There are many contributors to user churn — or user turnover — at financial institutions, from poor consumer service to product gaps. In an economic downturn, it’s crucial for credit unions and banks to maintain their consumers, especially if those consumers have recently become inactive. After all, it can costs more than $400 to acquire a new user and 40 percent of them will churn before you ever recover such costs.
A good way for financial institutions to reduce user churn is to recognize inactivity and re-engage an account holder before they decide to leave for good. With 20 percent of banking users saying it is too difficult to completely switch their relationship from their previous financial institution, finding a way to re-engage such users increases profitability by 8 percent during the first three years. Alternatively, an inactive user will result in a net loss during this same period.
While there may always be a small percentage of inactive users as part of your community, that shouldn’t be a reason to let them stay idle, especially during an economic downturn. Here are some tips for how to reduce user churn before it’s too late and turn inactivity into profitability.
Prioritize Consumer Service
According to the Qualtrics Banking Report, consumers who are sure they’re leaving their current bank or credit union ranked “poor service” as the number-one factor, and 56 percent of users who have left say the bank could have changed their minds. Instead of sending out a single annual survey to gauge user feedback, organizations should find a way to stay keyed into what their consumers need through multiple channels and touchpoints. Lumin Digital has the ability to collect real-time actionable user feedback from multiple touchpoints — mobile, web and onsite. By using cloud-native technology, banks and credit unions using Lumin Digital are able to notice when consumers start to become less active and create personalized experiences to keep them engaged.
Offer Relevant Discounts and Rewards
Forty-five percent of consumers say they will remain loyal to their bank or credit union if their institution offers them discounts. Loyalty and rewards programs are a good place to start, with the most-effective programs being those that provide cash back in the form of funds or pre-paid cards. Discounts and rewards must be relevant to each user, though. While cash is relevant to anyone, attractive mortgage deals may not be of value to someone who may have just made the last payment on their home. Lumin Digital uses data-driven technologies to help financial institutions identify consumer behavior and leverage it to tailor product offerings, services and financial wellness tips to each individual.
Enhance Digital Tools
Banks and credit unions are in danger of losing users if they don’t provide seamless digital experiences, finds a Bain research study. On the hunt for accessibility and convenience, consumers are becoming increasingly willing to use high-tech firms for simpler banking products when traditional providers make it too difficult to explore or purchase their products on a mobile device or online. This is especially true of younger consumers, who prefer to research and open new relationships using digital channels, the study shows. From accessing checking accounts, saving accounts and credit cards to using person-to-person payments and automated savings tools, digital tools must be expansive to serve the varied needs of any user with a computer or mobile device. And it’s not enough to simply offer online banking or a banking app. Consumers crave security and speed, not one or the other.
Lumin Digital is a user-first solution that thrives on using innovative digital tools. With real-time, behind-the-scenes upgrades, users will never find their banking offline. Lumin Digital provides access to all products and services in one central place, so consumers never have to search too long to find exactly what they need. With artificial intelligence (AI) technology consistently analyzing user behavior, organizations using Lumin Digital are able to anticipate user needs before they even need to ask. By improving the quality of digital tools, credit unions and banks improve their chances of keeping consumers engaged and active.
Learn more about how Lumin Digital is helping financial institutions re-engage account holders with innovative digital tools.
Erica Garza is an author and essayist from Los Angeles. Her writing has appeared in TIME, Health, Glamour, Good Housekeeping, Women’s Health and VICE.