The not-so-secret fuel of growth: better relationships. Three tips to build better relationships with Millennials.
“What we really need is a mindset shift that will make us relevant to today’s consumers, a mindset shift from telling to selling to building relationships.” – Jim Stengel
It’s no secret that a key to success for banks and credit unions is developing deep and meaningful relationships with clients and members. However, with much of the focus on Millennials directed to developing environments and experiences suitable to their high ‘digital native’ expectations, it is important for financial institutions to revisit strategies that ensure that better relationships are also an outcome.
While the definition of relationship has not changed, the application of them has. No longer does it imply a one-to-one or face-to-face, but the ability to interact and work with each customer across all channel in a unique, personalized and individualized manner. The benefits of personalized relationships and experiences include a longer lifetime of customer accounts and increased utilization of products. There is no doubt that when financial institutions get to know their customers, their ability to successfully present products that meets their needs improves.
Here are three tips to build better relationships with Millenials:
Make an emotional connection.
According to Harvard Business Review (HBR), customers who have developed an emotional connection with a brand generate a disproportionate value for it. Customers who are ‘fully connected’ emotionally are 52% more valuable to brands than customers who are ‘highly satisfied’. This emotional connection value accelerator holds true for Millennials.
In HBRs research, there are specific emotional motivators that vary in impact across products and brands. For a major bank introducing a credit card targeted at Millennials, HBRs model uncovered key emotional motivators as desires to “protect the environment” and “be the person I want to be”. Through messaging and features tied to these motivators, they were able to grow use in the segment by 70% and grow new accounts by 40%. Their fasting growing new credit card.
For financial institutions connecting emotionally can include developing products, services and programs oriented towards Millennials inclination to support socially conscious brands and companies or improve and develop their own skill sets. This includes developing portfolios and accounts which support local and international social causes through partnerships or enable direct connections through impact investing or providing customized financial literacy programs.
Ask and listen.
One of the mistakes financial institutions make in targeting Millennials is assuming they know their needs. If you want to understand what your current and potential clients likes or wants, you need to ask and listen. There are many options available to do this, ranging from in person focus groups, to online surveys, to social media listening. For more on using these tools to create personalized experiences, you can read our blog post on the topic.
Mountain America Credit Union (MACU) in Utah took listening a step further by establishing advisory councils at a local high school. The advisory council meets monthly and provide input on design concepts, new programs such as rewards programs for Millennials, discuss banking pain points, and how they would like to engage with their financial institution.
By leveraging this feedback, results have followed. Between the 2010 and 2016 Millennial representation in their membership grew from 30% to 41%. In 2016 Millennials were half of their overall member growth. Millennials now also make up about 70% of MACU’s workforce.
Focus on Technology.
To drive growth you need to drive engagement. According to Gallup research, Millennials have low engagement across industries. For the financial industry, only 31% of Millennial customers are fully engaged. The great news is that focusing on Millennial engagement comes with more rewards than just growth. Gallup research has also shown that when Millennials are fully engaged, they are more profitable and loyal than other customers.
It may not be surprising that Gallup research also found that key for engagement with Millennials comes down to the digital tools and experiences. Compared to other generations, Millennials care the most about technology, and they’re the most influenced by technology. In the banking industry, Millennials are the most likely to use online and mobile banking channels. 73% of millennials prefer to have a digital relationship with their bank (mobile, online or ATM channels) rather than a personal one. This is significantly higher than other generations with 58% of Gen Xers and 43% of baby boomers stating the same.
Regardless of the approach financial institutions choose to build relationships with Millennials, it is imperative they be authentic. Authenticity can be characterised as a consistency and continuity between the brand and the institutions’ activity in the real world meaning. In a report developed by Stackla, an overwhelming 90% of Millennials said that brand authenticity is important. If a Millennial engagement program seems out of line of an institutions strategy, it may be time to revisit to ensure continuity and the authenticity Millennials desire.
How is your financial institution building relationships with Millennials? We’d love to hear! Share with us by reaching out to firstname.lastname@example.org.