Keeping Account Holders Close: How Loyalty Efforts Drive Engagement

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(Last Updated On: January 28, 2021)

What costs more: Getting a new member or keeping an existing one?

You know that answer. Your greatest pool of opportunities for new products and services come from your existing account holders. It’s way more profitable to keep an existing customer than to acquire a new one.

Yet today, that’s no easy task. Besides the usual competitors, now there are non-traditional players such as Neo-banks, FinTechs, Paypal, even Amazon, Walmart, and 7-Eleven!

So if existing clients are the best source of new clients, and it’s now a challenge to keep even those, what is needed?

A reason to stay.

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Loyalty Is Key

Why? Because loyal customers stay. And they also take advantage of what you have to offer, but only if you ensure they know! Consider their options and promote the right services by learning from your data.

Tools to Compete Effectively

Small Swiss Army Knife Tool

Your account holders are not immune to the woos of emerging (and traditional) competition. Keeping them under your umbrella of services takes more than just a low introductory rate offer. It’s an ongoing mission. (And that low rate offer could use some thought, too.)

Imagine it like this: How would you go about attracting new customers? Do you know what their other options provide? What sets your institution’s services apart?

That’s the same thing you need to do for your existing ones. Sure, they’re with you now, for the services they have, but they must be continually convinced they are making the best choice for their wallet and time.

Why continuously? Because your competition doesn’t stop advertising just because you think a member is satisfied.

So how can your institution maintain retention? It’s not as difficult, nor as costly as you might think. Before diving into some ways to increase loyalty, let’s get an understanding of your account holders. We need to define who they are and how they view your institution.

Who are Your Account Holders?

Before you scroll down and wonder, “but there’s no heading for ‘how they view your institution’’”, rest assured. We’re going to address both of these points in the following sections. Because we’re all about efficiency. And service. Anndd…we’re rambling.

Ok, so, who are your account holders, and how does that affect their view of your institution?

In the banking universe, which includes mega-banks, community banks, and credit unions, there are two types of account holders:


Transactional and Relationship Account Holders Pie Chart

Transactional (4 out of 5)

These consumers are those who see their financial institution(s) as a service to be used only when necessary, without seeking additional benefits. They are likely to stay loyal as long as they receive the service as and when expected.

As I put it in one of my Credit Union Geek posts, to them, you’re a “Dumb Bank”. Think of it this way: They use you for transactions. They share no relationship feelings. I’m sorry, but we’re just friends. It’s not you. It’s me.

These account holders can be wooed by offers of higher savings or lower loan rates at another institution. According to an Accenture survey,  79% of consumers fall into this category.

Of course, they’ll only move (or add another service) if it’s easy to do so. Over a year ago, I opened an account with an online bank. The application, account selection, verification, and funding took about 5 minutes. And I just used Safari on my phone. Easy? Easy peasy.

On one hand, this is a risk to your institution and account holder loyalty. On the other, it’s a huge opportunity. Why can’t your institution be the one someone joins that simply? For people who just want the next cool shiny service, is your onboarding process suitable?

Relationship (1 out of 5)

Heart Tied to Rope

Do you have account holders who shout your name off rooftops, attend your educational workshops, and keep your cards top-of-wallet? You just found the relationship-level clients. These make up the 21% who look for and are open to extra benefits.

(Incredibly, the “80/20 rule” even applies here)

Utilizing more products and services than transactional consumers, these supporters (because, let’s be honest, they’re your biggest fans) tend to be more engaged, satisfied, and loyal to your institution.

So how does your financial institution secure more of these coveted relationship account holders?

Give ‘em a Great Experience

It starts with the experience. I’m sure you already follow best practices throughout all your customer-facing platforms, right? What might that look like?

A great experience means staff has current training to helpfully address any questions raised, while being empowered to say, “I don’t know, but I’ll get you someone who does.” It also means your digital solutions let users accomplish normal tasks with ease.

On any device. On their schedule.

It also might mean being where they are. Like at the local DMV. Yeah, the driver’s license place. Even during a pandemic, if you gotta go, you gotta go. (I speak from experience.)

Banking At Your DMV…and More

Wall of License Plates

Ok, sounds weird. But it works. Nutmeg State FCU entered into an agreement with the Connecticut Department of Motor Vehicles to have DMV outlets in their branches. Note on their site, you can choose to make an appointment right at their DMV locations!

It’s great for members who also need to tend to their licensing and registration, and it introduces the credit union to non-members. Needless to say, new members are signing up and existing members like the convenience!

Of course, the partnership does not need to be with your DMV. It could be a local coffee shop, haircut salon, or sandwich place, or whatever you feel works, as long as the experience cannot be duplicated in the digital world. Think outside the bank box. It’s the future of retail!

Swedish meatballs, anyone? Assembly is even included!

Sidenote: Yes, with COVID-19, the appeal of in-person services has shifted…a lot. However, so long as you can keep the experience safe, people are already going to these places. What can you offer that embraces the necessary distancing and face covering precautions?

At a minimum, if your team doesn’t have adorably engaging finance-focused masks, you’re missing opportunities. Of course, we’re based in Florida, so doing the outdoors part is easy in winter. Less so in August.

Use Your Data for the Mission

Computer with Analytics Charts

Who says the ratio of Relationship to Transactional account holders has to stay the same? If you can connect with people in delightfully unexpected ways, you can do more than fulfill a marketing goal. What kind of things does your data unlock?

Ok, that’s a loaded question. Your data is a key to incredible possibilities, but first you must have it organized, verified, and configured for insights. We’ve written about data management systems. This is your time.

Imagine if you could reach out to an account holder when their economic situation changes. Not in a creepy way, but to offer assistance, guidance, and resources. You know, your mission! Anne Legg of THRIVE shares some ideas how to make that happen.

The possibilities really are endless, and are only limited by the ingenuity of your team. And it’s not a new idea. Under my Credit Union Geek alter-ego, I wrote about this topic years ago. Then, enjoy my audio post on AI/Machine Learning.

Your data is a treasure trove of relationship-building, if you take advantage.

“Low-Hanging Fruit” Improvements

Apple Orchard

So, “ease of use.” Make the most of your data. Got it. Now what? Next, it’s the “easy stuff.”

The low-hanging fruit (i.e.: you don’t have to devote much time nor resources) ripens by providing:

  • Best-in-class products and services
  • Consistent and clear communications (yes, that means marketing)
    • Connect with both your relationship and transactional groups (as the majority, success with the latter can reap massive rewards)
  • Delight your relationship members and help them use more of your programs
    • Relationship Rewards: You know the concept of a comprehensive Rewards program. It can be based on activity (Direct deposit, debit card usage) or minimum savings balance, and of course, having a current loan. The key here is to keep it as simple as possible.
    • Brainstorm ways to offer “introductory” rewards to people just building their relationship to incentivize them towards your higher benefits.
  • Work to convert your transactional base into relationship supporters. ie. Show them why they want to love you!

While we just covered a number of strategies to increase loyalty within your financial institution, consider those the freebies. From here, your best “next step” is to review our article, 6 Easy Ways to Increase Loyalty at Your Credit Union or Bank!

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Joe Winn - CU Geek

Blogger. Speaker. Part-time Jedi.

Focused on helping your bank or credit union grow in the face of emerging challenges.