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A Healthy Dose of Customer Strategy

Designing a Winning Onboarding Program

Establishing a relationship between a bank and a new customer is like dating: The initial months are crucial to long-term success. Foul up something early on in the union and there is little chance of an everlasting marriage.

Also similar to dating, consistent communication is essential to a long-lasting relationship. In the case of banking, that communication begins with a comprehensive onboarding strategy, which can reduce new-customer attrition by as much as 50 percent, according to published data. Additionally, industry studies indicate that the first 180 days in a new customer's experience with an organization present a prime opportunity to cross-sell products and services if customer intimacy is well established.

An onboarding strategy helps to forge that connection by engaging with customers in a relevant way from the start of the relationship. Studies show that customers who lack any type of engagement during that first 180 days have a high propensity to close their bank accounts or cancel their other products by the end of the first year.

The bottom line is that the more services customers uses, the more invested they are with the bank, and the less likely they are to leave. Onboarding is an effective way to introduce new customers to other relevant products. According to the U.S. Banker study "Bringing the Customer On Board in the Early Days," of the 50 percent of customers who open at least one additional account in the first three months, 60 percent of them do so in response to information provided by their banks.

Furthermore, 2010 Harland Clarke and J.D. Powers and Associates research shows that communicating with new account holders via multiple touchpoints within 10 days of them opening their accounts, and then three to five times in the first 90 days, positively impacts both cross-sell and retention efforts. The study also suggests that currently the opportunity for financial institutions to increase engagement with customers within the first 180 days is significant, because as many as 33 percent of a firm's account holders engage in only one to five transactions per month, while 17 percent never transact.

Despite the opportunities onboarding presents, only 66 percent of customers receive follow-up from their banks within the first 180 days of opening an account, the U.S. Banker study finds. Those banks that do use onboarding experience firsthand how effective it can be for engaging customers and building loyalty and profitability—especially when supported by an aggressive multitouch onboarding campaign that comprises well-timed, tailored activation, brand-building, cross-sell, and retention programs designed to drive organic growth among new customers.

Creating maximum impact

Banks launching an onboarding program, or looking to improve their current strategy, need to first establish detailed objectives. A bank's stakeholders should ask several key questions to help determine those goals and priorities: How do we expand the relationship from single product to multiproduct? How do we sell products around the real needs of the new customers about whom we have limited information? How do we gain the trust of these customers? Once we acquire customers, how do we successfully retain them and deepen the relationship? Are they actively using our products?

After the stakeholders satisfactorily answer these initial questions and confirm the objectives of the potential onboarding program, they must incorporate four critical processes: 1. Conduct customer profiling and a needs-based assessment; 2. Develop a multichannel communications strategy; 3. Provide employees with the necessary information, tools, and training to help facilitate the strategy; and 4. Establish key performance indicators.

1. Conduct customer profiling and a needs assessment Banks must first collect fundamental customer information to determine customers' needs and preferences. To help steer the conversation, banks should conduct a needs assessment designed to go beyond collecting basic demographic information, drilling deeper to help uncover customers' reasons for choosing the bank, determine their channel preferences, and understand their banking behavior and attitudes. This two-way dialogue will also help the bank identify customers' needs (current and latent), determine their life circumstances and upcoming life events (e.g., graduating from college, starting a family), and uncover their life stage (e.g., newly married, retired).

This process will help banks anticipate customers' needs and determine the optimal times to sell products and services tailored to those needs. Additionally, conducting a customer needs assessment can help prioritize cross-sell, upsell, and enrollment/activation objectives by segment, while helping to avoid bombarding customers with irrelevant offers.

Customers' potential value also will be instrumental in mapping specific products and services to them, and will help to define the enterprisewide communications plan, including method, mode, and frequency of interaction with the bank throughout a customer's lifetime.

2. Develop a multichannel communications strategy An effective customer communications strategy is critical to the success of any onboarding initiative. Research indicates that using a multitouch onboarding strategy across channels leads to more successful cross-sell efforts.

This starts with establishing a cross-channel team who will develop relevant communications and the supporting objectives needed to reach the firm's onboarding goals. Then the team must tailor the communications—whether thank-you calls, emails, welcome packs, or product-specific information—based on the bank's customer segments. Segmentation should be derived from customer value, needs, behaviors, channel preferences, and activity. The personalized components should include message content (e.g., emails, call scripts) and mode of communication (e.g., direct mail, email marketing, mobile messaging).

Ellie Mae, a provider of enterprise solutions for the residential mortgage industry, for example, launched a customer nurture program in 2009 that uses multiple communications channels. New customers automatically receive an email inviting them to log in to Ellie Mae's online resource center, which walks them through the orientation process. The portal also offers users training recommendations and a guide to "first steps." Additionally, it provides interactive tools geared toward customers' specific needs, such as conducting a "health check" of the software or contacting the service team for help.

3. Arm employees with tools to ensure success Targeted communication is one of the keys to onboarding's success, but will only be as effective as the frontline employees who serve as the main point of communication with any new customers. Therefore, it's necessary for banks to discuss the enterprisewide value proposition of the onboarding strategy and resulting communications plan with frontline staff and personal financial advisors.

Banks should also give those employees an onboarding framework that includes a list of relevant product bundles and a needs agenda for each customer segment to support their sales and service efforts. Additionally, banks must provide any training necessary to help employees understand how to discuss and disseminate information to customers about those products and bundles, as well as the methods they should use to respond in a relevant way to customers' individual needs.

Finally, banks should consider providing incentives to their employees for enrolling customers in relationship-building services such as online banking. They ought to also reward and recognize employees for successfully upselling or cross-selling additional products and then measure employees' progress.

4. Establish KPIs Banks must also establish metrics to monitor the performance of the onboarding process. One example is early retention, which is the percentage of active accounts against the number of new accounts opened within 180 days. The number of referrals from current customers and the percentage of new customers also serve as valuable performance metrics.

Some financial institutions may rely on process metrics as another effective set of KPIs. Such metrics include lead times, times taken for key activities to occur across individual processes like account openings and card delivery, and the number and percentage of customers who drop out between key steps along the overall onboarding process map.

Cross-sell metrics can also provide value and can include the number of products sold measured against currently active products, the percentage of products that are bundled into a packaged customer offering, the number of cross-sell offers accepted, and relevant future sales leads captured during the needs assessment. 

Well-executed onboarding drives long-term results Onboarding creates opportunities for banks to establish deep and profitable relationships with their customers. Organizations that successfully incorporate these four critical steps into their strategies will be well prepared to conduct a customer onboarding program.

Successful onboarding programs don't follow a one-and-done approach, however. Instead, they should be continuously updated based on new customer requirements along their lifecycle, changes in customer behavior, and other variations. This requires a collaborative approach involving various departments within an organization, including analytics, outbound marketing, customer service, and process management.

Financial service organizations that engage customers effectively after the initial sale will experience far-reaching benefits. Their onboarding investments will begin to pay off immediately and will positively impact long-term profitability. As a result organizations will gain the most valuable asset they can acquire: customer trust.