Tag: customer retention

Building loyalty and improving customer retention are sensible business practices, and they're essential banking growth strategies for long-term success.

Customer retention is crucial for lenders to maximize lifetime value, especially during economic uncertainty. Increasing customer retention rates by just 5% can boost profits by 25% to 95%. However, many lenders struggle with loyalty, as seen in Q2 2024 when mortgage servicers’ retention rates for refinances dropped to 20%, the second lowest in 17 years. Nonbanks and banks also saw significant declines. This is due to increased competition, changing economic conditions, and a lack of personalization. Key strategies for improving customer retention Lenders can improve retention by leveraging data for personalization, maintaining consistent communication, offering loyalty rewards, and utilizing retention triggers. Leverage data for personalization. Use customer data to offer tailored products and refinancing options based on financial behaviors. Using credit attributes, trended data and alternative credit data (alternative financial services data,  cashflow attributes, etc.) can help provide deeper insights of your customers. Maintain consistent communication. Keep customers informed with regular updates about interest rate changes or new loan products. Use a variety of communication channels, including email and in-app messaging, to ensure customers are kept in the loop. Ensure your customer service team is always available and responsive, offering clear answers to any financial concerns. Offer loyalty rewards. Develop programs that reward repeat business and referrals. Offer special rates or discounts for returning customers or for those who refer friends and family to your services. Increase customer lifetime value (LTV) by offering additional services like financial planning or credit score monitoring. Utilize retention triggers. Identify key events for engagement with automated retention triggers. For example, a borrower who has a mortgage with a fixed rate may be less likely to consider refinancing unless prompted. Experian’s Retention TriggersSM can notify lenders when refinancing might be beneficial to their customer, offering them personalized incentives or new product options at the right time. Why Experian’s Retention Triggers? By integrating Experian’s Retention Triggers, lenders can keep borrowers engaged, increase retention, and boost profitability even in tough economic times. Advanced data insights: Gain deeper insights into your customers’ behavior to identify those at risk of leaving and take proactive action. Personalized engagement: Automate personalized communications based on customer behaviors, ensuring timely engagement. Increased revenue: By offering personalized, timely and relevant offers, you can increase the likelihood of retaining your customers and growing your revenue. Make customer retention a priority In today’s challenging economic climate, lenders who focus on personalized experiences, consistent communication, and relevant offers will stand out and retain borrowers. Leverage tools like Experian’s Retention Triggers to proactively engage customers, reduce churn, and foster long-term relationships for increased profitability and success. Learn more

Whether consumers are shopping for new credit or experiencing financial stress, monitoring their behavior is crucial — even more so in an ever-changing economy. Our latest infographic explores economic trends impacting consumers’ financial behaviors and how Experian’s Risk and Retention TriggersSM enable lenders to detect early signs of risk or churn. Key highlights include: Credit card balances climbed to $1.17 trillion in Q3 2024. As prices of goods and services remain elevated, consumers may continue to experience financial stress, potentially leading to higher delinquency rates. Increasing customer retention rates by 5% can boost profits by 25% to 95%. View the infographic to learn how Risk and Retention Triggers can help you advance your portfolio management strategy. Access infographic

Do you know where your customers stand? Not literally, of course, but do you know how recent macroeconomic changes and their personal circumstances are currently affecting your portfolio? While refreshing your customers’ credit data quarterly works for some aspects of portfolio management, you need more frequent access to fresh data to quickly respond to risky customer behavior and new credit needs before your portfolio takes a hit. Use triggers to improve portfolio management Event-based credit triggers provide daily or real-time alerts about important changes in your customers’ financial situations. You can use these to manage risk by promptly responding to signs of changing creditworthiness or to prevent attrition by proactively reaching out to customers who are shopping for credit. Risk Triggers℠ and Retention Triggers℠ offer a real-time solution that can be customized to fit your needs for daily portfolio management. What are Risk Triggers? Experian’s Risk Triggers alert you of notable information, such as unfavorable utilization rate changes, delinquencies with other lenders and recent activity with high-interest, short-term loan products. This solution allows you to monitor how your customers manage accounts with other lenders to get ahead of potential risk on your book. You can use Risk Triggers to get daily insights into your customers’ activity — allowing you to quickly identify potentially risky behavior and take appropriate action to limit your exposure and losses. Types of Risk Triggers Choose from a defined Risk Triggers package that could help you identify high-risk customers, including: New trades Increasing credit utilization or balances over limit New collection accounts An account is charged-off A credit grantor closes an account New delinquency statuses (30 to 180 days past due) Consumers seeking access to short-term, high-risk financing options Bankruptcy and deceased events How to use Risk Triggers You can use the daily alerts from Risk Triggers to help inform your account management strategy. Depending on the circumstances, you might: Decrease credit limits Close or freeze accounts Accelerate payment requests Continue monitoring accounts for other signs of risk Spotlight on Experian’s Clarity Services events Included in Risk Triggers are events from Experian’s Clarity Services, which draw on expanded FCRA-regulated data* from a leading source of alternative financial credit data.  For example, you could get an alert when someone has a new inquiry from non-traditional loans. These triggers provide a broader view of the customer – offering added protection against risky behavior. What are Retention Triggers? Experian’s Retention Triggers can alert you when a customer improves their creditworthiness, is shopping for new credit, opens a new tradeline or lists property. Proactively responding to these daily alerts can help you retain and strengthen relationships with your customers — which is often less expensive than acquiring new customers. Types of Retention Triggers Choose from over 100 Retention Triggers to bundle, including: New trades New inquiries Credit line increases Property listing statuses Improving delinquency status Past-due accounts are brought current or paid off How to use Retention Triggers You can use Retention Triggers to increase lifetime customer value by proactively responding to your customers’ needs and wants. You might: Increase credit limits Offer promotional financing, such as balance transfers Introduce perks or rewards to strengthen the relationship Append attributes for improved decisioning  By appending credit attributes to Risk and Retention Trigger outputs, you can gain greater insight into your accounts.  Premier AttributesSM is Experian's core set of 2,100-plus attributes. These can quickly summarize data from consumers' credit reports, allowing you to more easily segment accounts to make more strategic decisions across your portfolio.  Trended 3DTM attributes can help you spot and understand patterns in a customer's behavior over time. Integrating trended attributes into a triggers program can help you identify risk and determine the next best action. Trended 3D includes more than 2,000 attributes and provides insights into industries such as bankcard, mortgage, student loans, personal loans, collections and much more.  By working with both triggers and attributes, you'll proactively review an account, so you can then take the next best action to improve your portfolio's profits. Customize your trigger strategy When you partner with Experian, you can bundle and choose from hundreds of Risk and Retention Triggers to focus on risk, customer retention or both. Additionally, you can work with Experian’s experts to customize your trigger strategy to minimize costs and filter out repetitive or unneeded triggers: Use cool-off periods Set triggering thresholds Choose which triggers to monitor Establish hierarchies for which triggers to prioritize Create different strategies for segments of your portfolio Learn more about Risk and Retention Triggers. Learn more *Disclaimer: “Alternative Financial Credit Data” refers to the use of alternative data and its appropriate use in consumer credit lending decisions, as regulated by the Fair Credit Reporting Act. Hence, the term “Expanded FCRA-Regulated Data” may also apply in this instance, and both can be used interchangeably.

An intuitive digital customer experience in banking is more important than ever. Americans swipe, tap or insert their debit and credit cards at supermarkets, gas stations, restaurants, hotels and ATMs, conducting more than 74 million daily transactions.¹ Despite the volume of transactions, just 23% of banking customers give their bank high marks for its range of products, services and financial advice.² A hyper-digital, ever-changing banking industry means that there are more choices for financial service providers than ever before — and customers are taking full advantage of the options. On average, consumers have more than six different financial products and 82% of consumers between the ages of 18 and 24 acquired financial services products from new providers in the past 12 months.³ Digital transformation for banks is more crucial than ever, with some studies showing that 78% of bank customers prefer to access their accounts via a website or mobile app (with less than half of those surveyed ranking branch access as an important feature when shopping for a new checking account).4 Banks must embrace innovative strategies to elevate the banking customer experience in a competitive market. Here are some ways to boost customer retention and drive profitable growth. Rethink processes Complex processes and excessive paperwork needed to open accounts, approve credit cards and process loan applications can frustrate customers. In fact, more than 50% of consumers abandon the digital account opening process if it takes more than three to five minutes.5 Digital transformation initiatives can resolve these issues to improve the customer experience. Banks that leverage solutions, like artificial intelligence and automated data-driven decisioning solutions, to facilitate faster, more streamlined services can reduce friction, expedite processes and decrease wait times, resulting in improved customer satisfaction and retention. Reduce fragmentation Financial services are more fragmented than ever. Retail banking customers often use different providers for their checking and savings accounts, credit cards, investments, mortgages and other banking products. The options to access those accounts are also diverse, with customers choosing from brick-and-mortar branches, websites and mobile devices. Increased fragmentation means that the need to create an omnichannel experience should be top of mind for lenders. Additionally, the current retail banking landscape often fails to reward consumers for loyalty. Fewer than 15% of banks provide comprehensive rewards to those who use a single bank for multiple products or services, even though reducing fragmentation and taking a holistic approach to meeting customer needs can provide a competitive advantage.6 Personalize the digital experience While digital banking has reduced face-to-face interaction between banks and customers,7 consumers still expect a personalized banking experience. Experian has shown that using data analytics can lead to an improved understanding of customer needs and preferences, while customer segmentation enables the creation of targeted marketing campaigns, customized product offerings and tailored financial advice. These efforts towards a more personalized banking experience help increase customer satisfaction and loyalty. Provide more touchpoints An increasing number of branch closures and greater demand for digital banking services mean that just 3% of banking transactions are conducted in person.8 Customers are more willing to use digital channels for services like opening accounts and applying for loans. Banks can promote credit offers and product recommendations via email, social media and mobile banking applications while providing real-time digital customer experiences and prioritizing consistency across channels. Embracing a multichannel approach to marketing can help banks achieve better results, making it easier to cross-sell customers, amplify offers and meet consumer expectations for a personalized digital experience. Go beyond banking The customer experience in banking is about more than deposits, withdrawals and interest payments. Customers want resources and information to improve their financial well-being — and providing it can build trust, improve customer retention and boost revenue. Using digital channels to provide education might be more effective than encouraging appointments with customer service representatives. These tactics can help you: Leverage artificial intelligence to provide educational resources and personalized financial advice. Monitor user transactions for unusual activities and push information about online security or fraud protection. Employ chatbots to provide investment information and credit score monitoring and respond to questions about products ranging from mortgages to credit cards. Enhance your customer retention strategies by focusing on credit education and helping customers at every stage of their financial lives. Deliver a personalized customer experience in banking Globally, banks have invested $124 billion in artificial intelligence, machine learning and other technologies to make retail banking services more efficient and effective.9 Personalization is still imperative, and putting the customer first must remain the highest priority. Achieving those results requires a solid strategy for an improved banking customer experience. Experian leverages customer-level analytics and provides comprehensive solutions to expand digital transformation efforts, drive acquisition and improve customer retention. Learn more about our banking solutions. Learn more ¹Federal Reserve (2023). Commercial Automated Clearinghouse Transactions Processed by the Federal Reserve2,6-9Accenture (2023). Global Banking Customer Study3-4Forbes Advisor (2023). U.S. Consumer Banking Statistics5The Financial Brand (2023). How Credit Card Issuers Are Tackling Application Abandonment

To reach customers in our modern, diverse communications landscape, it's not enough to send out one-size-fits-all marketing messages. Today's consumers value and continue to do business with organizations that put them first. For financial institutions, this means providing personalized experiences that enable your customers to feel seen and your marketing dollars to go further. How can you achieve this? The answer is simple: a customer-driven credit marketing strategy. What is customer-driven marketing? Customer-driven marketing is a strategy that focuses on putting consumers first, rather than products. It means thinking about the needs, wants and motivations of the prospects you're trying to reach and centering your marketing campaigns and messages around that audience. When done well, this comprehensive approach extends beyond the marketing team to all members of a company. The benefits of customer-driven credit marketing One benefit of this type of personalized credit marketing is that you can target customers with a potentially higher lifetime value. By focusing your marketing efforts on the right prospects, you'll ensure that budgets are being spent wisely and that you're not wasting valuable marketing dollars communicating with consumers who either won't respond or aren't a fit for your business. Customer-driven marketing enables you to identify and reach the most profitable, highly responsive prospects in the most efficient way, while also engaging with current customers to optimize retention rates. When you create marketing programs that are customer-driven, you're not just selling; you're building relationships. Rather than being simply a service provider, you become a trusted financial partner and advisor. This kind of data-driven customer experience can help you onboard more customers and retain them for longer, translating to better results when it comes to your bottom line. Customer-driven marketing: How to get started Customer-driven marketing is less funnel, more spiral. You research, test, refine and repeat, all while taking into account customer feedback and campaign results. It starts with defining your target audience and creating customer personas. As you do this, think about all the factors that are involved in your target customers’ path to purchase, from general awareness and growing need to the final motivation that pushes them to commit. You'll also want to consider what their pain points may be and the barriers that may prevent them from buying. Next, develop a marketing strategy that aligns with your target customers' needs and outlines how and where you'll reach them. It may also be helpful to gather and respond to customer feedback to ensure the value propositions in your campaigns are aligned with customer expectations. These insights can help you refine your messaging, resulting in increased response and retention rates. Use the right data to extend relevant credit offers When you send credit offers, you want to ensure they're reaching the right prospects at the right time. You also want to make sure these credit offers are relevant to the consumers that receive them. That's where quality data comes in. By optimizing your data-driven customer segmentation, you can develop timely and personalized credit offers to boost response rates. For example, you might have a target audience of consumers who are both creditworthy and looking for a new vehicle. Segmenting this audience into smaller groups by demographic, life stage, financial and other factors helps you create credit marketing campaigns that speak to each type of customer as an individual, not just a number. Meet consumers on their preferred channels Nowadays, consumer behavior is more fragmented than ever. This is relevant not just from a demographic point of view, but from the perspective of purchasing behavior. Customer-driven marketing helps you interact with prospects as individuals so that the value propositions they encounter are a true fit for their life situation. For instance, different age groups tend to spend time on different platforms. But why they're on those channels at any particular time matters too. Messaging aimed at prospects in their leisure time should be different from messaging they'll encounter when actively researching potential purchases. Keep up with your customers This is one answer to the question of how to improve customer retention as well. Research demonstrates that it's more cost-effective to keep a customer than to acquire a new one. When you tailor retention efforts with a well-thought-out customer-driven marketing strategy, you're likely to boost retention rates, which in many cases lead to better profits over time. Importance of a customer-driven marketing strategy Putting consumers at the center of credit marketing strategies — and at the center of your business as a whole — is the foundation for personalized experiences that can ultimately increase response rates and customer satisfaction. For more on how your organization can develop an effective customer-driven marketing strategy, learn about our credit marketing solutions.

"Out with the old and in with the new" is often used when talking about a fresh start or change we make in life, such as getting a new job, breaking bad habits or making room in our closets for a new wardrobe. But the saying doesn't exactly hold true in terms of business growth. While acquiring new customers is critical, increasing customer retention rates by just 5% can increase profits by up to 95%.1 So, what can your organization do to improve customer retention? Here are three quick tips: Stay informed Keeping up with your customers’ changing interests, behaviors and life events enables you to identify retention opportunities and create personalized credit marketing campaigns. Are they new homeowners? Or likely to purchase a vehicle within the next five months? With a comprehensive consumer database, like Experian’s ConsumerView®, you can gain granular insights into who your customers are, what they do and even what they will potentially do. To further stay informed, you can also leverage Retention TriggersSM, which alert you of your customers changing credit needs, including when they shop for new credit, open a new trade or list their property. This way, you can respond with immediate and relevant retention offers. Be more than a business – be human Gen Z's spending power is projected to reach $12 trillion by 2030, and with 67% looking for a trusted source of personal finance information,2 financial institutions have an opportunity to build lifetime loyalty now by serving as their trusted financial partners and advisors. To do this, you can offer credit education tools and programs that empower your Gen Z customers to make smarter financial decisions. By providing them with educational resources, your younger customers will learn how to strengthen their financial profiles while continuing to trust and lean on your organization for their credit needs. Think outside the mailbox While direct mail is still an effective way to reach consumers, forward-thinking lenders are now also meeting their customers online. To ensure you’re getting in front of your customers where they spend most of their time, consider leveraging digital channels, such as email or mobile applications, when presenting and re-presenting credit offers. This is important as companies with omnichannel customer engagement strategies retain on average 89% of their customers compared to 33% of retention rates for companies with weak omnichannel strategies. Importance of customer retention Rather than centering most of your growth initiatives around customer acquisition, your organization should focus on holding on to your most profitable customers. To learn more about how your organization can develop an effective customer retention strategy, explore our marketing solutions. Increase customer retention today 1How investing in cardholder retention drives portfolio growth, Visa. 2Experian survey, 2023.