Can you hear your bank now?
Canadian Imperial Bank of Commerce has been behaving a lot like a telecommunications company lately. In April, the bank introduced a marketing strategy not much used in the financial services industry: bundling.
That stalwart of your wireless, Internet and cable TV provider’s advertising is being employed with chequing accounts, mortgages and credit cards. It’s a strategy that CIBC began testing out just over a year ago, and was encouraged enough to become much more aggressive in its marketing of “banking bundles” this spring. It is advertising the concept in an attempt to convince customers that they can simplify their financial management by grouping different services with one institution, something that banks are constantly trying to do anyway.
CIBC’s new messaging approach is just one example of a long-standing technique in the world of marketing: introducing innovation to one industry’s customer-acquisition process by taking inspiration from other industries. And it’s something that has been on the rise lately, especially in Canada.
Just last week, Rogers Communications Inc. launched “Rogers First Rewards,” a customer loyalty program that will allow people to collect points on the piles of money they hand over for cable television, Internet connections, and home phone and wireless services each month. Those with higher overall spending on Rogers services will receive more points per dollar, and those points can be redeemed for rewards such as long-distance calling, upgrades on Internet packages and even expanded TV content.
There is one important reason that loyalty programs are relatively rare for the telecommunications and cable industry: For most companies, loyalty is all about data. By asking customers to create their own identity linking them to a company, it can then analyze their shopping behaviour, buying habits and attachment to a brand, and identify targeted ways to market to them.
However, the companies that provide your TV, Internet and phone services already know plenty about you. Instead, for Rogers – which is struggling against competitors such as BCE Inc. and Telus Corp. constantly trying, and sometimes succeeding, at persuading customers to switch – the new program is all about reducing “churn,” or customer losses.
“This really is just making a way for our customers to have more value in our services,” said John Boynton, executive vice-president of marketing and chief marketing officer at Rogers. “If we can change people’s perceptions … our leap of faith is that they will like us better, they will stay longer, and our churn will go down.”
Rogers looked to other industries for inspiration, Mr. Boynton said, but it also did research into what frustrated consumers about their existing loyalty programs. That helped it rule out certain irritants such as paying taxes on points redeemed, or blackout periods.
And because it was such a new offering for the industry, Rogers had to build its loyalty program from scratch: It took roughly two years, from when it put out a request for proposals to build the infrastructure for Rogers First Rewards, until its launch.
This type of borrowed strategy has influenced marketing around the world for decades, said Alan Middleton, a professor of marketing at the Schulich School of Business. Starting in the 1960s, other industries began to notice the success of packaged-goods companies, and the people behind those brands were frequently headhunted as other companies tried to recruit that expertise.
More recently, packaged-goods companies themselves have also looked outside their industry and have been taking insights from, of all things, the hotel and hospitality industry, Prof. Middleton said.
“Packaged-goods organizations are now talking about customer experience. Are they selling diapers, or are they selling reassuring mothers that they are bringing up their babies well?” he said. “Everyone is beginning to look at customer-based activity as opposed to transaction-based activity, to help with what some people call brand bonding.”
It’s for this reason that companies such as Procter & Gamble Co. and Kimberly-Clark Corp. take cues from hospitality, trying to serve customers’ whole needs instead of just marketing products to them. Those companies’ diaper brands, for example, now provide free services such as the Huggies Q&A to educate new moms, online forums and extras such as a “baby diary” to help scrapbook a newborn’s first months of life.
For Rogers, that meant recognizing that there was customer dissatisfaction in the industry, particularly regarding the fact that long-term customers are often treated worse than new customers being courted with promotional pricing and more attentive service. Its research showed that 40 per cent of customers felt that a loyalty program would strengthen their relationship with their carrier.
That can be especially important for creating the potential for a lifetime bond with customers early on: Research from Montreal-based Aimia Inc., which operates Aeroplan as well as a number of global loyalty programs, showed that younger “millennial” consumers, who represent about 26 per cent of the Canadian population, are attracted to loyalty programs. In its survey, 78 per cent said loyalty or rewards offerings would be “very” or “somewhat” likely to make a difference in their purchase decisions.
“Over all, Aimia does believe there is an important role for loyalty to play and that increasingly the competitive differentiator will come from companies that better understand their customer, through collection of relevant data, and can provide meaningful interactions with their brand,” said Aaron Dauphinee, knowledge and development director at Aimia in Toronto.
Like many banks, CIBC is aiming to keep consumers as they move through life stages, and it says its bundles are designed for people at different ages and states of need. (Banks in Canada are somewhat constrained in bundling because, for example, they are not permitted to co-sell retail bank services and insurance products, but CIBC’s offering stays away from insurance.)
“Traditionally, it’s been a product approach to marketing,” said Veni Iozzo, CIBC’s senior vice-president of marketing and strategy. “We’re moving here to a shift to client need and consumer-driven insight.”