FinTech Expert Reveals the Secret to Customer Loyalty for Financial Services
By Guy Dilger, VP of Product and Marketing, Plain Green, LLC
The recent launch of Nordy Club, Nordstrom’s new loyalty program, underscores the need for a second look at traditional customer retention strategies. Nordy Club will maintain a point-based system, but also offers personalized services and experiences. Notable perks include exclusive access to products and events and more convenient ways to shop. With 10 million loyalty customers as of August and a nearly 20 percent increase over 2017, the upscale store knows how to keep consumers shopping.
Nordstrom Vice President of Retention and Loyalty Dave Sims says, “Our loyalty program is our opportunity to not only thank customers for shopping with us, but to serve them in a more personalized way. When thinking about this evolution, a guiding principle was to offer something for everyone, no matter how much they spend or where they interact with us.”
A Look Back on Loyalty Programs
The genesis of loyalty Programs (with a capital P) began in an attempt to identify the customer base. Once customers were identified, their demographic data and shopping behaviors could be tracked to inform marketing campaigns and promotions.
Armed with new customer data, savvy organizations improved on the one-size-fits-all approach. Companies could understand shopping patterns, determine frequency of spend, categories shopped and profitability of customers. Customer Relationship Management became a strategy that marketers spotlighted — especially how their efforts drove traffic and sales incrementally, and grew lifetime value.
Loyalty Programs for Financial Services
Traditional loyalty programs work well for retailers and many other industries, but the typical processes required to activate loyalty programs is challenging for financial services. This is due in large part because of the many government restrictions regarding consumer credit. Because of government regulations that attempt to ensure all customers are treated fairly, I believe that really great loyalty Programs in financial services were never developed.
Oddly, financial services may have been in a unique position to offer loyalty Programs that truly set their businesses apart and drove real, honest-to-goodness long-term loyalty from their customers.
Name and address were always available. And with the Patriot Act, validating these data points were mandated. For example, have you ever tried to cash a check? Your driver’s license or some other government form of identification was most likely required. For financial services companies, knowing and accurately identifying the customer was never an issue.
True Customer Retention Ideas for Financial Services
The trick has been making that customer feel special, feel wanted, and appreciated so that they had no reason to take their business elsewhere.
Sure, most financial services companies offer discounts, such as waived fees. Many offer special perks — including gold, platinum and black VIP plastic credit cards — to certain customers, but it’s likely those customers were already used to special treatment.
I suggest that old-school, low tech options may be the most relevant and have a high likelihood of retaining customers and fostering utility.
For example, why do you use your dry cleaner? I bet they don’t have a loyalty program. Is it because they’re the closet to home or work? Or offer the best price? Possibly. But if you don’t like their service, you likely would look for an alternative. Could it be that your dry cleaner knows your name, knows how you like your shirts starched, and offers to replace broken buttons at no extra charge?
What about your Starbucks? In a coffee-rich environment, there is likely a coffee outlet on every corner near you. So, why that Starbucks? Proximity is a strong possibly. Could it be that they know your name, know that you like your double-shot mocha frappuchino with low fat milk and no whip without you having to remind them?
How FinTechs Should Treat Customers
For years, I have tried to crack the code on how to develop the best loyalty program in an alternative lending FinTech company. I’ve tried refer-a-friend programs, educational programs to enrich their understanding of personal finance, providing access to their credit scores, and anything else allowed within legal boundaries and government regulations.
You know what works? Treating our customers with dignity and respect.
Customers told us through focus groups that they like our no-nonsense approach in working with them over the phone. They like the fact that our Customer Service team is based in the U.S., and they like that we use every-day English when speaking to them. Our communications, website and direct marketing underscore our unique Customer Service team to our current customer base as well as our prospect customers through our acquisition programs.
Making Customers Feel Special
You know what else works? I make sure that we mail birthday cards and holiday cards to our active and idle customer base. Not a big deal, right? I thought so too until one memorable Christmas season. A customer called to thank us for sending her a holiday card. The customer told us it was the only card she received that year and she appreciated it even if she never met me or any one on my marketing team personally. Now, that’s only happened once, but it’s something I’m never going to forget.
Can I measure the results? It may not be as easy as direct attribution from a ring code included in a retail transaction, but I do use Customer Satisfaction scores. I can tell when a customer reactivates and takes out a subsequent loan with my organization.
Do loyalty Programs work? Yes! They can when managed correctly.
Our fast-paced FinTech markets need to remember that sometimes low-tech still works.
Gaining loyal customers comes down to showing respect, making customers feel special, and saying, “thank you for their business.” And make certain your font-line associates do the same.
Guy Dilger, Vice President of Product and Marketing, Plain Green, LLC
With more than 12 years of experience designing groundbreaking marketing strategies for Fortune 500 companies and financial technology brands, Guy Dilger is known for generating engaging content and compelling concepts that resonate with targeted consumers.