For more than a decade now, consumers have expected to be able to bank any time, anywhere. Yet two recent studies reveal that many financial institutions still fail to fully leverage the online channel to sell and cross-sell products.
While large banks have dramatically improved the usability of their Web sites in the past 12 months to 18 months, small to midsize banks have not achieved a high level of usability, which is critical to customer retention, according to Chicago-based Vox's Fourth Quarter 2007 Banking Mind Model Study. Vox reports that 91 percent of online customers who had a bad experience on a self-service Web site will not return.
The ability to accomplish tasks online quickly and easily is key to relationship building, says Bill Cusick, CEO of Vox. "If you get someone to sign up for online banking, the retention shoots up," he asserts. "If retention shoots up, cross-sale opportunities expand. But all you need is one little glitch and you can destroy the relationship before it even starts."
Beyond usability, Cusick adds, banks need to do a better job of targeting offers. Even some of the large financial institutions are guilty of throwing offers in front of the masses with the hope that someone will take advantage of them. To improve results, however, banks should leverage analytics technologies to identify profitable customers, understand their behavior and needs, and promote targeted product offers that provide "relevant value," Vox says.
Banks also need to develop better approaches to interacting with customers via e-mail, text messaging and mobile banking, Vox adds. This will be the key to winning technology-savvy Generation Y customers and retaining them, according to the research.
A report published in November 2007 by New York-based Corporate Insight also indicates that banks can do a better job of cross-selling on their Web sites. The Corporate Insight study found that while most banks do a good job of promoting products on their public sites, they do not take advantage of cross-selling opportunities on their private, customer sites. Fifty-three percent of the 15 financial firms' private Web sites reviewed by Corporate Insight displayed general graphic ads for banking products, but few provided details about the offerings. Only Bank of America (Charlotte, N.C.) and Citi (New York) had pages dedicated to special offers targeted at existing customers on their private sites, according to Corporate Insight
A Captive Audience
"Part of the reason we think cross-selling on the private site is so important is because it's a captive audience," explains Doug Miller, senior analyst for banking and cards at Corporate Insight. "You've already got your client, and you can advertise to them in an environment where there's no other ads for them to look at. You're just trying to expand your relationship with them."
Among the best practices that Corporate Insight recommends to improve the cross-selling potential of banks' Web sites is to promote a separate "special offers page" on the private site providing product details and a link to an online application. Also, banks should provide links that allow customers to navigate between the public and private sites without being logged off. "There's a lot of low-hanging fruit for the designs they already have," says Miller.
Bruce Graham, executive director of Landmark Technology Partners (Braintree, Mass.), points out banks need to do a better job of aggregating retail and investment accounts to identify cross-selling opportunities. But, he contends, third-party solutions, such as Landmark's BankBroker product, can help banks pull together customer information.