How to lure them online: 'would you like to earn $10?' There are a number of effective tactics available to entice more customers to sign up for online banking--including incentives and contests. And don't forget about educating your frontline staff.

• Author: Sablosky, Tanja Lian
• Position: Feature

Teller: Would you like to sign up for online banking?

Customer: No thanks.

Teller: You can save time with our online bill pay service.

Customer: I'm not interested.

Teller: We have a special offer where we'll pay you a $10 cash bonus for signing up.

Customer: What???

Teller: Sir, it isn't necessary for you to jump across the counter to get an application!

Some ways of marketing online banking work better than others. Across the country, banks have successfully marketed online banking through the use of techniques such as incentives, contests, e-mail and online advertising, and customer education. Here's a look at some of these approaches.

Sweepstakes

These can be an effective technique to drive up usage, according to Kevin Doohan, marketing director of Digital Insight Corp., Norcross, Ga., a provider of online financial services products. The important thing to remember is that prizes work better than cash, he says. For example, Digital Insight, with a client bank, just managed a sweepstakes entitled "Live Free for 60 Days." (See "All Your Bills Paid for Two Months!") "The cost for the prize was about $14,000, but the allure of a contest offering a customer a chance to 'Live free for two months' was much greater than just a drawing to 'Win $14,000,'" says Doohan.

Incentives

Promotions to encourage initial use are effective when small cash rewards are offered. A $10 gift certificate or cash prize works well. Another incentive that frequently succeeds is one to six-months free online banking services. Once customers have adopted the online bill paying services, they tend to stay with the service. And once they've realized the convenience of airline bill paying, they generally are willing to pay the nominal lee most banks charge for such services.

Doohan doesn't recommend negative incentives, but says that if you must use one, combine it with a customer benefit. For example, if your bank is charging $1 per teller visit, pair that with "However, if you check balances and transfer amounts online there will be no cost, and we'll lower your car loan rate by 0.25 percent," the offer will be much stronger. Negative incentives are the wrong way to go, agrees Paul Murphy, president, Murphy & Co., a St. Louis-based company specializing in online banking and electronic commerce strategies. Instead of penalizing customers for using branches, reward them for using online services. "I've never seen a negative incentive work," says Murphy. Incentives that...