For Banks, Excellence in Digital Sales is not As Far As You Think14 min read
Banking is one of the areas where innovation, disruption, and customer experience have been at the forefront. The changing nature of customer demands and competition coming from the fintechs are the two important forces which are shaping the banking industry today.
First of all, fintechs are challenging the incumbent players. They have agile organizational structures; they can adapt to the changes much easier and are fast at creating new innovative products. Therefore, they are heating the competition in the industry.
Secondly, customer demands have evolved to a great extent thanks to Amazon, Uber, and others. Customers’ mobile banking adoption rates are on the rise, and they also demand personalised services and offers that meet their financial needs. They also want to be able to conduct their financial transactions without effort and any kind of disappointment.
Under these circumstances, banks are putting a lot of effort into developing digital banking products; however, translating customers’ digital adoption rates into sales and revenue is another story. The banking sector needs to be able to take a new approach or revise its modus operandi from the lens of digital sales.
WALKING IN YOUR CUSTOMERS’ SHOES
Banks’ owned channels are a highly effective medium for elevating digital sales due to the high adoption rates of digital channels among their customers. Yet gone are the days of bulk marketing campaigns which had the same value proposition for all customers!
Leveraging your digital channels in a smart and well-thought manner is critical for successfully generating revenues: Presenting irrelevant offers to your customers on a frequent basis creates a poor user experience and would often result customers revoking marketing and communication permissions. As a result, your assets for further sales will start diminishing.
So how do you know “the right level” or define the “sweet spot”? The answer is by walking in your customers’ shoes.
In this article, we will share DefineX’s Digital Revenue Services framework and evaluate how banks can leverage owned channel offers to increase digital sales without sacrificing from user experience.
START WITH YOUR METHODOLOGY
At DefineX, when we analyse the current state of our clients, who are prominent banks that want to maximize revenues through their digital channels, we approach from four main angles.
Smart Offering: Assess if your company is presenting offers to the right customers with the right content through the right channel at the right time. This might sound like a no-brainer but making it work requires lots of capabilities in your marketing stack both in terms of technology and business. In most cases, data is not there or not integrated to an automated decision making. Decision-makers are typically humans, and they clearly fall short of capacity in generating the required number of tests to optimize the offers at hand. An automated test-and-learn cycle is either limited or not present. Learnings are not cross-leveraged across different channels, content, segments, and products/services.
Let me give you a real-life example to visualize the situation in your mind. Running A/B tests for micro segment based offers is a complete headache for companies which don’t have a testing automation system, because you need to run many different sub-campaigns simultaneously and compare their performances.
Sales UX: Evaluate whether users can conduct transactions on digital channels without any friction or disappointment. For instance, we focus on eliminating unnecessary data inputs in mobile banking product application processes to minimize cognitive load to maximaze usability. Again, easier said than done since many journeys in your digital channels are developed in multiple rounds and often overlaid on top of each other with many concessions done due to the time pressure of going live, the urge to avoid technical complexities, and the tendency to stay in comfort zone due to regulations.
Digital Marketing: Analyse whether your company acquires new customers and sells its products by effective and efficient use of digital marketing channels. Applying archaic processes and metrics such as focusing on brand awareness instead of conversion that are originally designed for brand marketing for sales in digital channels is the most common trap in this domain. This approach misses the speed and variety required for successful Digital Sales and consistently yields lower RoI.
Organized to Perform Best: Assess whether your organizational structure has agile decision-making and execution capabilities. Most large companies operate under a functional organizational model like sales, marketing, finance, technology. This structure perform miserably against the speed and variety requirements of today’s fast-moving digital sales realm. The number of test-learn-evolve cycles you need to iterate in a day is far beyond the capabilities of organizations based on organizational silos. Because capabilities required to deliver successful digital sales in an orchestrated effort are placed in different and tightly sealed silos.
SMART OFFERING FOR GROWTH HACKING
In the section, we will focus on the Smart Offering domain which is one of the main pillars of our Digital Revenue Services framework that enables you to increase digital sales by utilizing owned-channel offers.
With this approach, we achieved outstanding results in our projects such as increasing the number of general personal sales (GPL) 21 times in an offering area of our client’s mobile banking app which led to a 65% increase in the number of mobile banking monthly GPL sales with other improvements.
We will give you a brief explanation of how we vet technical capabilities, analyse customer data, and run execution sprints to test growth hypotheses in the Smart Offering workstream of Digital Revenue Services projects to achieve such results.
Define Your Playground
Capabilities of the existing marketing technology stack such as the capability of processing real-time transaction data to present instant offers define the boundaries of how smart your offerings will be in the short term. Hence, understanding the technical capabilities should be your first task in optimising the effectiveness of the offers. The key points that you should analyse are;
- Data variety for real-time trigger-based offers and rule-based targeting offers
- System integration among different campaign systems
- Descriptive and predictive (Next Best Action) analytics capabilities
- Segmentation and offer content personalization capabilities
- Marketing and A/B testing automation maturity level
After analysing the marketing technology capabilities and data available, we define what kind of offers we can present and through which campaign system.
Know Your Customer
Data analysis is vital for understanding your customers’ needs and defining improvement areas in your offers. Therefore, it should be your second task. The more the data-driven approach is embraced, the more your offers will become customer-oriented. We categorise data analysis in our projects under two main titles; analysis of customers and analysis of ongoing offers. In customer analysis, we aim to address the following main questions;
- Who is our target audience?
- What are their similar traits and needs?
- Why do they use our services?
- Which channels do they use to conduct financial and non-financial transactions?
- When are they closer to buying products?
By analysing current offers, we aim to understand whether our client presents offers to the right customers with the right content through the right channel at the right time. We apply a top-down approach first, in which we analyse overall metrics on product-channel-offering basis to learn how many customers are contacted through which channel and at what frequency. After analysing conversion rates on product-channel-offering basis, then we segment customers by demographic and behavioral patterns to analyse the performance of the offers for each micro-segment and define which offers work best for each micro-segment. With this approach, we determine the as-is state of the offers and define potential opportunities to be tested further.
Now, we are ready to run growth hypotheses.
Enjoy Test & Learn Cycle
After analysing the data and understanding the technical capabilities of marketing technology stack, the next step is running the test-and-learn cycle. The outcome of the analysis phase in our projects is to identify short and long-term growth opportunities. In smart offering sprints, we run growth hypothesis tests to validate opportunities and convert successful hypothesis tests into ‘always-on’ offers.
The growth hypotheses are classified under two categories;
- Growth hypotheses that you can convert into always-on offers with your existing marketing technology capabilities if the hypothesis test is successful.
- Growth hypotheses where you can test new capabilities for your marketing technology stack and assess whether they are worth investing in technology.
While defining growth hypotheses, here are some recommendations that you can take into consideration;
Quick wins show that gaining incremental value through new offers is possible and help to build momentum. Don’t roll up your sleeves to change the whole system on day one, instead, earn credibility from stakeholders through quick wins even if they are tiny improvements. In one of our DRS projects, we increased the conversion rate of the credit card offers by 120% just by changing the offer channel. So, you can discover plenty of opportunities by analysing data without making huge investments.
Rather than targeting your customers with bulk marketing campaigns, you should focus on creating campaigns triggered by your customers’ actions. By following the footprints of the customers, we achieved up to 5x conversion rates in offers that are triggered by customers’ financial actions compared to bulk offers.
Design digital channels and product onboarding programs. With these, you can present offers that are relevant to your customers’ bank and financial lifecycle. By creating onboarding programs, you will not only train your customers about your products and services but also create opportunities for cross and upsells.
Retaining your customers and the products they use is as important as selling new products, so you should consider your customers' bank lifecycle when designing your campaigns.
In brief, your ultimate goal in managing owned channel offers should be presenting offers to the right customers with the right content through the right channel at the right time. In order to achieve the ultimate goal, you should analyse data continuously and iterate an objective-based test& learn cycle.
We tried to shed light on how we elevate digital sales through owned channel offers by giving a glimpse of our methodology and critical success factors.