“Cash, it seems, is no longer king,” explained Alan Yarbrough, director of sales for River Rock Marketing Services, a company that specializes in developing incentive-based acquisition and retention programs based on using merchandise as incentive gifts for the financial services industry.
“With fifty dollar offers regularly being topped by $250 offers, our clients are telling us that they are giving up on a cash “arms race” that has become prohibitively expensive and questionable in value,” Yarbrough said.
He noted the research conducted last December by AlixPartners LLP that showed consumers’ intention to switch from large banks, also discovered that a whopping seventy five percent of banking customers were unhappy with banks in general.
- “Now more than ever, consumers want a transparent relationship built on old-fashioned values like honesty, integrity and respect,” Yarbrough said. “Small and mid-sized banks and credit unions are turning to branded bank marketing gifts as an inducement to earn their business and help build that relationship.”
- It’s also a good idea for the financial institution, he added. “There is substantial evidence that offering branded merchandise as bank marketing gifts motivates consumers to take immediate action, spurring new accounts and increasing the ROI on what is spent to attract and keep customers.”
Yarbrough pointed to River Rock Marketing Services’ own ConsumerNSight research which reinforces research by the Incentive Federation as far back as 2005 showing that cash and gift cards lack the long-term trophy value of merchandise and do not secure loyalty.
“The source of the cash or gift card is quickly forgotten; its perceived value is fixed—$50 is $50; and it’s indistinguishable from one offer to another,” he said.
Yarbrough noted that there is some evidence that cash offers did help fuel growth as the recession worsened, but with competition forcing the cash rewards to higher and higher levels, and as customers continually jump for the next highest offer, the incentive offers become more complex and actually begin to work against the goal of keeping new customers.
“If there are too many restrictions on getting the cash—or in the case of cash-like ‘points,’ in claiming and redeeming the points—consumer mistrust sets in,” he said, “which could jeopardize a positive ongoing relationship.”
Points programs are also complex and expensive to implement since they impose a financial liability that must be accounted for as points grow and are not redeemed by the customer.
“Using merchandise as a gift, on the other hand, is transparent,” Yarbrough said. “You get what you see on the spot. It reinforces a financial institution’s positive image, clearly differentiates it in the marketplace, motivates prospective customers to take immediate action, encourages customer loyalty and simply says ‘thank you, we value you.’”
About us: River Rock Marketing Services specializes in developing customized incentive-based acquisition and retention programs for the financial services industry. It leverages its unmatched industry knowledge, deep experience and proprietary ConsumerNSight research to recommend and source incentive gifts with a level of perceived value that drives higher response rates to marketing outreach efforts. Its state-of-the-art online inventory management tracking and reporting technology delivers an affordable turn-key customer attraction program that is simple to execute at the branch level. For more information visit www.riverrocksvcs.com.
