Bankers have no shortage of practical expertise to offer customers, but their failure to make an emotional connection with clients could be hurting their retention efforts.
The motivational speaker Zig Ziglar said it best when he theorized that, “People don't buy for logical reasons. They buy for emotional reasons.” Numerous studies have backed up Ziglar’s hypothesis, finding that positive emotions about a brand build greater consumer loyalty than a consumer’s rational reasoning or a brand’s tangible attributes.
This theory can be observed in practice by looking at some of the most popular commercial brands. Consumer powerhouses like Apple, Amazon and Nike have succeeded in eliciting specific emotions.
Apple, one of the most recognizable brands in the world, speaks to customers’ yearning for a stylish lifestyle, imagination, innovation and power through technology. If you think about the iPod, for example, its practical outcome was not much different than a personal CD or tape player, but consumers wanted it because of its innovative technology and pleasing design.
The iconic company builds upon this image to create strong relationships and a sense of community with consumers of all ages who are extremely loyal, and in most cases, purchase their technology just for the brand name. According to Apple, 99% of Apple customers love the iPhone — that’s impressive.
Nike was able to tap into a similar tendency with athletic shoe brands such as the Air Jordan. Was it a better basketball shoe than that of competing brands? It didn’t matter. The marketing campaign led by commercials featuring Michael Jordan made a powerful connection: When a young baller received new Air Jordans, the feeling was electric. Amazon has been able to engage consumers in a similar way with well-designed products that elicit a sense of wonder, while the online shopping site’s quick delivery service taps into people’s yearning for instant gratification.
Equally impressive (or unimpressive, rather) is that, in more than a decade of conducting consumer research, I have rarely encountered respondents that professed love for their financial institution. A checking account, CD or credit card just doesn’t have the same emotional effect.
But it doesn’t have to be this way. Most consumers think of their banking relationship as purely transactional. Yet banks have an opportunity to change the dialogue and provide more value-added services and custom-tailored offerings to engender longer-term loyalty. These bespoke services will allow individuals to think of their bank as more of a partner and less as a place to park money. For younger consumers, banks must forge this relationship sooner rather than later or risk losing the client, since millennials have a higher rate of switching banks than other groups.
Consumers’ lives are filled with significant events, which all tend to have financial ramifications. Some are momentous and others are mundane. Some are jubilant and others are less so. People are often hit with unpredictable and complicated situations. The life events with a financial connection range from weddings to unexpected health bills to a home’s heating system breaking down in winter, to many others.
Connecting on an emotional level before, during, and after each of these events will allow banks to engage on a different level and create deeper connections with their customers who are dealing with sensitive matters. The financial decisions made during these critical events could have a significant impact on the financial lifestyle someone lives.
Banks can help consumers prepare their financial plan in advance of life events that are not always predictable. This can mitigate consumers’ worry and stress. Influencing consumers’ emotional reaction in a positive way has the propensity to enhance relationship building and retention efforts.
Not only in the midst of significant events, but also in everyday life, bankers can make greater attempts at inviting customers to have a deeper dialogue to learn what keeps them up at night.
Bankers can also take their cue from the reason why a customer is seeking help from a financial institution to engage in a more personal back-and-forth. For example, a client comes into a branch or reaches out to a call center to open a joint account or change their last name. This is a cue to talk about the client’s wedding. A banker can then inform the customer about the array of products useful to married couples. This brief encounter can enable a more human connection, promote an emotional response, and deepen a new or existing relationship. Other cues include signs that indicate a home purchase, a death in the family (someone seeking to close the account for a parent or grandparent), or a serious medical issue. Frequent follow-ups with the customer following the initial interaction could also help establish a stronger emotional connection.
Listening to customers more closely along their financial journey will be critical for moving forward if they want to build lasting brands. Having an emotional connection will strengthen the commitment on both sides and create stronger financial lives for consumers and stronger financial institutions.