Amidst the challenges facing U.S. financial institutions (FIs) following the collapse of two major banks, FIs have been compelled to demonstrate their reliability to retain customers. But trust alone isn’t enough. Banks that want to stand apart from their competition must persistently seek methods to stay pertinent in the lives of their customers. Irrespective of income level, a prevalent theme among consumers is the desire to maximize the value of their money, especially in today’s uncertain economic environment. Customer engagement and rewards programs are proven business investments, which can help banks thrive, even as consumers pull back on their spending.
There is compelling evidence that showcases the benefits of customer loyalty.
Studies reveal that loyal customers are 50% more inclined to explore new products and tend to spend an average of 31% more compared to new customers. Financial institutions, too, can stay top of mind and build brand loyalty with the right customer engagement tactics in place.
Consider these compelling reasons why today’s financial institutions should prioritize a customer engagement program to remain relevant.
1. Differentiate yourself from the competition
In an environment where disposable incomes are increasingly constrained, the competition for a limited share of consumer spending becomes more intense. As people tend to use their cards less frequently, financial institutions face the challenge of encouraging ongoing engagement with their customers. Even though individuals may be reducing their purchases, it is crucial for banks to ensure that their cards remain at the forefront of customers’ wallets and are utilized for transactions when they do decide to make a purchase. How can banks achieve this goal of sustained customer engagement in such circumstances?
Customer engagement programs go beyond merely acquiring new customers for banks. These programs can continuously encourage customers to choose their card for their spending by providing rewards, cashback, and other enticing offers with each purchase. When these programs feature rewards from a wide network of retailers and travel companies, it becomes possible to offer customers deals from their favorite brands. This not only influences customers to select one card over another, but also leaves them grateful for the exceptional service they receive from their bank. Moreover, during times when finances are tight, these programs offer customers the opportunity to earn rewards or receive cashback, thereby accessing savings on things they may have been purchasing anyway. And offering cashback pays off – with cardholders saying they prefer to use their go-to bank card because of the cashback features.
2. Build buying power with timely offers
Amidst strained economic conditions, presenting customers with timely offers can significantly influence their purchase decisions. This becomes particularly crucial when customers are undecided or contemplating a purchase due to perceived high costs. In fact, a significant majority (85%) of consumers indicate that they tend to spend more with a brand if it allows them to maximize the benefits of their loyalty program. This inclination is likely to be even stronger when customers need to make more prudent choices in the months ahead.
By participating in engagement programs, customers can accumulate loyalty points, miles, and cashback whenever they make purchases with partner merchants. A strategically timed message containing personalized offers or rewards, particularly those tailored to the brands and services that align with consumers’ interests, can significantly influence their decision to make a purchase. This becomes especially crucial when customers are feeling the financial strain. In such cases, the inclusion of a bonus reward can be the determining factor that motivates them to proceed with the purchase.
3. Become a relevant brand in consumers’ everyday lives
One of the notable advantages of a customer engagement program is its ability to maintain customer engagement with your financial institution. In addition to providing offers, these programs serve as a means for banks to stay connected with customers even during periods when they are not actively making purchases. These interactions play a crucial role in fostering a positive relationship and ensuring that your card remains at the forefront of customers’ minds when they do decide to start spending again.
As banks compete for a smaller portion of consumers’ wallets, it is crucial to have differentiating factors that set one financial institution apart from another. A customer engagement program can demonstrate your understanding and willingness to assist your customers, which has been proven to cultivate stronger customer loyalty and repeat business. By demonstrating a genuine desire to help customers maximize their financial resources, banks can establish themselves as trusted partners in their customers’ financial journey.
An effective customer engagement program encompasses multiple components like payments, card-linked offers, affiliate marketing, and expertise in earning and redemption. A robust engagement program can serve as a powerful motivator to drive customer spending, even in times of uncertainty. For instance, travel loyalty programs successfully adapted during the pandemic by offering relevant offers tied to customers’ cards, even when travel was not possible. This same model can be applied by financial institutions to ensure they remain at the forefront of customers’ minds. By providing compelling and tailored offers, banks can maintain customer engagement and encourage continued spending, fostering a strong and enduring relationship that extends beyond everyday money management.
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- Source: https://www.finextra.com/blogposting/24626/building-brand-loyalty-3-reasons-customer-engagement-programs-are-vital-for-financial-institutions?utm_medium=rssfinextra&utm_source=finextrablogs
