Financial institutions have consistently improved the customer experience with new products and services geared toward an audience looking for more digital alternatives. But with the entire industry shifting towards a more customer-centric business model, differentiation has been a challenge. New insights from Motista, the leader in predictive intelligence for Emotional Connection, indicates that while a good customer experience no longer is a differentiator, those institutions which understand and act on the emotional connection consumers have with their financial institutions are more likely to experience predictable and sustainable growth.
Motista’s findings are available in a newly-published white paper titled “Making the Emotional Connection: How Financial Companies Are Harnessing Customer Emotions to Generate Growth.” The white paper explains how companies in finance – from retail banks and brokerages to credit card providers and mortgage lenders – are driving growth by better quantifying and acting on the human experience of both existing customers and potential clients.
Emotionally Connected customers driving predictable growth
Emotional connection leads to higher value across all key sectors of consumer financial services, according to the research:
- Retail Banking: Based on Motista data from 60,000 customers of US retail banks, Emotionally Connected customers hold 20 percent more products with their banks than do customers who say they are “Highly Satisfied,” have a 78 percent lower attrition rate, and consider their bank as their primary bank 32 percent more often. As a result, Emotionally Connected customers produce nearly six times the lifetime revenue of Highly Satisfied customers.
- Mortgage Lending: Based on Motista data covering 20,000 US mortgage lending customers, only 12 percent of Highly Satisfied customers would be willing to pay higher rates and fees for future loans, while 68 percent of Emotionally Connected customers will do so.
- Credit Cards: In a study of 40,000 customers of U.S. card issuers, Motista found that Emotionally Connected cardholders generate nearly eight times the lifetime card spend as Highly Satisfied cardholders. They complete 71 percent more card transactions, spend 46 percent more with their cards every year and use their primary cards 29% more often.
- Investment Brokerage: Compared to Highly Satisfied clients, Emotionally Connected clients have a 71 percent lower attrition rate, are six times more likely to consolidate assets and recommend their firms twice as often.
“Financial institutions are struggling to move the needle on growth while striving to become more customer-centric,” explains Scott Magids, CEO at Motista and a co-author of the paper. “They’re just starting to discover the importance of emotional connections, which are the underlying motives of customer behavior in the industry, and how those connections can be quantified and activated to predict financial value.”
Emotional connection in action
“Every financial institution wants a highly satisfied customer, but in today’s competitive environment, that’s no longer enough,” said Magids. “Our research shows that across all categories, an Emotionally Connected customer generates 52 percent more annual value than one who is just Highly Satisfied.”
A top-ten U.S. bank sought to raise the effectiveness of its cross-sell efforts, understanding that traditional strategies such as increasing customer satisfaction and building brand awareness were merely table stakes, and no longer gave them an edge over the competition. The bank identified a $300 million to $475 million annual revenue opportunity associated with monetizing Emotionally Connected customers and increasing their number.
Focusing on the right emotions allowed the bank to better predict higher cross-sell, revenue, retention and lifetime value. In the two years after the bank’s emotional connection program began, average products held increased 26 percent and average annual revenue per customer jumped 34 percent.
“The financial services industry is facing more challenges than ever,” said Alan Zorfas, Chief Intelligence Officer at Motista and co-author of the paper. “Differentiation is narrowing, and even strong brands are finding it difficult to grow revenues. By understanding the emotions behind customer behavior, we have seen that financial institutions are able to better serve their customers, grow revenues faster and more predictably, and roll out the type of products that suit their customer base best.”
Predictive analytics based on customer emotions reveal the best strategies for deep human connection that drives customer value, based on an understanding of often-unspoken social aspirations and emotional needs. In financial services as well as other industries, individual facets of the customer experience can resonate with the specific emotions that underlie behavior. The Motista approach recognizes the complexity of individuals and segments – not to mention the financial marketplace – and focuses on the particular emotions that motivate the most profitable customer behaviors at critical points in their journey.
Please visit http://www.motista.com to download a copy of “Making the Emotional Connection: How Financial Companies Are Harnessing Customer Emotions to Generate Growth.”