By Nick Barnes from JRNI 

The experience economy is here, and that means that, as McKinsey & Company puts it, consumers don’t want to just buy products and services anymore. They want to buy into an experience – and they expect that kind of experience to be delivered to them by their banks and building societies.

Experiential relationship management – or XRM – is the process of managing the personalized experiences delivered to customers.  For banks and financial institutions, an XRM strategy can help deliver the experiences customers not only want but expect. The types of experiences that turn a customer into a loyal customer. And doing it right means that banks need to provide unique experiences, offer human-to-human connections, build personalized relationships, and do it all at scale.

But what does that actually mean for financial institutions and how can they step up their XRM strategy?  Here are three ways banks and other financial institutions can level up their customer engagement strategy to build customer loyalty and drive customer lifetime value (CLV).

1. Using data to drive decision making

If financial institutions are not using customer data to build stronger relationships and increase retention, then it’s going to cost them. In fact, banks spend approximately $200 to acquire a new customer, yet their average customer generates $150 in revenue annually. When profitability is tied to CLV, the importance of using data to improve customer satisfaction and loyalty cannot be understated. Using analytics allows financial institutions to develop insights on customer segments and behaviours to more precisely target and tailor products for customers. Studies show this can lead to an increase in sales productivity as much as 40%.

Additionally, financial institutions need to leverage analytics data to provide better experiences for consumers. Utilizing data to better understand and serve customers will ensure they’re providing not only a great customer experience, but a memorable one.  Banks and other financial institutions should analyse their customer engagement strategy to truly understand the value of the experiences they provide and to better prepare their teams in the future. Some important metrics to consider tracking:

• What services and appointment types are most popular?
• Are locations properly staffed to accommodate busy times?
• Are locations properly staffed with the expertise needed?
• What are the lead and wait times?
• What is the cancelation rate?
• What is the no-show rate?

Leaning on the power of customer journey data is a vital way to keep track of success and a guaranteed way to level up a bank’s experiential relationship management strategy.

2. Meeting customers on their terms

While there have been a lot of changes in customer behaviour during the pandemic, the one thing that remains constant is that customers want to do business with banks on their own terms. Omnichannel banking means meeting customers where they are.

While the pandemic escalated the need to provide digital and remote financial services such as video banking, several studies have shown that most consumers prefer having in-person interactions with experts when receiving financial advice. Being able to meet the demands of the new hybrid consumer means being able to provide services across all channels, allowing them to do business via website, mobile app, in-branch, or remotely.

What it comes down to is being able to meet customers’ needs. As a financial institution, you have to make sure you are available to them – and for them. And in today’s world, banks need to be available anytime, anywhere via any device, regardless of transaction, to make customers feel heard and secure.

3. Personalization is key

From a streaming app’s home screen of TV show recommendations to a retailer recommending products based on previous purchases, personalization is everywhere. Consumers are becoming even more accustomed to this personalization, especially given their increased screen time during the pandemic.  They expect content and offers that appeal to them personally, based on both their past interactions as well as anticipated future actions.

Data is the key to transform customer engagements into personalized, memorable experiences. Just as many retailers use customer data to tailor fashion styles and make customized product suggestions, financial institutions too can make customized product recommendations based on customer history and previous conversations. There is so much value that can be derived from diving into your data and using it to arm your staff and business with the knowledge to personalize at scale.

To make experiences memorable, banks need to personalize their services in a way that customers will remember. Knowing their needs and how to help them is crucial. Your customers should feel like they are truly benefiting from you – that their bank or building society understands their financial needs and is recommending the right products. Consumers both want to be heard and know they are cared for. They want to know they can depend on their bank with something as sensitive and personal to them as their finances.

The statistics don’t lie – customers crave personalization. Ernst & Young reports that 40% of customers say they would be more likely to stay with their financial services provider if it offered more personalized service. Additionally, the services firm states that “for every $100 billion in assets that a bank has, it can achieve as much as $300 million in revenue growth by personalizing its customer interactions. There is no question that personalization is key to a financial institution’s strategy and success.

While personalization is key to strategy… the key to personalized experiences is being able to provide it at scale. That’s why using software to help manage and schedule your customer engagements, be it an in-person appointment or a video call to discuss loan options, can serve all of your customers in a personalized way at scale.

Leveraging data and tools to increase revenue, build stronger customer relationships, and improve customer loyalty is essential. If banks aren’t already using the power of their data, providing omnichannel service options, and prioritizing personalization, then it’s time to start. The experience economy is here – and the financial institutions that are going to thrive are already implementing an XRM strategy.