Economist Umair Hague makes an interesting point — and raises some interesting questions — about customer and brand loyalty on his blog:
Why do Apple customers care so much (about Apple)? It’s a good question. But in fact, it’s the wrong question to start thinking strategically about consumption. The real question is the opposite: Why don’t most consumers care more about firms/products/services/brands?”
My take: One reason why consumers don’t care more about the firms/brands is that they don’t care that much about the product/service that they purchased from that firm.
This is one of the big hurdles facing financial services marketers looking to engender loyalty among their firms’ customer base.
While money is really really important to whole lot of consumers, managing money is not something that a whole lot of consumers like doing or look forward to doing. More importantly (from a loyalty building perspective), it’s not something by which they define themselves.
Apple fanatics wear their loyalty like a badge. But how many people consider themselves a “Fifth Third fellow” or a “Chase chap”? (Stop laughing).
Customers have to care enough about the product before they’ll care enough about the firm or brand. Few — if any — banks get this.
This is why a community like Wesabe is so important. It’s a community of consumers who are involved enough with the management of their financial lives to participate in a community with other like-minded consumers. They’re potentially consumers who — despite the conventional wisdom that they’re rate hoppers– might become loyal to a particular financial firm because they’re involved enough with the products and services to understand how that firm is different in its product and service delivery capabilities.
Banks have really missed the boat in developing Wesabe-like sites. On one hand, they can’t envision where the payback on the investment will come from. They know they can’t charge customers for the privilege (stop laughing) to participate. And on the other hand, they’re fearful that their customers, left unchecked, might — gasp! — recommend other banks and services to fellow community members.
What they’ve failed to grasp is that financial community members like Wesabeans (I wonder if anybody actually refers to him or herself as a Wesabean) are hand-raisers. They’re people who are demonstrating an interest in their financial lives — and therefore signaling their potential to be a more loyal customer because of their engagement with the product category.
Understanding customers’ product category engagement could have huge impact on how a financial firm executes its marketing programs (in terms of targeted offers and calls to action), segments its customer base, and calculates potential lifetime value (if they’re calculating it at all).
It’s possible to predict category engagement using behavioral data that the bank collects. For example: How many times does an online banking customer check savings rates each quarter? How often has a customer moved money between accounts each quarter? (Interestingly, a customer that frequently moves money out of the institution might be a better candidate for long-term loyalty than a customer who just parks him money there).
Until financial services marketers begin incorporating category engagement into their marketing efforts, they’ll be looking for love…in all the wrong places.