Karen Wheeler, Vice President and Country Manager UK, at Affinion
Each year, thousands of young people begin university courses for the first time in the UK, starting a new stage of their lives and for some, opening bank accounts for the first time.
With the potential to attract a customer for life – and offer them mortgages, credit cards and loans later on – incentives to attract the student population have long been a part of retail banks’ strategy. Rail cards, coach cards and Amazon Prime subscriptions are often dangled as carrots to lure them in. These offers relate directly to students’ needs and encourage them to sign up for their first accounts, but how do you engage them longer term and ensure they remain a valuable customer for life?
Showing a common understanding
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The most common reason people connect with a brand, a Customer Thermometer study found, is because it shows them that it cares, a factor heightened for students. These consumers tend to be financially stretched and may feel more vulnerable, living away from home and making their very first important financial decisions. If a student feels that their bank appreciates the pressures they are under and is willing to help, rather than seem cold and difficult to contact, they will be more likely to feel an affinity with their bank.
Our ‘Connected Customer’ research report found that a strong and long-lasting customer relationship occurs when companies become a meaningful part of a customer’s everyday life. By making the customer’s life simpler and delivering what they promised, banks increase the likelihood of building a positive image in their minds. If students believe that a company will help them if things go wrong, they are likely to move along the engagement journey from interest to loyalty. If banks display genuine empathy and understanding towards students’ situation, they will go a long way to win a customer for life.
Due to their situation, students are often extremely financially savvy, and seek out discounts, rewards or any added value experiences and companies can quickly gain a reputation for offering deals amongst the student community. Our research found a direct correlation between additional offerings, such as overdrafts, loans and insurance, and the index score, demonstrating that product range boosts engagement. When students first open a current account, banks should be looking to offer something else that will enhance their life.
If traditional high street banks do not make students a priority, challenger banks will soon take advantage as they can continue to drive change in the industry and provide smart alternatives. This naturally appeals to the student community, who are looking for value and challengers raising standards across the board won’t have gone unnoticed, despite currently lacking market share.
With this growing customer segment in mind, banks are beginning to understand the need to build a reputation for being innovative, digital and flexible. For example,Bank of America has recently committed $500 million to technology investment, with the aim of driving innovation and sales over the next 18 months. Leading the way for innovative engagement in the UK is Monzo which recently responded to a Ticketmaster data breach by automatically replacing all cards for any customers who had accounts with the ticketing business, demonstrating digital know how and customer empathy in one act.
High street banks must keep innovating – students don’t want to bank with businesses that appear outdated or old-fashioned, they want a slick, digital customer experience and prefer physical branches to be relaxed environments. Banks have begun to respond in kind by styling key student locations accordingly, Virgin Money, for example has invested in lounges for its customers. The hotel lobby-style areas do not offer banking services, but give customers areas to watch TV, read free newspapers and magazines, and even play grand pianos. Virgin saw an increase in brand loyalty and a 200 per cent increase in sales in stores located near their lounges.
The personal touch
Banks can also access rich customer data from multiple touch points, that can be used to target students with hyper-relevant and genuinely engaging messages at opportune moments that increase their relevance.
In the mobile phone industry, O2 is a good example, offering its customers targeted and exclusive offers to sporting/music events, restaurants and other lifestyle experiences through its Priority and Reward programmes. It’s accompanying social media campaign, #FollowTheRabbit, has resulted in O2’s making customers social media ambassadors while they share the hashtag across their own channels. Students tend to be very active on social media, showing how this could be particularly effective among this segment.
Banks will benefit in the long-term if they can attract student customers and get their customer experience right. To gain an advocate for life, brands must show they genuinely understand the challenges and issues relevant to students and that they can provide a meaningful and personalised solution. This approach can help banks to succeed in the student market and build customer relationships which are engaged, long-lasting and worthwhile.