More and more financial institutions are adopting the practice of onboarding, and with good reason.
Onboarding is a series of structured contacts directed toward new customers with the primary goal of keeping those customers well beyond their one year anniversary.
When done properly, onboarding dramatically improves retention, and it can increase cross-selling results among new customers which is historically the most vulnerable portion of your customer base.
Industry statistics tell the sad truth: on average, 35-40% of all new checking account customers leave within the first 3-6 months. This is approximately 2 times higher than annualized rates.
In this installment of ASA’s special series on Opportunity Management, we examine the role of onboarding within a thriving sales and service culture, and what goes into a successful onboarding program.
More than just a welcome letter, onboarding is organized and executed to first ensure that the customer is happy and using the product, and then to determine if other products or services might be of value.
The primary reason customers leave in that critical first 3 to 6 months is due to errors or dissatisfaction. For example, the checks never arrived, or an unexpected fee was charged. Being proactive rather than reactive is a key component to successful onboarding.
A simple, well-timed call from a branch manager or CSR would resolve such problems. Similarly, if the customer is not using the product within a reasonable timeframe, the contact could focus on helping them get comfortable and engaged. Such small actions can yield big pay-offs.
A secondary goal of onboarding is to sell additional products to new customers and for good reason?they are ready for change and once again, statistics support this. New customers are six times more likely to open new accounts compared to prospects. And 75% of cross-sales from retail checking customers occur within 90 days of account opening.
As straightforward as onboarding is, there are a few essentials you need to consider.
Onboarding is especially profitable when it is driven by analytics. For instance, what groups or segments exist among your new customers? Analytics can identify these groups, and into which your new customers fit. You can also determine what their expected long-term value might be, which can drive other important outcomes such as optimal product packages.
The forms of contact vary (letters, phone calls, email, direct mail). Decide what mix is best based on the nature of your financial institution, the kinds of processes you can maintain consistently, and other goals you may have. For example, a welcome letter is certainly appropriate as the first step, but Gen X and Gen Y customers might prefer to receive an email instead.
The timing of each contact is also important. A welcome letter or phone call can occur within the first few days, whereas a call to verify if the checks arrived should be scheduled a little further out.
Early contacts can also be a good time to tactfully gather additional information not captured during the account opening process. For example, why did the customer switch to your financial institution? Are there any life events on the horizon, such as kids going to college? How, when, and where do they prefer to be contacted?
Track each action and outcome, especially uncompleted contacts, such as phone calls. Tracking is vital, and so is reporting. Effective reporting allows you to monitor and share your progress.
If the enthusiasm you initially felt begins to wane because the organization and coordination of onboarding seems beyond your grasp, don’t worry. Automated solutions are available that lightly dovetail to your existing systems and have virtually no negative impact on your staff.
If a financial institution is serious about improving the bottom line but feels constrained by how much they can realistically commit to, regardless of the reward, onboarding is probably the single best choice because it delivers the highest return in the shortest amount of time with significant continuing impact.
For financial institutions able to adopt multiple practices to improve sales and retention levels, onboarding is a logical starting point that strengthens other initiatives such as referral management.
