-channel experiences; only 27 percent of consumers say the experience they receive from their bank’s branch, online and mobile channels is completely seamless— down 7 percentage points in just one year.
Customers don’t perceive account switching to be as challenging as they did in 2013 when Accenture first started this annual report. Only 11% switched banks, but some of the most appealing demographics, Millennials (19%) and the mass-affluent (18%), led the way. This is not great news for bankers who are feeling added pressure from alternative banking providers and financial institutions find themselves in a challenging situation. Driving loyalty at your financial institution has never been more important than it is today!
Despite this growing importance, 67 percent of consumers do not participate in a bank rewards or loyalty program and another 17 percent of consumers were unsure if their bank even offered a loyalty program. This tells me we have a major communication issue or more importantly a loyalty program design challenge. You program must be designed to offer value to your customers or it will be ineffective and not provide the value you built it to provide.
Account holders would use mobile more if rewarded
What’s more, 78% said they would increase their mobile usage if they received rewards points. Even among non-users, this type of incentive was appealing; 54% said they would make mobile payments if their FI offered discount pricing or coupons, and 53% would increase usage in exchange for rewards points. Do you have a way to reward your account holders for taking the kind of actions that drive more engagement with your financial institution?
Consumers are looking banks and credit unions that understand what they are looking for and seemingly aren’t getting it. If you don’t have a way to reward account holders for taking key actions, like using your mobile app, well then you are missing out on an opportunity!
Those numbers make mobile emerge as a critical component of financial institution loyalty. Consumers not only want it, they’re willing to use mobile even more if their bank rewards them for doing so.