Focus on these three tactics to keep your customers (and your CEO) happy.
With interest rates on the rise, bank profits are likely to rise, too — but only if consumers keep up the same borrowing pace. While interest rate hikes indicate a strong economy, there’s also a chance that higher rates could scare away borrowers and slow down your bank’s lending opportunities. So how will rising rates impact your loan portfolios, and more importantly, what can you do to reassure and retain your customers?
Adopt a Customer-Centric Mindset in Relation to Interest Rates
Changes in the economy can bring new challenges as well as opportunities. And those changes may involve a shift in strategy to engage prospects, retain current customers and keep profits on track. By understanding what your customers want and need, your financial institution can take advantage of unique opportunities to nurture relationships — and profit from a rising interest rate environment. The following tactics can help increase customer engagement and retention, as well as bank profits, resulting in a win-win opportunity for your financial institution — and your customers.
1. Leverage Customer Data
Most organizations collect data from their customers, but many aren’t utilizing this potential gold mine of information to improve their financial marketing and engagement strategies. There are several ways to use financial data to uncover insights into specific customer segments that may be impacted by higher interest rates.
For example, you can identify customers who have adjustable rate loans, and then target them with specific messaging that encourages them to refinance to a fixed rate loan. Or review transaction patterns to gauge when customers will be in the market for certain products.
Identifying segment profiles can help you understand the characteristics of your most profitable customers. That can allow you to tweak and tailor your message and product offerings to more customers like these.
2. Communicate Consistently with Interest Rate Education
Many of your customers may not fully understand the implications of rising interest rates and the potential impact on their finances. They’re likely searching for information to help them navigate the changing and uncertain economic climate. Take advantage of this opportunity to educate and reassure your customers — and position your organization as a trusted, go-to resource that helps them make smart financial decisions — by communicating across all online and offline channels.
- Explain that an interest rate hike is a sign of a strong economy.
- Include a historical perspective that shows that rates are still relatively low and it’s okay to take out that home, auto, personal loan or home equity line of credit.
- Provide the opportunity to sign up for rate alert emails that keep customers up-to-date on interest rate news.
- Encourage customers to consolidate higher interest credit card debt into a lower interest home equity loan.
- Educate customers about ways to pay off variable rate debt sooner.
- Expand relationships by encouraging customers to take the savings from a refinance and put it into a secure deposit product that will grow over time.
- Remind customers that if they’re planning to remodel or buy a home, they should consider locking in an interest rate now, before rates rise again.
3. Provide a Seamless User Experience
Consumers want more control over their finances, including their loan portfolios — particularly when they’re anxious, as they may be in a rising rate environment. They will seek out organizations that provide better access and convenience.
Consider offering digital tools on your website or mobile app that make it easier for customers to manage their money in real time. In addition, send targeted and personalized loan acquisition communication pieces that let customers access and respond to offers any time — and from anywhere.
Keep in mind that consumers continue to use multiple channels to interact with their bank, based on the transaction type and individual behavior. So it’s crucial to have a presence on all the channels where your customers are — with consistent messaging and clear calls to action.
Beef Up Customer Service Opportunities
Extend the user experience to your offline channels as well as your online ones by making it easy for your customers to find the answers they’re looking for. Educate everyone in your organization — from sales to service to marketing — about customer needs and all the solutions that your bank offers. That way, employees are all on the same page regarding the importance of informing, educating and providing answers to your customers.
Profit from Rising Interest Rates by Listening and Adapting
Rising interest rates may bring challenges, but they also provide new opportunities for profitability in loan portfolios. And those organizations that can identify customer behaviors and adapt their financial marketing strategies to focus on a more personalized, customer-centric experience will be in a better position to generate higher revenue.
Need help creating a winning marketing strategy? Our team of financial marketing experts will work with you to create customer-centric solutions to help you grow your customer relationships and boost your bottom line. Email us or call us at 800.525.0313 today to see how our 30+ years of financial marketing expertise can work to your advantage.