Looking For Love (Loyalty) In All The Wrong Places (Customers)

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.

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3 thoughts on “Looking For Love (Loyalty) In All The Wrong Places (Customers)

  1. Hey, Ron,

    Thanks for the kind words.

    People do actually refer to themselves as Wesabeans (particularly, the people who participate in Wesabe Groups) — although some seem to prefer the variation ‘Wesabian’.

    I think you’re right in your comments, but I would also say that all of our best ideas come from Wesabeans these days. There’s nothing we’ve considered or tried that hasn’t already been suggested by someone in our Groups or on our support email address. When we are able to respond quickly to requests or suggestions from people, they come back very often with more requests and suggestions, and those tend to be the ideas that make the most people happy.

    So if banks are looking at us and thinking our would only increase loyalty, I think it goes beyond that — I think loyal members help steer products in the right direction.

    That said, it may be a lot easier for us to form a community of this sort than for a bank to do the same, since we have no incentive to see our members choose one financial product over another. If the community doesn’t trust that you have their needs first in your mind, you’re hosed.

    Anyway, thanks again for the kind mention. I hope we do help banks understand their customers better — and that banks will do a good job of responding to what their customers want. As I’ve said in the past, I think the past decade or two has brought a lot of distance between banks and their customers, and I’d love to see a mechanism, any mechanism, for closing that gap.

    Marc Hedlund, Wesabe

  2. @Marc: Thanks for commenting.

    A bank could have established something like Wesabe — as a standalone business, and not as a “cross-sell feeder” to their retail business. How could they have justified the investment? I don’t know. How do they justify all the investments they make today in sponsorships and advertising that produce no return?

    (Damn! And I resolved not to make off-the-cuff remarks in my comments. Oh wait — that was for 2008. It’s still 2007. Phew.)

    “Helping banks understand their customers better” is something I think Wesabe is well positioned to monetize (see Why Wesabe Matters https://marketingroi.wordpress.com/2007/02/02/why-wesabe-matters/)

    As for bringing banks and their customers closer together…well, I think the good will that the Wesabe community creates is and will be attributed to Wesabe. While some (many?) banks don’t get that Wesabe doesn’t compete with them for product sales, it does compete for them for attention and “trusted advisorhood” (if you know what I mean). And that’s why, if I were at a bank, I would see Wesabe as a threat. But you know what — the banks have, for the most part, blown it when it comes to earning this trusted advisor status.

  3. As long as banks don’t feel the succes of Wesabe and other social banking concepts in their ‘wallet’ , they probably won’t be seeing the threat you are mentioning. And they won’t feel the need for change since they are still making lots of money without connecting to their customers and without being a trusted advisor…

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