Spoiler Alert (not really): Millennials Aren’t Going to the Branch
Millennials – the most digitally-savvy and computer-literate generation of our time – are opting for digital experiences over branch ones. This is not surprising and banks are taking note. While the branch may not go away, it is transforming. Some branches today have more of a Starbucks look and feel, as it appeals more to younger generations. Additionally, consumers seem to be more willing to visit locations that allow for multi-tasking – they can grab a cup of coffee, check email and catch up on news, and talk to a bank representative about potential financial questions.
But it goes beyond a pretty branch. Bankers who think they can simply create a beautifully-designed branch and just sit back and wait for the masses to roll in will be fooled. They must optimize their marketing efforts by 1) tapping into the value of analytics and automation, 2) really understanding their target market, and 3) delivering meaningful rewards beyond a t-shirt or cash back.
Analytics and Automation
While some institutions have only recently begun to leverage data analytics in their marketing strategies, the impact of these insights has proven profound. Analytics allows banks and credit unions to more intelligently segment both current and prospective customers based on seemingly unrelated factors, like spending and borrowing habits or life events. As a result, financial institutions can target them with timely and relevant campaigns that generate greater share of wallet.
Additionally, this approach actually cuts time and expenses, which is particularly important for community institutions with limited budgets. Institutions are constantly looking for strategies to drive new account openings and increase market share, but doing so requires attention to its marketing arm.
According to a report, banks tend to allocate less than 10 percent of total revenues to marketing and advertising, so moving the needle can be challenging if those expenses are not allocated well. Deploying an analytics-driven marketing practice, however, maximizes the ROI of outbound efforts, particularly to market segments like Millennials.
To truly create a winning marketing strategy, banks and credit unions must understand who they are targeting. Millennials are now the most dominate demographic in the U.S., but based on data from the Bureau of Labor Statistics, this group also fell on sluggish times during the recession. Unemployment for the older members of this group took a significant dip, which impacted their ability to accumulate much wealth. This group is also managing considerably more debt than other generations, which postponed many major purchases for them, like buying homes.
Fortunately, Millennials are breaking out of this and are now at a point in their lives where they’re able to accept financial offers and make bigger decisions. To capitalize on this opportunity, banks and credit unions must be in tune with new marketing methodologies and the use of flexible, creative and non-traditional offers that are presented at the right time and through the right channel.
For instance, Millennials are a mobile-first generation. They prefer to shop online through their mobile devices and expect instant gratification with the click of a few buttons. This group also relies heavily on information they find online to guide their decisions. This means sending them offers through mail or even email will be a turnoff. Online methods tied to social media tend to resonate much better for this market segment.
Rewards Key to Winning Over Millennials
Beyond delivering the right offer at the right time and through the right channel, banks and credit unions must also reward Millennials if they expect to keep them engaged. Millennials still perceive banks as purely transactional, so giving them free merchandise like hats, t-shirts and whatever other tchotchkes that were once valued no longer works. What does work are rewards they actually value – not just points or cash back.
A recent report by Aite Group found that almost half of Millennials carry just one rewards credit card, while 40 percent of seniors (born before 1946) and 27 percent of Gen Xers (born between 1965 and 1980) have three or more cards. Also important is that while Millennials only have one card, they don’t use it often, with less than half saying they use it at least once a week. According to a NerdWallet study released earlier this year, buyer’s remorse may be the reason, with 91 percent of Millennial respondents saying they regret their credit card debt.
To really engage Millennials, banks and credit unions must support their financial needs and provide financial guidance. That’s the real reward. Institutions must market and communicate to Millennials the products and services they offer, but also tie in how they are helping them make sound financial decisions. Through a consultative approach, institutions can facilitate ongoing engagement with this group and continuously nurture those relationships long-term.
Reaching Millennials doesn’t have to be a daunting task – but it is necessary and can no longer be done through traditional methods. After all, we know this group is not coming to the branch. Even with a re-design to make the branch trendier, banks and credit union must re-evaluate their marketing strategies.
By tapping into the use of analytics and automation and making data actionable, they can create successful campaigns that target the right individuals with the right message. This also requires understanding Millennials – what is their history, what do they really need and want, and how do they want to receive information?
Finally, bankers must go beyond simple product offers and deliver meaningful rewards through a consultative approach. Doing so, banks and credit unions will be well positioned to drive customer acquisition and grow relationships with the largest consumer group in history.
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Posted on Thursday, December 19, 2019 at 10:45 AM
by Baker Hill