More engaged customers offer greater customer lifetime value (CLV) than those less engaged, suggesting marketers have work to do in order to get their customers using the bank’s services much more regularly.
The spectrum is a wide one and new-to-bank customers don’t turn an annual profit until year two and lifetime profit remains negative until year four. For digitally originated customers, the break even point goes beyond year five.
Traditionally, primary checking customers are considered to bring stickier deposits and are less rate sensitive so targeting primacy in the early days of the relationship is critical. According to the Curinos Annual Shopper Survey, around a third of consumers who have established primacy with a financial institution will seek advice and other products from the same bank, extending their customer lifetime value. Primacy provides eight times higher fee revenues, ten times more average deposits, and higher operating deposits – reserve deposits mix, compared to non-primary customers.
Our research also shows that if primacy isn’t attained within the first 90 days the chances of it happening will quickly dwindle to nothing after that. We’ve also observed that since 2015, marketing and branding have become increasingly important factors for consumers looking for new banks. Marketers should therefore learn from what helped make the acquisition in the first place to inform targeted messaging and onboarding strategy over those first three months.
Of course banks are facing hurdles at these early stages: average cost per acquisition (CPA) has increased over the past three years, and even on successfully acquiring a new customer marketers must work especially hard with digital banking providing consumers with instant access to multiple options in an increasingly competitive device wallet interface.
The value of account quality will always vary across each bank’s footprint but recently we’ve seen that digitally opened accounts contain lower balances, lower rates of funding, and lower customer retention. Marketing must fill the funnel with acquisitions and strategize how to feed regularly engaged customers through the 90-day window and beyond, and from there look to further deepen the relationship.
This is an abridged article from our Marketing Analyzer Insights series. To request access to the supporting statistics please email firstname.lastname@example.org