Building Loyal Consumers by Boosting Financial Education Engagement

Transactional Consumers vs. Relationship Consumers

There are two types of banking consumers, EVERFI discovered in its recent report: transactional and relationship.

Seventy-nine percent of patrons are transactional—they see their bank or credit union solely as a vessel to facilitate basic banking needs and nothing more. Relationship-oriented patrons, however, prefer engaging more deeply with their financial institution and, while they only make up 12% of the consumer pool, it’s a crucial population worth focusing on.

Doubling Down on the Relationship Consumer

Relationship consumers use their bank’s services and buy their products more than their transactional counterparts.  They tend to embrace learning opportunities and be more confident in and satisfied with their institution. Thus, the inclination may be to leave what’s good alone and put all your marketing resources elsewhere; to invest in trying to convert the transaction-only consumers into more involved relationship ones.  Targeting the transactional group is certainly a worthwhile effort, too, but it’s important that your relationship consumers are also being prioritized.

Why focus on this group when they’re already participating in your offerings?  Well, if they are naturally yielding solid results for your institution (in terms of spending, involvement, and satisfaction) without much prompting, imagine how strong the results could be with a little more encouragement.  Turn good to great. Activate their curious, receptive nature by providing compelling opportunities for them to take their engagement to the next level.

What's The Secret To Consumer Loyalty?

More than half of consumers switch their primary financial institution at some point in their lifetime, and even more switch more than once. In order to gain consumer loyalty, you need to first identify the profile of a loyal consumer.

High-Quality Financial Education Increases Consumer Loyalty

Financial education correlates to consumer loyalty and satisfaction.  Helpful educational tools can be linked to positive feelings among consumers, including financial empowerment and confidence. Further, the more products a consumer uses at their primary financial institution, the less likely they are to switch institutions.  In becoming more interconnected with their bank, they become more loyal. Find opportunities to encourage consumer loyalty and satisfaction by creating valuable products and getting them in front of all of your consumers, but particularly pinpointing those who will likely be most interested.

The quality, however, is key.  Not just any financial education tool or service will do.  Research by Clarabridge found that 70% of customers would give their institution more business if its advisory services were better.  Meaning, there is much interest in useful financial guidance but a sentiment that the options currently available aren’t up to par.  If you have existing financial education resources in place, ensure the quality meets the high standards of today’s consumers. This includes ensuring your employees are equipped to have competent, knowledgeable conversations with customers.  Consider providing financial education to your staff, as well.

Among your consumers, relationship consumers are about twice as likely to take a financial education course as transactional consumers; and, after doing so, 64% say financial education is an important part of their relationship with their bank and 56% say they are even more inclined than before to buy and/or use additional bank offerings.  When you get your program in front of relationship consumers, the value is clear and powerful.

However, Financial Education is often Under-Promoted

About 38% of relationship-based consumers are not even aware that their institution provides financial education courses.  There is a huge opportunity here. While 38% of your relationships consumers only amounts to about 5% of your total consumer population, this is a high-yield 5% of receptive, engaged personas that should not be overlooked.  Promoting your financial education offerings to this small subset can lead to disproportionately strong returns. It may even lead to as many or more gains in financial education learners than when you promote generally to your much larger, but more disconnected 79% transactional consumers.

Promotion can be done cost-effectively and en masse, so promoting to transactional and relationship consumers shouldn’t be an either/or decision.  Your goal should be that all consumers are aware of your financial education resources, but you should also determine how you can pinpoint your relationship consumers to further reinforce the message to them.

Take a multi-pronged approach.  For example, you could promote your financial education program to all new consumers upon signing with your institution, as well as on your website and social media pages for all consumers to see; and then send an additional email with a link to the program only to the consumers who have used or purchased a particular beyond-transaction service or product (your relationship consumers).

Don’t miss the opportunity to optimize this group of already warm leads to get even greater engagement from them.  Take them to the next level in terms of participation, purchases and long-term retention.

Learn more about the secret to consumer loyalty!