Banks often run promotions or “behavioral campaigns” to elicit a certain action. The most common is to get a customer to try a new product such as an interactive teller, mobile app or to enroll in a loyalty program. Other uses include educating a customer on a new procedure (such as account access during an integration) or to provide additional information (such as an email). For any bank looking to run such a program, the data below will open your eyes and provide insight into how your bank can be more effective.
The Overarching Lesson
Recent research from the digital marketing firm HelloWorld found that the key to an effective behavioral campaign is to keep the reward and the required action simple. Ask a bank customer to complete a 10 question form, and you might get a response rate of 15%. However, if you just ask for an email address or a social media follow, and that participation level can shoot up to above 50%.
Below are participation statistics on some of the more popular campaigns. Asking for a branch or product review in exchange for a $5 gift card and you can see participation levels in the eighty percent range. On the other side, requiring a customer to share content on social media, has a much lower percentage.
Types of Reward
Of course, the type of reward matters. Contrary to most banker’s instincts, the data shows that it is better to give away a $5 gift card for the action rather than a chance to win $10,000. Surprisingly, younger age groups prefer a firm reward, while the 60+ age cohort was the only segment that would rather have a chance to win $10,000.
Looked at another way, all age groups prefer rewards that make their life easier. There has been a recent shift away from offering a chance to win a luxury ski trip, an Apple watch or other high-end good and a shift towards prizes that help the customer save time or streamline their lives.
Finally, various reward types were tested, and the Visa Gift Card was the overwhelming favorite while a bank credit was least desired. It turns out, there is little satisfaction gained by a credit to a bank account credit whereas a Visa Gift card would provide more satisfaction while the customer figures out where to spend the credit. Below, is a breakdown, by age group, of which common rewards were preferred.
Putting This Into Action
This data can help banks become more effective in their marketing as promotion response rate can dramatically be increased. The takeaways here are that banks should leverage credits to products such as a debit card, credit card, or payment platform to best drive behavior while customizing the campaign to match the income and age demographic. Also, instead of a chance to win a price, banks should consider providing a firm credit for specific actions. Make it simple for the customer to take the desired action and banks can vastly improve the performance of marketing promotions used to drive desired behaviors.
Submitted by Chris Nichols on December 17, 2018