Live from NCDM: Wells Fargo Banks on Customer Analysis

It takes more than good service to keep retail bank customers from leaving.

The longer they’re with you, the more likely they are to leave. So it pays to know their channel preferences, and to predict which products they might need, according to Gary W. Class, senior vice president for Wells Fargo.

The 150 year-old company was able to reduce its bank customer attrition with a lead analysis program that took both of those variables and more into account.

The bank started out by determining the risk of attrition. Wells Fargo found that the most likely to depart are customers who do all their business through tellers. The least likely to leave are those who make their deposits via ATM.

And customers who bank online are less likely to jump ship than those who don’t.

The attrition rate is 12.6% for consumers who have no online activity. That number falls to 6.5% for customers who look at their accounts online, to 4.2% for those who move money online, and to 3.5% for people who pay their bills online. These numbers are fairly standard throughout the industry, Class said.

But all groups are different, said Class, speaking at the National Center for Database Marketing Conference in Philadelphia. And Wells Fargo found that it also had to listen to “clues to unmet product needs.”

To do that the bank rates a customer by criteria like tenure, products, channel behavior, ATM activity and online presence. It then tailors an outbound telemarketing message based on those variables.

For example, a long-term customer who has a non-interest checking account and does not use ATMs would be encouraged to use them. He would also be offered a savings account that earns interest, and a credit card with overdraft protection.

In devising offers, the bank tries to meet a customer’s spatial and temporal needs, Class continued.

The data is derived from “many layers,” Cross said. Key factors include recency, frequency and functionality of online behavior, Class noted.

Does Wells Fargo ask customers about their channel preferences?

No–that’s expensive, and hard to do, Class said. But preference can be inferred by what a customer actually does, he added.

“The key is to understand touchpoint behavior,” he said. And a bank has to move beyond mere utility to being a trusted advisor.

What do customers want? Above all, they desire convenience and consistency, he said.