How often are you pestered by telemarketing callers trying to sell you credit cards or personal loans? When you visit the bank, how often do tellers offer you insurance or mutual funds that you don't need? If you view such encounters as a nuisance, we feel you.
These often misguided cross-selling practices are rampant. According to the Financial Consumer Protection report by the Bank of Thailand, 30% of customers with complaints about cross-selling report that banks failed to offer the right financial products to them.
Cross-selling is not the problem per se. The real problem is that banks do not offer customers the right products at the right time and through the right channels. This stems from the traditional bank-centred model of target-driven strategies, and a failure to put customers first, based on a proper understanding of their needs and "pain points" in the customer experience.
Failure to understand customers can potentially result in mis-selling and even fraud. Recently, the US bank Wells Fargo made headlines for allegedly creating 2 million accounts without customers' permission as part of an aggressive cross-selling culture.
Against this backdrop, many banks are now trying harder to understand customers, deliver the value propositions that best suit their interests, and improve the overall customer experience. This can be achieved by applying data analytics to customers' decisions and behaviour throughout the "customer journey". Essentially, this refers to the end-to-end process from the time they become aware of a product, up until they use and recommend it to others. The journey consists of five stages:
Discover: Every journey begins with discovery. Customers start to discover the brand or they have been dormant but need a trigger to become active. Content analytics can be used to identify customers with targeted profiles in specific segments based on online traffic and viewing behaviour. The means to enhance public recognition go beyond regular channels such as TV commercials and social media ads. For example, geolocation technology and event-based marketing can help customers discover a product on their mobile phones as they walk past a billboard or "check in" to a location.
Explore: The decision process before making a purchase -- the "zero moment of truth" as Google puts it -- is also critical. The rise of smartphones and social networks has induced customers to search for more information and make comparisons online. Search engine optimisation (SEO) plays a major role here.
For instance, around the end of the year, keyword searches in Thailand for LTF and RMF, as captured by Google Trends, always spike, pointing to a jump in demand for tax-deduction financial products. Given this, banks can allocate budgets to SEO to create the right campaigns to fulfil the highest demand.
Buy: At the heart of being customer-centric, banks should offer the right products even before customers ask for them. Banks can create a model to predict customer characteristics that represent a greater "propensity to buy" for specific products. Big data technology can open up more opportunities. By working with travel agencies and websites, for example, banks can automatically offer money-exchange services through customers' mobiles. Or, if customers are in airports, they can be offered foreign credit card usage and temporary limit increases.
Use: As customers use a product, comments and feedback gathered from either customer service or social media websites can be used to bridge the gap between current product features and customer experiences. Banks can improve product design to better cater to customer interests. Additionally, all relevant data can be used as an input for behavioural models to understand how to increase utilisation and reduce attrition.
Advocate: Customers stay engaged with the product, continue to use it, and eventually recommend it to their peers. Again, geolocation-based analytics can play a role. A service that integrates a bank's mobile application, credit card usage and social network data will allow customers to search for nearby merchants on a map and their corresponding promotions. They could also share these services, locations and deals with their friends instantaneously with just a click. This becomes a much easier way to promote banks' financial solutions through digital channels.
Of course, integrity and disciplinary codes of conduct are a top priority here when it comes to using customers' data. Customer permission, proper disclosure and confidentiality should be strictly adhered to. Only then can customer experiences be improved to their utmost potential.
In summary, various use cases show how customer journey analytics help to provide insight into people's lives. Banks can then offer financial products more in line with the customer's interest, activities, location and time. This not only enhances customer satisfaction, but also optimises the bank's resource allocation based on customer activities.
Ultimately, the standard of the industry will be elevated to 5 Rights: the Right product to the Right customer, with the Right message, on the Right channel, and at the Right time.
TMB Analytics is the economic analysis unit of TMB Bank. Behind the Numbers is co-authored by Panawat Innurak and Naris Sathapholdeja. They can be reached at tmbanalytics@tmbbank.com
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