While substantial progress has been made it also shows there is still room for improvement. And this is especially true when it comes to digital sales. For example, retail banks are behind when it comes to the sharp rise in smartphone use, and the potential for mobile as a sales channel. Despite the availability of online digital applications, only 9% of personal banking products in the UK can be applied for using a mobile device. With two-thirds of UK adults now owning a smartphone, there is every reason to forge ahead in this area.
The abandonment problem
Having a digital or mobile onboarding process, while a step forward, is only the first step in digital sales. Many banks still run into ‘the abandonment problem’ – customers who start the process but drop out before the end. Imagine a consumer viewing a TV ad for a new credit card. They use their smartphone to visit the bank’s website to learn more; perhaps they’re even ready to apply. But if the mobile application experience is poor (perhaps the onboarding process was designed for a PC rather than a mobile device), too much typing is required, or the application isn’t touch-friendly, the customer is likely to abandon.
The reasons behind abandonment are numerous. However, there are some big problems and pitfalls that crop up time and time again. For instance, a good user experience typically starts with the easiest questions and leaves the more difficult questions until the end of the process. Yet a lot of digital onboarding processes tend to operate in the reverse. If a question requires effort, for example forcing the customer to go and get their wallet (which may be in another room etc.), then it is much more likely to cause abandonment at the start of the process rather than the end, by which time the customer will feel far more invested (“I’ve come this far”).
It isn’t uncommon to see abandonment rates of 85-90% for new product applications: a major and unnecessary loss. As well as being potentially brand damaging, it wastes marketing budget not to mention lost revenue from the product itself.
Reducing the number of questions and amount of information customers are required to fill-in themselves is also key. Too often the onboarding process operates in a silo, separate from the bank’s primary data stores, meaning the customer is asked redundant questions to which the bank already knows the answer. Similarly, there is a tendency for different departments within the bank to all add their own questions into the process, inflating the application. Reducing the number of questions involved is a key way to reduce abandonment rates. Other typical examples include the overuse of capital letters or non-conversational English, as well as the lack of a ‘save and resume’ feature which prevents a customer from starting an application online and finishing it with help from a bank employee.
Gaining insight into the digital sales process
These problems are often the result of in-house onboarding processes that have been designed and put together in an ad hoc fashion over time with the needs of the back office in mind. This is understandable; the focus to date has primarily been to get online applications running in the first place. However, many banks are now starting to take a more sophisticated, customer-centric approach to the digital sales process, tailoring the experience to minimise abandonment.
Central to this is the use of big data and analytics to shine a light on what’s really going on during the application to see where customers are dropping out, and – crucially – why. Up until now, the analytics capabilities available in this area have been limited and top-level; such as the ability to see whether customers are dropping off from a mobile or desktop device. But with the latest technology it is now possible to get a far more granular picture. This involves, for instance, seeing how long users spend on each page, which fields and questions they struggle with the most, where errors are made, where the customer is using pre-fills as opposed to entering information directly – and so on. And this can all be done through metadata, avoiding any data confidentiality issues.
Once armed with an accurate and detailed picture of the user experience, tweaks and improvements can be made and then tested – creating a feedback loop. In our experience working with banks to improve the visibility they have over their processes, we find the abandonment rate can typically be reduced from 85% to 50% in a short amount of time simply by addressing these common issues.
This represents the ‘catching up’ of digital sales to marketing and service provision, where many of these big data/analytics principles have been in play, to a relatively sophisticated degree, for some time. It goes beyond the abandonment problem too; more granular insight – with breakdowns for age, gender, background, device and so on – opens up the possibility of tailoring the onboarding process for different groups of customers with different preferences and needs in the future.
This is only the beginning. With continued analysis and improvement the abandonment rate can be driven further still. The closer it can be driven down to zero, the closer the bank is to making every pound of marketing budget count.
To a great degree, the use of Big Data and analytics to this major step in digital banking is unavoidable. As more and more banks start applying it, information about who is doing it well – and not so well – will wind its way into the public domain. In a complex market environment, characterised by squeezed revenues, high competition, and low interest rates, there is probably no easier or low cost way to boost revenues and cut waste. And as always, those who take action early will gain an advantage.
Don Bergal
CMO
Avoka
It isn’t uncommon to see abandonment rates of 85-90% for new product applications: a major and unnecessary loss. As well as being potentially brand damaging, it wastes marketing budget not to mention lost revenue from the product itself.
Reducing the number of questions and amount of information customers are required to fill-in themselves is also key. Too often the onboarding process operates in a silo, separate from the bank’s primary data stores, meaning the customer is asked redundant questions to which the bank already knows the answer. Similarly, there is a tendency for different departments within the bank to all add their own questions into the process, inflating the application. Reducing the number of questions involved is a key way to reduce abandonment rates. Other typical examples include the overuse of capital letters or non-conversational English, as well as the lack of a ‘save and resume’ feature which prevents a customer from starting an application online and finishing it with help from a bank employee.
Gaining insight into the digital sales process
These problems are often the result of in-house onboarding processes that have been designed and put together in an ad hoc fashion over time with the needs of the back office in mind. This is understandable; the focus to date has primarily been to get online applications running in the first place. However, many banks are now starting to take a more sophisticated, customer-centric approach to the digital sales process, tailoring the experience to minimise abandonment.
Central to this is the use of big data and analytics to shine a light on what’s really going on during the application to see where customers are dropping out, and – crucially – why. Up until now, the analytics capabilities available in this area have been limited and top-level; such as the ability to see whether customers are dropping off from a mobile or desktop device. But with the latest technology it is now possible to get a far more granular picture. This involves, for instance, seeing how long users spend on each page, which fields and questions they struggle with the most, where errors are made, where the customer is using pre-fills as opposed to entering information directly – and so on. And this can all be done through metadata, avoiding any data confidentiality issues.
Once armed with an accurate and detailed picture of the user experience, tweaks and improvements can be made and then tested – creating a feedback loop. In our experience working with banks to improve the visibility they have over their processes, we find the abandonment rate can typically be reduced from 85% to 50% in a short amount of time simply by addressing these common issues.
This represents the ‘catching up’ of digital sales to marketing and service provision, where many of these big data/analytics principles have been in play, to a relatively sophisticated degree, for some time. It goes beyond the abandonment problem too; more granular insight – with breakdowns for age, gender, background, device and so on – opens up the possibility of tailoring the onboarding process for different groups of customers with different preferences and needs in the future.
This is only the beginning. With continued analysis and improvement the abandonment rate can be driven further still. The closer it can be driven down to zero, the closer the bank is to making every pound of marketing budget count.
To a great degree, the use of Big Data and analytics to this major step in digital banking is unavoidable. As more and more banks start applying it, information about who is doing it well – and not so well – will wind its way into the public domain. In a complex market environment, characterised by squeezed revenues, high competition, and low interest rates, there is probably no easier or low cost way to boost revenues and cut waste. And as always, those who take action early will gain an advantage.
Don Bergal
CMO
Avoka
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