I had a great time talking to  The Financial Brand  and  Matthew Doffing  about using data to retain and grow client deposits. And it prompted a lot of great questions asking for more info. Here’s part 1 of 2, offering up additional thoughts. 

Read the original article with great insights from  Alkami Technology ‘s  Mark Leher  as well. We covered a lot of ground. Reach out with follow up questions if they’re not touched on in the next two posts. 

“Ben, I can’t get anyone to buy in to offering incentives to attract new clients.”

My response is: “Do the math.” 

Many FIs focus on the immediate costs, overlooking the long-term impact. ROI is clearly important, but institutions I talk to don’t do the math. Or the math is not comprehensive to the overall relationship. Or they’re unwilling to even test an offer. Or they did it once, and aren’t willing to iterate on the offer. 

Do the math, review your results to your math, refine, and continue to improve. 

Or institutions are uncomfortable with making assumptions about future performance of client relationships. Which is funny, because you can already infer future performance based on your current client base. You should know the average life span of a client and their cross sell as a portfolio, which gives you metrics to model out performance. 

Will you get some bad apples? Of course. Treat your campaign like a portfolio. You’re going to have great accounts, and some duds. Expect it. And don’t let the fear of duds derail your efforts. You’ll need to understand why these accounts are not working out and manage your campaign expectations, requirements, and disclosures to find the best outcome. I’m amazed at how many people focus on the negatives, versus the upside to growing their business. 

“Ben, it’s expensive to offer upfront incentives.”

Well, what’s also expensive is other FI’s, FinTechs, giant banks, and others stealing your clients. Or not being compelling enough relative to their efforts and offers to attract new clients. 

The debate between offering high interest rates versus upfront cash incentives is intriguing. It’s an amazing look at consumer psychology. Many consumers act on immediate gratification (a cash offer) over the long-term benefits (interest rates). 

Don’t immediately dismiss a cash offer without doing the math. And maybe it’s a lower rate with a cash incentive, which could be a lower total out of pocket cost in year 1. Clients have the gratification of a known cash offer, while a decent but not top of the market rate retains the client for the long term. 

I hope those thoughts offer some additional insights to  Matthew Doffing  great article. Stay tuned for part 2.