Extending the honeymoon.

• Author: Funston, David
• Position: On-Boarding

According to the Dove Consulting, the Boston-based research firm, first-year account attrition among banks averages 25-to-35 percent, with half of that attrition occurring within the first 90 days! So while a bank spends 70 percent of its marketing budget to bring new customers in the front door, 30 percent of them drift out the back every year.

Many customers still select their bank based on location and convenience rather than products. A 2006 study by RightNow Technologies shows that 73 percent of customers attrite because of poor customer service, while the Rockefeller Corp. reported the same year that 68 percent of customers leave because they think their financial institution does not care about them.

Savvy marketing directors realize that opening the account is the initial part of a long-range acquisition strategy. The next phase of the customer investment involves a short honeymoon--or as many in marketing call it--the "on-boarding" period.

On-boarding is a two-way dialogue with new customers during a critical period in the customer life cycle--the first 90 to 120 days. Effective customer on-boarding is:

* Efficient and relevant: Communications are targeted only to those customers considered to be the most profitable or to have profit potential. Product offerings are consistent with these customers' needs.

* Cost-effective. It supports the original acquisition investment. The strategy decreases attrition and increases the opportunity for cross-selling, leading to higher balances, improved returns and enhanced loyalty.

* Personalized: Customer on-boarding serves to build a caring, long-term one-to-one relationship with the customer as messages are personalized to needs and interests---sent via preferred channel--and delivered by a representative who can answer questions and complete the transition efficiently.

* Measurable. On-boarding is a profitability-based program built upon incremental results. By focusing on customer segments that need the encouragement to respond to a unique offer, companies cut costs by sending the right offers to the right universe of customers. This optimizes response/conversion levels and eliminates natural responders who would act regardless.

Six steps to on-boarding success

The first 120 days is a critical time for securing customer loyalty, and early outreach to new customers can have an immediate impact on a bank's bottom line. The following are the suggested steps to develop an effective on-boarding program.

Step 1: Strategic...