Marketers across virtually every industry have turned to loyalty programs to help build their brands and drive consumer behaviors. Many succeed, others do not. Yet in the banking world, it seems more common for programs to struggle for efficacy and profitability. Why is that?

WHAT’S DIFFERENT IN THE FINANCIAL INDUSTRY THAT MAKES IT SO DIFFICULT TO MAKE YOUR LOYALTY PROGRAM DO WHAT YOU WANT IT TO DO?

The Financial Brand just published my article, “How Does Your Bank’s Loyalty Program Stack Up?” that pulls FI-specific data from the Forrester Consulting report, Elevate Engagement to Unlock Your Loyalty Program. The full report polled 150 directors and brand managers, including 50 from banking, to shed some light on how loyalty programs for financial institutions differ from other industries.

OVERALL, BANKS’ PRIORITIES ARE DIFFERENT, WHICH LEADS TO THE QUESTION: IF WHAT YOU’RE TRYING TO GET OUT OF YOUR LOYALTY PROGRAM IS SO DIFFERENT, SHOULDN’T YOUR TACTICS BE DIFFERENT, TOO?

My perspective on the data says yes. Here are some interesting take-aways from the research:

  • FI loyalty marketers want more from their programs than do other industries, but they’re also generally less satisfied with the results.
  • Financial institutions rank customer acquisition as the No. 1 objective for their loyalty programs, while all other industries put it second. Banks might be missing opportunities to enhance engagement and stem attrition by placing too much emphasis on acquisition.
  • Worse, while other industries rank improving customer satisfaction as their fourth most-important objective, FIs put it at sixth — but customer satisfaction is critical if you’re going to retain bank customers who have a plethora of other options when they’re no longer happy with you.
  • Multiple communication channels add up to greater loyalty program success, but FIs need to emphasize the channels that have the potential to make the greatest contribution toward inspiring brand advocacy actions. Sixty-six percent of FIs cited brand advocacy as the top behavior they seek to influence.
  • Financial institution loyalty marketers need to revisit their definition of an active program member; they were the least exacting on this point. While pretty much everyone agreed that enrollment was the top criteria to qualify for active status, banks underplayed important post-enrollment behaviors like earning and redeeming points, or completing ratings and reviews. All of those actions speak directly to engagement, and ample research shows that a more engaged customer is a more profitable one.

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These points could help explain why financial institution loyalty marketers feel they could be doing better. The number of FI marketers who were completely unsatisfied with their programs was double the percentage of everyone else who felt that way. Gaps exist and everyone knows it. Read the article to determine what your financial institution could be doing to close the distance between where your program is now and where you want it to be.

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