Posted On June 22, 2017
Millennials are now the largest population segment ever in U.S. history. (FICO, 2014) Even though half of millennials claim a national bank as their primary bank, they are also willing to open an account somewhere else—giving your community bank a great opportunity. (Accenture, 2015) Investing in customer loyalty with millennials creates multiple wins; 56% of surveyed millennials have recommended their bank in the past. (FICO, 2014) Not only can millennials develop into loyal customers, they are more likely to promote their bank and services compared to other groups.
Millennials are more likely than other age groups to switch from their primary bank, switching at a pace nearly double the average of any other age group.
Keeping Pace with Your Newest Competition: Fintech
Fintech – financial technology – is rapidly emerging, disrupting the banking industry and fighting for a share of your most valuable customers. Millennials are gravitating towards this new way of banking because of how easy and stress-free it makes traditionally complicated tasks, like applying for a mortgage or refinancing student loans.
One of the most rapidly growing fintechs is SoFi, an online-only finance company that has taken a radical approach to lending and wealth management. (WSJ, 2016) SoFi is playing right into the hands of millennials. Their modern website design, zero fees, member rewards and simple process are gaining them a healthy share of the lending market. (WSJ, 2016) Even though your community bank may have a different approach, you can still captivate the millennial market with a sound marketing strategy that is backed up by your products and actions.
Your Brand is More Than a Logo and a Tagline
Your brand is what differentiates you from the competition. It’s your customer service. It’s what you say to customers and the channels you use to communicate the message. It’s the hours of operation and location of your bank. It’s the products and services you offer. It’s the look and feel of your physical and online branches. It’s every point of contact customers have with your bank.
Banks must be conscious of the diversified age demographic of their customers when executing branding. Millennials are the largest generation in history, eclipsing even baby boomers. What is most unique about them is that half lived through the transition into the digital era, and the other half were raised on it. No other generation can claim this.
Investing in Customer Loyalty
Millennials are a very powerful customer segment – generating spending power of $8 trillion by 2025. (Signal, 2017) Investing in products and services that matter to them and develop their customer loyalty is simply good business practice. Instead of guessing or assuming how to capture their loyalty, work backwards, starting with where their disloyalty lies.
Create loyal customers by improving these three areas that millennials sited for switching banks. (FICO, 2016)
- Eliminating high fees
- Improving customer service
- Convenient branch and ATM locations
Eliminating High Fees
Millennials want to feel a personal connection to their bank, and feel like their bank is on their side. Charging high fees for things like low account balance or ATM usage creates the opposite effect. Although community banks, big banks and credit unions struggle to do so, fintechs can and are. The playing field between financial institutions may not be even, but establishing your brand’s differentiation will propel you ahead of the competition.
Improving Customer Service
Every point of contact with a customer, from mobile transactions to in-branch visits, needs to be customer service orientated. 80% of companies believe they are delivering a superior customer experience, while only 8% of customers agree. (Bain & Company, 2014)
What do your customers think? Don’t be naive, dig in and discover what your customers are really thinking. With the number of millennials who visit physical branches dwindling, there are fewer direct engagement opportunities. For millennials, your digital avenues are brand touchpoints.
Convenient Branch and ATM Locations
Millennials are accustomed to convenience. When it comes to location, the best way to tackle this is to bring the branch to them via mobile app or online banking. Are you keeping up with the competition? Where are areas for improvement? What really makes you different? Your brand message does.
Your brand message begins with a sound brand. At the core are your beliefs and values, they are the heart that keeps all other elements going. Due to this, they are the most meaningful and hardest for your competition to imitate. The functional benefits provided to customers make up the head. The branding spine consists of the features and processes you must provide to your customers. These are the least meaningful and the easiest for your competition to imitate.
Marketing and branding is all about your customers. Talk to your customers. Learn directly from the source. What engages and motivates them, and what keeps the loyal ones loyal to your brand - it’s about transforming a first-time customer into a die-hard advocate, and growing a prospect into a healthy customer. It’s about finding the big idea that speaks to your customer.
Developing loyalty based on digital differentiation is nearly impossible for community banks because of the limited options available for website and mobile apps from software providers. Your brand needs to be built on more than digital offerings. Connect with customers on a commonality, like small town values. Or leverage your small size to show the flexibility you have when it comes to your products and services when compared to big banks.
Communication is the key to loyalty. You will not develop loyalty if you are not communicating with customers through the channels they prefer. For example, roughly 59% of online adults ages 18-29 use Instagram. Investing in student loan service ads on Instagram would make more sense than an AM radio spot. Your promotional marketing mix needs to be diversified to effectively communicate and capture your customer groups.
Millennial’s future buying power makes them the obvious choice for customer acquisition. However, technology has changed the game, from the competition of online-only fintechs to the consumer requirements of the millennial generation. To compete is this digital world, your bank needs to have a strong differentiation strategy that is followed by a carefully crafted marketing strategy that reaches the target through the channel that best suits them.