7 Key Elements of Effective Onboarding Programs
A guaranteed way to impress newcomers is to repeatedly demonstrate how your financial institution helps improve your customers’ financial lives— by providing them with services that facilitate an easy transition and by ensuring they have the right products to meet their ongoing financial needs. With onboarding programs, you create multiple opportunities to deliver valuable messages in multiple ways. No single aspect of an onboarding program will make or break it, but the most successful strategies integrate the following components:
1. Make it easy – Send every newcomer a no-hassle switch kit, without delay, encouraging easy transition from competitors and spurring account usage. Kits should be personalized with pre-populated accountholder information, streamlining the transition and making it easy to sign up for a range of services.
2. Hit ’em monthly – Deliver targeted communications to new accountholders at least three times during the fi rst 90 days.
3. Ask how they feel – Schedule a new customer experience survey early in the relationship. Expect response rates as high as 15 to 20 percent, because new accountholders like to express their opinions. You will gain valuable feedback that will aid future decisions.
4. Don’t wait! Automate! – Initiate automatic activity using triggers such as check re-order dates and anniversaries. If it is not easy to maintain, your onboarding program may not succeed.
5. Take aim – Use predictive intelligence to cross-sell the right product to the right consumer at the right time.
6. Crunch your numbers – Measure the impact of your onboarding program and make adjustments if necessary.
7. Do it right – Partner with experts (like Harland) who understand the fi nancial services industry and the complexities of marketing to accountholders. Make sure you comply with regulations and legal requirements pertaining to security and confi dentiality.
During the first 90 days, new checking accountholders are most likely to purchase additional products and services. Paradoxically, this is also the time they are most likely to leave the institution. Therefore, few initiatives are as important as managing first-year accountholder attrition. Yet not many financial institutions have strategies in place that effectively address the problem. Preventing this drain of business is crucial to a financial institution’s long-term success, as new accountholders are a significant factor in creating organic growth.
According to multiple industry sources, 30 percent of new accountholders leave during the first year, which is a rate three times higher than established accountholders. While new accountholders are considered “high risk,” they are also extremely receptive to the cross-sell of products and services, providing financial institutions with more motivation to target this segment. New customers are in switch mode, and this presents the best possible opportunity to expand on the relationship.
Revolving Door: 30% of new account- holders leave their financial institution within the first year.
Impact on Organic Growth
Managing attrition and building strong ties early in the relationship will remove barriers to organic growth, thereby creating deeper and more loyal relationships. With long-term account performance hanging in the balance, institutions should aggressively address first-year attrition by implementing well executed, multi-touch onboarding programs. Such programs engage new checking accountholders during the first 12 months and grow them into satisfied, profitable and loyal consumers. This is accomplished by deploying a series of well-timed crosssell, activation, retention and brand-building campaigns designed to drive organic growth.
What’s To Be Gained?
Are onboarding efforts really worth it? Statistics answer a resounding “yes.” Measured results show that successful onboarding programs begin to pay off immediately and that their impact positively affects long-term profitability years later. Leading industry experts have found that an effective overall retention strategy lowered attrition 25 percent, and a new accountholder retention (onboarding) program reduced attrition by 50 percent. Typically, the average life of a retail account is between seven to nine years. When an accountholder leaves the financial institution within that first year, that translates into a lost opportunity in terms of wallet share and income over the lifetime of that relationship. Thus, the consequences to financial institutions of not retaining their first-year customers or members can be severe.
How to Attack the Problem
The most effective means to reduce first-year attrition of checking accountholders is to put an actionable onboarding strategy in place. This will ensure that the financial institution identifies and markets to new customers with accountnurturing communication on an ongoing basis.
An essential characteristic of a successful onboarding strategy is its ability to cross-sell products and services that have a high “stickiness” factor, precisely when accountholders are most ready and willing to buy. These offerings might include DDA-related products and services such as direct deposit, online banking, debit cards and bill pay. Engaging new accountholders with sticky products and services makes it more difficult for them to defect to their previous service provider. For example, according to Harland’s Financial Industry Database, accountholders with online banking (a sticky service) are twice as likely to stay with a financial institution.
Establish the Foundation for Long-term
Relationships Right from the Start
When banks and credit unions employ thoughtfully designed, personalized onboarding strategies that effectively engage new accountholders, they engender a sense of trust and confidence that encourages loyalty and profitable long-term relationships. As the needs of these loyal and deep-rooted accountholders change, financial institutions have opportunities to reward that loyalty and cross-sell other financial services.Attention Liberty Clients! Harland’s onboarding solution, Passport, is now available to you. Strengthen your relationships with new members by using this powerful solution, now tailored for your needs. For more information, contact your account executive at (800) 597-2435.