RMS Inc.’s New ConsumerTrac Research Shows that “Choice is King”
Survey Shows That Community, Regional And National Financial Institutions Should Offer Incentive Variety In Consumer Acquisition And Appreciation Programs
Grapevine, TX., December 4, 2012- For years, the debate of cash vs. non-cash incentives as motivators of consumer behavior has raged in practically every industry. The selection of incentives offered in any given program is critical to its success. Currently in the financial services market, consumers receive offers on a daily basis to open new checking accounts, for example, or apply for various types of loans with an incentive for doing so typically tied to the offer. Over the past 5 years, cash incentives have begun to dominate the bank and credit union promotion landscape because those institutions assume that:
- everyone is motivated by cash
- it is easier for them to manage
- it is less expensive and time consuming than traditional in-branch merchandise programs.
While most studies have shown that non-cash offers outperform cash offers in various industries, no firm or group has focused on determining if cash promotions actually deliver the perceived benefit that banks and credit unions believe they do.
With this in mind, RMS Inc. , a leading provider of incentive marketing solutions, concluded its annual ConsumerTrac research commissioned through market intelligence provider Mintel Comperemedia®. The goal of the effort was to provide RMS customers with data that reflects what incentives are the most meaningful to consumers, and how those incentives motivate those consumers to take advantage of the different offers available in the financial services market today. Through the 2013 RMS ConsumerTrac report, banks and credit unions:
- Better understand consumer behavior and perceptions regarding incentives offered by financial service institutions
- Gain insight into the key drivers for incentive based banking behaviors
- Determine the most effective incentive categories and perceived value among target groups
The research targeted 1,000 consumers across the United States. Participation was distributed according to US demographics for age, annual household income, and banking relationship, ensuring that the study considered consumers who banked with community banks, credit unions regional banks, and national financial institutions as well as the unbanked.
“The research confirmed what most studies over the past decade have concluded, that cash used as an incentive does not motivate most consumers to take advantage of a promotional offer,” says Baron Unbehagen RMS CEO. “We work very closely with our clients to drive successful customer acquisition and cross selling campaigns. Time and time again we hear that cash as an incentive doesn’t resonate with everyone. Our customers also find that cash incentives become a slippery slope because the only differentiation in cash offers is the value. If one bank offers $50 for opening a checking account the competitor across the street will then offer $75. Suddenly, a price war erupts over who can offer the most cash, which is untenable for institutions in this economic environment.”
Respondents to the survey indicated that having the ability to choose their incentive was more attractive than other alternatives, such as cash.
“It wasn’t a surprise to us that consumers are looking for value and they want the ability to choose their incentive. When respondents are presented with a single incentive option, be it cash, a pre-paid card or merchandise, if that choice is not applicable to their lifestyle or current needs, the incentive is not influential in their decision. This suggests that instead of increasing the dollar amount of the cash incentive, it might be time for financial institutions to consider integrating a variety of relevant incentives in addition to their existing cash offer.”
Key Survey Takeaways
- Growth Opportunities: Community Bank and Credit Union account holders are most loyal to their financial institution and have an opportunity to leverage incentive programs to win new business from their national and regional competitors.
- Improve Loyalty: Regional and national financial institutions have an opportunity to improve customer impressions and improve loyalty through meaningful appreciation and recognition programs.
- Provide Compelling Relevance: Incentives should be relevant to the target audience, allowing them to choose what’s most appealing to them at the time of the offer.
- Increase Wallet Share: In addition to new acquisition, relevant incentive programs that offer variety can be an effective approach to cross-selling products and services to existing customers.
“The survey also confirms that financial institutions can save money by offering incentive variety while maximizing program results. Previous studies have shown that 40% to 50% of consumers are motivated by cash offers. The same can be seen for tangible incentives such as merchandise or travel. So, if financial institutions leverage the ability to offer a variety of incentives that appeal to a broader base of consumer needs and wants, wouldn’t such a marketing tactic ultimately result in better performing programs? With the right mix of offers, institutions can ultimately buy down the overall cost of their marketing efforts and improve their promotional program’s ROI.”
About RMS Inc.
RMS provides innovative, online and in-branch incentive marketing programs and solutions designed to motivate customer actions and behaviors to more than 200 financial institutions in the US annually supporting customer acquisition, customer referral, cross-selling and employee programs.
RMS’ Incentive Management Platform solutions are supported through unparalleled industry expertise, strategic program design, innovative technology, and expansive incentive options. RMS has supported more than 1,100 financial institutions over the past 35 years, resulting in over 25 million new checking accounts.
For additional information about RMS Inc., visit www.goRMS.com or to schedule a 30-minute online presentation contact Matt Domanico at 817-481-6516.