Millennials comprise the most targeted demographic for loyalty marketers these days, and banks have taken interest. Customer experience, according to a new study from The Medallia Institute, is the single greatest influence on how consumers decide where to bank.
Of 2,000 U.S. Millennials and Baby Boomers surveyed, 63% of Millennials and 54% of Boomers cited personal experience, reviews, or recommendations as being the most influential when choosing where to open a checking account. Beyond choosing a bank, 80% of Millennials also cited these factors as the top reason for switching banks.
“As the largest generation in the U.S., Millennials represent massive current and future purchasing power,” said Beth Benjamin, senior director of the Medallia Institute. “Capturing and maintaining their attention is paramount to earning their brand loyalty.”
Only 13% of Millennials cited convenience as most critical in their selection process.
“Experience factors—personal interactions with the brand, online reviews, and recommendations from friends and family—have replaced branch proximity as the most important driver of customer acquisition,” said Robert Schiff, vice president and general manager of financial services at Medallia. “Market leaders must become experience leaders if they want to stay on top. Welcome to New Finance.”
What exactly do Millennials look for from a positive customer experience?
Millennials (93%) said it starts with getting the basics right, including security of personal information, transaction efficiency, and effective problem solving. Millennials, in particular, respond positively to innovation with nearly 65% reporting that their day-to-day behavior is driven by a desire to find new and better way of doing things.
“What it means to deliver great experience is changing. Historically, it was about pain-free processes and pleasant service,” added Schiff. “Now Millennials are demanding a level of novelty and experimentation that looks more like what we expect from a fashion house than a bank. There’s real work to do if we’re going to keep up.”
What’s more, online banking is the most frequented channel (81% of Millennials) and Millennials are 2.6 times more likely to have used a mobile app; 55% of Millennials rank technology failures or the inability to carry out a transaction online among their top three most frustrating banking experiences.
The Medallia Institute conducted a panel survey of 2,000 Millennials (ages 21-32) and Baby Boomers (ages 51-69) in the U.S. The sample was matched to census on race, income, region, and gender to ensure a representative model of consumers.