There is a direct correlation between share-of-wallet, customer retention and the duration of the relationship. Greater SOW means greater loyalty and satisfaction. Here are some strategies to consider:
We have all heard in a casual conversation of a phrase like “I’d rather pay a bit more for this product and be sure that it will work, than buy a cheaper one that I don’t really know anything about.”
This is a customer expression of fidelity or loyalty.
As you may know, “Fidelity has to do directly with a person while loyalty has to do directly with a cause. One can be loyal but not faithful, believe in the cause but not in the person.” When it comes to marketing, loyalty would mean that the client corresponds and believes in the brand and understands what is offered in a rational way; fidelity would mean that the client falls in love, corresponds, believes and trusts the brand no matter the circumstances given at any moment of their lives.
“Assign time to clients based on analysis, not instinct”
The previous phrase, can be considered the main conclusion of a survey made to 870 executives B2B by the company Bain & Company, among others this were the results:
- Less than 20% of respondents said they have a quantified understanding, based on data, of the total market opportunity and the potential of untapped customers.
- Even fewer respondents regularly determine the required sales capacity and coverage based on this market opportunity.
- And less than 25% have an account management process that identifies critical actions, such as cross-selling opportunities, based on understanding of how customers make decisions.
The stakes are high: companies that take these actions consistently earn more than twice of the market share than those who don’t, according to this analysis.
In marketing, the Share of Wallet [SOW] is an often forgotten parameter, but highly important: “It is the proportional amount of money that a client invests in products and / or services of 100% of the personal budget destined to that category”.
The SOW is one of the greatest indicators of loyalty that a brand or company can use. One way of translating SOW into banking or financial language is to think about quantity of banking products acquired by the same client. Greater SOW means greater loyalty and satisfaction.
For greater Share of Wallet, it is best to be the main wallet
A report by the RFI Group, based on a massive study of more than 40,000 consumers through 21 markets, proposes that in order to create a fertile field for cross-selling, one must become what they call the Primary Financial Institution (PFI) and that the Share of Wallet is an excellent tactic for measuring success. This study, carried out mainly in the developed world, highlights that the global average of banking products per person is 7.4. It is slightly higher in the USA (8.5), a bit lower in Canada (7.1) and UK (6.5) and, at the other end of the scale, are Australia (4.9) and Egypt (2.6).
The RFI Group proposes some tactics to increase SOW in banks, while becoming the PFI:
- Frequent use: PFI is the bank with which the consumer makes transactions more frequently. How can you increase the volume of interactions, activities and participation in your customer base?
- Recurring payments: in most developed countries, customers use their PFI to pay their regular bills. This means that online / mobile bill payment is crucial for establishing a PFI relationship.
- Brick & Mortar: Although the use of branches and ATMs has been steadily declining, these channels are still important in determining the status of a major bank in most countries. In fact, when customers in the US were asked about the criteria they used to choose their current PFI, customers continue to value the physical presence of a bank and the ability to interact face to face if necessary, even if they do not use these channels regularly.
- Loyalty / Longevity: When customers observe all of their current financial relationships, they identify the institution they have been using for the longest time as their PFI. So, how can you make your products and services more attractive? Do you need a seductive rewards program? How can you reduce the wear rates? If you can reduce the number of clients that leave your institution, you will have more people who will identify you as their PFI, which, in turn, will improve your overall success rate with cross-selling.
There are many factors that contribute to the continued success of a bank or financial institution with its customer base. However, perhaps the most important key for long-term and mutually beneficial relationships between the client or the partner with the bank is the share of wallet.
To achieve all these goals, the digital marketing is essential, as well as a good automation strategy.
How can banks and credit unions choose a marketing automation platform that helps them increase share of wallet? Check out our guide on marketing automation for financial institutions.
Image credit: shutterstock.