Building a Best-In-Class Retail Banking Onboarding Process - Loyalty Through Engagement

Building a Best-in-Class Retail Banking Onboarding Process Loyalty Through Engagement

AuthorJim Marous

EditorBrittany [email protected]

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With reduced fee income, increased costs and a sluggish economy, the need to retain and maximize the lifetime value of new custom-ers has never been greater. New customer onboarding continues to be one of the most effective data strategies for banks and credit unions wanting to improve engagement, share of wallet, retention and ultimately the value of a relationship.

According to the 2014 State of Marketing in Retail Banking study, 59.6% of nancial institutions surveyed said that onboarding programs will be a more important strategy in the coming year. This should not be a surprise in an environment where it is harder than ever to acquire new customers and where the payo on the cost of acquisition is more important than ever.

A new customer onboarding process is really nothing more than a tradi-tional CRM process implemented at the beginning of a customers relation-ship with your organization. The dierence is that, unlike a typical cross-sell program, there is normally less internal insight available on the new customer (especially behavioral and purchase data) and the focus is more on engagement than selling new services.

Despite the lack of structured, internal data, the eectiveness of an onboarding process is correlated with the degree of personalization of communication that can be achieved. By communicating with the customer early and often after they open their account using various media that leverages insight collected at new account opening and thereafter, you are more likely to foster a positive customer experience, dierentiating your institution and building long lasting loyalty.

A successful onboarding program is not easy. It requires a strategy that shows the customer you know them; that you will look out for their individ-ual needs; and that you will ultimately reward them for their business. This requires a focused eort on the collection of insight and the leveraging of insight to meet these objectives.

Unlike many traditional cross-sell programs, onboarding is an ongoing process. It is the communications gateway to what will hopefully become a long-term relationship with additional communication moving the customer from the engagement stage to the relationship and loyalty stages of the customer lifecycle.

As powerful as a good onboarding strategy can be, it can also destroy trust if not done correctly. Your mission is to ensure that insight is collected wherever and whenever possible, enabling personalized communications that will build upon each other, being relevant and reinforcing the decision the customer made to open a new account at your institution.


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Customer Analytics in Financial ServicesConference & Networking EventNew York, 15-16 September 2014

A Meeting to Guide your NewCustomer Analytics Strategies andCapabilities within your Organization.


Onboarding is rst way of illustrating the type of customer experience that can be expected at your organization. Done wrong, and trust is broken, and in many cases, attrition occurs.

The First 90 Days

The banking industry usually denes the onboarding process as the initial 90 days of the new accountholders relationship. While the communication and ability to personalize the messages dier, onboarding should be done for both brand new customers as well as existing customers who open a new account.

The reason why this period is so import-ant is because numerous research studies have found that the ability to grow a new relationship (or lose the customer) is highly weighted to the front end of a relationship. The customer is more open to hearing how to maximize their relationship with their nancial institution during this period, and therefore is more open to oers.

BAI research found that: 1) 24% of total cross-sales occur during the initial account opening; 2) 28% of total cross-sales occur within the rst 30 days; and 3) 75% of cross-selling occurs in the rst 90 days. Conversely, many organizations experience attrition rates of 25%, 30% and as high as 40% with these new-to-the-bank customers in the rst year.

When new customer acquisition costs of $150 - $250 are combined with the lost average lifetime value of a new customer of $100 - $250, the negative impact of every lost customer is at least $400.

Eective onboarding helps stem attrition by enabling early, meaningful dialogue with new customers. The key to success is to gather as much insight as possible early in the relationship, since the opportunity for 1:1 engage-ment many times ends immediately after the customer opens their account.

So how do data collection, analysis and application t into an onboarding process?

New Customer Targeting Strategy

Successful new customer onboarding begins before the new customer walks in the branch or opens their account digitally. It begins with acquir-ing the right customer. The right customer diers from organization to

$400Negative impact

of a new customer who attrites.


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organization based on the product portfolio, the competition, market conditions and your brand positioning.

Separate from your onboarding strategy, it is imperative to develop an acquisition strategy that optimizes the cost of acquisition and level of attrition. For instance, while your organization may be eective at acquiring the transitional Gen Y customer, these customers may also have the highest level of attrition, netting a high incremental cost of acquisition.

Using internal and external data, building optimized acquisition models, can provide the strongest foundation for an eective onboarding process. Going beyond using just demographics, leading nancial organizations are leveraging more digital, behavioral and social insight than ever to nd the most responsive and loyal prospect.

Insight Collection

As mentioned, it is possible that the new account opening process may be the only time your team ever meets the new customer face-to-face. As online and mobile account opening processes have become more customer friendly, there may not be a 1:1 human engagement at all.

Whether in-person or through digital channels, the time of new account opening is the best time to collect insights beyond the basics. For instance, research has shown that collecting the following basic information can be highly valuable later in the onboarding process:

What is the customers primary nancial goal (cash flow needs, savings, debt reduction, major event/purchase)?

Who is the primary manager of the new relationship?

What channel(s) does the new customer prefer for future communications?

What types of accounts are held elsewhere?

Some organizations have utilized short needs analysis surveys or additional account opening questions to provide insight for future communications. The risk of trying to collect too much insight is that trust can be broken if the customer believes the insight collected was not used for their benet.

Another strategy that is proving eective for some organizations is the use of iPads to allow customers to complete their own new account form. The rationale is that, while new accounts personnel are notoriously poor at collecting personal insight, most customers psychologically want to make sure all of their questions are answered.


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Asking relevant needs-based questions as part of the new account opening process improves satisfaction, serves as a dierentiator compared to other organizations, and has the potential to build customer intimacy.

Increased Data Collection Higher Customer Intimacy

Early Communication

As the saying goes, You dont get a second chance to make a good rst impression. This is especially true with an onboarding program whether the new account opener is new to the bank or simply opening a new account to expand their current relationship.

The objective of onboarding is to get out of the starting blocks as quickly as possible so the customer realizes you appreciate their business. The good news is that you have several options available for how to say thanks immediately. The challenge is to make the communication as relevant as possible.

While a great deal of insight can be collected as part of the new account opening process, it may be difficult to leverage this insight in the rst few days after account opening due to back office processes. The key is to balance what data can be used, with the importance of reaching the new customer as soon as possible.


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Impact of Early Communication on Sales and Satisfaction

Some institutions may simply have access to name, address and type of account opened initially. If this is the case, the potential to use a person-alized note handwritten and sent to the customer the same day they opened the account may be the only option.

If your systems enable you to use insights such as cell phone number or email address immediately, the impact of sending a simple text or email a few minutes after the new customer leaves the office to thank them for their business is very impactful.

Some institutions have been able to personalize these communications to highlight the person who assisted the customer, but this is not necessary. Others have included a coupon from a local merchant as a great surprise and delight.

The benet of an email is both speed and the ability to provide an embed-ded link to a personalized new customer introduction microsite or even a personalized welcome video (built for mobile consumption). This is where the use of account type data and even opening balance can be eective.

The objective of this immediate communication is to thank the customer as quickly as possible leveraging a personalized message that will highlight the customers name, the type of account opened and what the customer may expect next. Imagine this as the combination of account opening receipt combined with personalized thank you.


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Frequent Communication

One of the biggest misconceptions by nancial institutions is that new customers dont want to get a sequence of messages after opening a new account. According to J.D. Power & Associates, customer satisfaction and cross-sell success both improve as the number of contacts are increased up to 4 times, and is still eective if the customer is communicated with as many as seven times during the rst 90 days.

What most banks and credit unions forget is that not every communication intended to be sent to the new customer will be read or even delivered, even if the organization has done their best to make the communication both personalized and relevant. Therefore, the optimal number of messages should probably be even higher than the J.D. Power study suggests.

Impact of Multiple Communications on Sales and Satisfaction

These early communications cant be standardized however. After the earli-est messages during the rst few days, the application of customer-level insight becomes even more important. In addition, the communication path each customer takes will dier reflecting the actions they have taken during the onboarding period.

Much like a dating process, starting with a simple thank you and proceed-ing in a non-aggressive manner to stages that encourage a deepening of the relationship, the communication must get smarter over time.

As opposed to moving too fast to cross-selling, the majority of early communication should focus on logical go with services, such as direct deposit, bill pay, alert notications, online and mobile banking, mobile deposit capture and actual usage of the account. Once trust is established


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with highly personalized communication, the relationship can be expanded using knowledge received.

During the sequence of communications, incentives can be provided to encourage engagement. These incentives should be easy to receive and can even support other programs at the bank such as a points program. The key is to leverage real-time insight to deliver the right message, at the right time using the best communication channel(s).

Wells Fargo Multichannel Early Onboarding Process

Source: Comperemedia

Multichannel Communication

An eective onboarding program does not need to be expensive. This is because many of the touches can be done with channels that are not expensive and may even be free.

Leveraging multiple channels (1:1, direct mail, email, phone, SMS, online, mobile banking, digital, video, ATM, social) allows you to appeal to a customers channel preferences while delivering a highly personalized message that will positively impact results. Many organizations achieve lift in results of 30 percent to 50 percent when combining multiple channels to reinforce a single message.

For instance, a message encouraging the sign-up for online bill payment on the 15th day after an account was opened could be done with email, online banking banner messages, SMS and can be embedded in the mobile banking application. In addition, each of these messages could be linked to a short personalized online video or an interactive educational microsite for increased eectiveness.

As the tenure of an onboarding communications process increases, response and relationship growth data can be leveraged to determine the optimal communication channel mix and channel attribution. This is by no means an easy process due to the number of variables, but can decrease marketing costs while improving eectiveness.


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Multichannel Onboarding Roadmap

It is important to remember that the ability to use multiple channels is contingent upon an eective data collection process at new account opening. If mobile phone numbers and email addresses are not collected, these channels cant be used. If mobile and online banking are not sold during the new account process, these communication channels also cant be used.

In other words, the foundation of an eective (and lower cost) onboarding program is established on day 1 when customer insight is collected and the initiation of the onboarding process begins.

Segmentation and Targeting

At the very least, nancial services organizations must be able to apply basic segmentation based on accounts owned, size of relationship, geo-de-mographic data and protability forecasting. If it is possible to perform on a close to real-time basis, additional parameters can include behavior segmentation, attitudinal segmentation, life stage segmentation, and life change segmentation.

But most segmentation programs are not eective for the development and implementation of highly personalized communication process like an onboarding program. So, while segmentation may provide a broad catego-rization of customers, an institution must drill down communication to the lowest common denominator, and build messaging around specic solutions for the customer at the appropriate time and using the best channel.

In addition, while it is recommended to include all new account openers in the early stages of communication (since it is close to impossible to


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correctly determine potential lifetime value of a brand new customer), quick determination of prot potential will make for more eective alloca-tion of resources in the future.

As with all business decisions related to client communications, the market-ing investment decision is ultimately a prot/loss equation. Each messaging should be based on potential response, value of that response and impact on potential lifetime value.

Eventually, the goal is to mine the data on the customer to generate automated marketing messages that are customer (as opposed to prole) specic. This allows real-time adjustment to a customers segment or prole based on purchase behavior, remembering the importance of engagement before selling.

The Importance of Engagement Services

In any onboarding program, services that go with the initial account opened build engagement, trust and the foundation for future sales. As with any sale, the power of data analysis and application of the analysis can greatly improve results.

Dierent engagement services have dierent values with regard to making attrition less likely, but selling some of these services (such as bill pay) are harder than others. Therefore response and utilization models must be built that provide the optimal targeting for each communication.

Beyond traditional engagement services, product enhancements such as alert notications, privacy protection and even mobile banking have proven to be eective recommendations to stem potential attrition. The chart below illustrates what some of the largest banks in the country promote early in the relationship.


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Engagement Services Promoted During Onboarding Process


Chase Bank Engagement Communication Flow


Test, Learn and Measure

There is no one size ts all onboarding program for every nancial institu-tion. Not only do product sets dier, so do new account opening processes, the ability to leverage dierent communication channels, the support team in place, etc. Therefore, it is important to test, learn and measure results for maximum eectiveness and ongoing support of the onboarding initiative.

The good news is that virtually no nancial institution has stopped an onboarding program once they have initiated the process. This is because the return on investment (even in the worst case scenario) is always positive, and many times has a return of 5:1,10:1 and even 20:1 or higher.

The key is to test messages, timing, oers and channels to optimize your specic program from both the customer and organizations perspective.


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While multivariate testing may seem daunting to many, less scientic thumbs up/thumbs-down directional insight many times is a better time/value trade-o.

In other words, did adding an email or SMS message to a direct mail communication stream improve the ROI as opposed to needing to measure the exact degree of improvement?

If a robust process of testing new combinations of channels, messages and oers is done, an organization may also nd ways to improve new account opening processes.

The beauty of measuring the results of an onboarding process is the ability to share the results with product and segment managers who also have bottom line accountability. By sharing successes (and shortfalls) many database and marketing managers have seen funding of onboarding increase signicantly as product or segment marketing dollars are reallo-cated or increased for this more eective process.

Power of Leveraging Data in an Onboarding Process

If the onboarding process is done well (from the customers perspective), there will be time for cross-selling additional services since trust will be established and you will have set your institution apart from others who only care for the new customer on the day they open their account.

Industry research shows that the rate of attrition and inactivity of new account openers at banks and credit unions often exceeds 25-35% during the rst year of a relationship. This high attrition rate is often hidden by future new customer acquisitions or combined with other attriters so the impact seems less.

But, with the cost of a lost retail banking customer approaching $400 and being more than $700 for a small business customer (when acquisition costs and lost relationship revenues are taken into account), the cost of not having an eective onboarding program is unacceptable.

If your institution currently has an onboarding program, do you have enough touches and are you leveraging all available channels? How well are you integrating structured and unstructured data for improved person-alization and eective oer development?

If you dont have a program, there is no better time to build a strategy using the foundation provided here and the learnings of others before you. There are few, if any, programs that will generate such a high ROI over time.

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Building a Best-In-Class Retail Banking Onboarding Process - Loyalty Through Engagement