Introducing Differentiated Product Offerings in Banking

Fitbit did it with fitness challenges. Snapchat is doing it with lenses and geofilters. Uber will do it with Trip Experiences. This critical component of the customer experience is engagement. After providing customers with a good deal on your product or subscription through a seamless in-store experience or digital journey, give them a reason to use it all the time – and to use it over the five other similar apps or stores at their disposal. With the customer frequently on your turf, selling becomes that much easier.

Nurturing routine engagement, however, requires being unique from the customer’s other options. What makes Spotify the clear choice for streaming music over Pandora, iHeartRadio and Apple Music? Why Eatsa over other quick-service restaurants in San Francisco? Differentiation tactics span both physical and digital channels – and in some cases, a combination of the two. Let’s explore several examples across industries.

In the service sector, L.A. Fitness paired its core offering with a component of fitness that traditionally had to be managed by the customer himself: body and health tracking. The chain partnered with mPort last year, a provider of health “pods”, enabling gym patrons access to body and health measurements for a small monthly fee. With other gyms lacking a similar service, the routine use of mPort by fitness junkies translates into a natural dependency on their L.A. Fitness memberships.

Within media, Spotify offers a variety of unique features that increasingly transform free users into paying customers. One in particular is its Discover portal, which includes the “New Music Friday” playlist. Users keen on discovering their favorite artists’ new releases habitually check Spotify on Fridays, which oftentimes means earmarking the day as an opportunity to discover new songs. By intentionally delaying access to new music, Spotify creates a reason for users to engage with the app on a cadence, which is typically accompanied with excitement.

As we would expect, both the e-tailer contingent and technology companies have been highly effective in delivering captivating experiences across distribution channels. Amazon’s bookstores, as well as its Go stores, offer a unique shopping journey by: expediting the checkout process, embedding Prime loyalty and leveraging its mobile app as an additional source of product information while at the point of purchase. This digitally-enabled store experience cannot currently be matched by Barnes & Noble or Whole Foods.

In each example above, the brand has found a way to make the customer experience distinct from that of its competition. Customers that regularly take advantage of unique features and product offerings are much less likely to attrite for two reasons: 1) the same experience doesn’t exist elsewhere and 2) they often incorporate the experience into their daily schedules and lifestyle.

Creating said differentiation in Financial Services is not so straightforward. Financial needs and guidance are not historically well planned for by consumers. Product consumption is typically long-term in nature, making it difficult to replicate the engagement pulse of brands in other industries.

But sometimes banking execs themselves forget how regularly consumers interact with their banks, even if the bank’s role is perceived as custodial or utilitarian. In the payments space, every card swipe is an opportunity to: a) point out incremental card rewards earned on the purchase b) provide feedback on the transaction’s impact on budgets and savings and c) reinforce loyalty toward the merchant.

More broadly speaking, retail payments allow banks to associate spend data with behaviors/lifestyles and relay relevant insights to the customer in real-time. High levels of engagement are achieved when the bank establishes meaningful communication during each of a customer’s 6-10 daily card transactions.

Going hand-in-hand with purchase-level engagement is the “savings coach” role that banks have neglected to play. While a customer may not need his bank to inform him of budget variances after every transaction, the twice-a-week visualization of progress and threats toward savings can play an instrumental role in staying on track. With few large banks offering interactive PFM today, an easy-to-use solution would undoubtedly differentiate a bank from its competition.

Finally, the heavily-criticized bank branch can too offer differentiation from other banks. One forward-thinking bank has already invested in a differentiated branch model that includes in-store coffee, meeting/working space and associates that function as both financial advisors and mobile app tour guides. Engagement in this context means allowing customers access to productivity-friendly premises that promote financial livelihood – and, with that, sales opportunity for the bank.

While marketing tactics like gamification and rewards are viable means of driving customer engagement, a differentiated product offering is one that carries lasting effects more difficult for competitors to replicate. Banks must be creative and explore new solutions that peers have yet to tap. If they don’t, the next Fitbit, Snapchat or Uber is sure to.

This entry was posted in Banking, Digital Marketing, Payments, PFM, Retail. Bookmark the permalink.

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