Keeping Customers in the Bank: Retention for Financial Services

Lots of attention in FinServ goes to conversion — which makes sense, considering a key component of the business is getting people through what’s often a long and complicated application funnel. And with direct ties to revenue, it’s no surprise that CRO tends to steal the show. 

But for FinServ product managers, retention is just as important. As people conduct more and more financial transactions online, optimizing feature workflows and increasing product engagement have become critical to keeping the money coming in. 

Until a couple of years ago, FinServ companies weren’t really expected to have a great online presence. Customers generally stuck with brands based on which had the best financial product (the best rate, the more interest, or the best coverage) — but not necessarily the best or easiest digital experience. 

Now that more financial services are transacted online, and it’s much easier to switch your bank or insurance provider, companies need to offer a compelling digital experience AND have product offerings that are discoverable and easy to use. Since self-service has become the norm in financial products, it’s not unreasonable to think that you might change your car insurance just because the online experience sucks. 

For product managers at FinServ companies, retention is now less about offering a good financial product, and more about designing a digital experience that helps people find value — in a way that’s faster and easier than the competition. 

But first: how to measure retention 

In financial services, feature workflows can be very elaborate. For example, if you want to put more money towards your retirement, you and your advisor may decide to increase your IRA contributions. The steps to do that online are fairly complex, no matter how well you design the flow. 

You have to link a bank account. Put in how much money you’re going to add. What’s the frequency? One-time or repeatedly? You may have a tax limit on how much you can put in too. The flow is much more complicated than a typical eCommerce conversion funnel. That’s why tracking user behavior helps optimize these processes. 

At bottom, your retention metrics should measure how many users performed an event once, and then performed that event again later. The first step? Deciding which event in your product counts as “usage.”

That could look like a customer viewing their balance, purchasing an insurance policy, or transferring funds. What are the actions that your customers take that correlate with long-term retention? Now how many customers are repeating those value-driving behaviors over time?

Download our Guide to Retention to see how you can establish your retention baseline against which you can run experiments. 

Let’s dig in a little further. When thinking about retention, it’s important to recognize the three different stages that indicate different types of retention. 

Three Stages of Retention

The first stage represents an initial drop-off of users. This kind of churn is to be expected, as far more people will likely try your product once than will visit it regularly. 

The second stage represents slower, longer-term churn. (Here we’re measuring retention over the course of a year. The actual time frame may change depending on what your product does.) Finally, there can be a significant fall at the end, where the majority of users in your product may drop off entirely.

Read on to find out how you can improve your customer retention rate at each of these three stages. 

Stage 1: Overcome barriers to finding value

The first stage tends to be the biggest challenge when improving retention in FinServ — getting customers over the hurdle of understanding complex financial instruments. The goal: to make using your services as easy as possible. First-time stock buyer? No problem. Your product should make it simple. 

Optimize your onboarding flow

We often think about retention as something to worry about after users are in the product. But in fact, customers’ very first interactions with your product set the stage for what they’ll expect in the future. If you’re in charge of retention, it’s your job to show users value as quickly as possible. 

With a wide range of people using financial products, PMs should design user workflows with the novice (rather than the expert) in mind. Complex features raise the barrier to entry and will cost you valuable customers if proper guidance isn’t given from the start. 

Don’t make your customers spend hours scrolling through support docs. Build the answers to FAQs in your feature workflows using in-app guides and pop-ups. 

Figure out which activities in the product are most correlated with customers’ getting value. Then use this information to revamp your onboarding process to drive customers to these more valuable features.

The effects will ripple out: customers will feel more confident about going with your business, because they will have already experienced your company’s most valuable services or features. And they’ll be more likely to use additional services based on the value they’ve seen with your other product features. 

Simplify direction in the product

Anyone who has bought insurance knows how confusing and overwhelming the experience can be. Sierra Hines, Customer Insights Analyst at Esurance, knows that customers often expect a confusing experience from their insurance provider. 

Her job is to make it as easy as possible for customers to add a vehicle, remove a driver, or change their coverage. Doing any of these is currently a two-step process. To make this process as simple and intuitive as possible, Hines needs to understand, with granularity, what paths users take through the site, and why some of them drop off before hitting confirm. 

Doing this is not always easy. Depending on their goals, users may be directed to “umpteen different routes” on the Esurance site. Thanks to Heap’s Path Analysis, Hines can visualize all of these paths, and see very clearly who gets to that final success page. This makes it easy for her to pinpoint moments of friction or confusion, and improve them.

From the beginning, Hines attributes her ability to do this to being able to empathize with her customers. “Being able to go in and look at our site and then look at what Heap’s Path Analysis is saying,” she describes, “I can kind of put myself in the customer’s shoes. I can see why they went this path when I look at our actual site. I can connect those dots.”

To optimize the flow of your product experience for your customers, ask yourself the following questions: 

  • Does your product intuitively direct people to the activities that will gain them value?
  • Could it be organized differently? 
  • Could you present information in a different way (through guides, say)?

Stage 2: Build services into regular habits

If you feel like you’ve sufficiently experimented and iterated with your onboarding process and feel confident about your product’s ability to activate new users, it’s time to move on to the next part of the curve, and find ways to make using your product features a regular habit for your customers. 

Don’t let customers wait to revisit your site until it’s time to renew their policy. Find new ways to add value by educating users about other product features. 

Make your product indispensable

Work hard to isolate the features that make your product indispensable. Then double down on your key differentiator(s). 

What can you do that your competitors cannot? How do you make these features invaluable to customers, so that if you left the market they would feel real pain? 

As with any product, the more of your features you can get people to adopt, the more likely they’ll stick around. 

For Northwestern Mutual, that looks like getting customers to use the mobile app to track their progress towards accomplishing big financial goals, such as paying off student loans or buying a house. This is a key feature that drives engagement, so the Product team launched a feature tour handholding customers through how to set up their goals. The tour saw a 20% increase in people engaging with the feature. And with Heap, Northwestern Mutual could pinpoint drop-offs in the feature tour, so they could iterate on them. 

Bottom line? Break down a bigger problem of use and engagement, and isolate it to a smaller set of things that you can sprint on and iterate on.

Get specific with segmentation

The financial services industry has a history of treating all customers as the same, when in fact, a senior citizen switching auto insurance is going to have very different motivations, expectations, and lifetime value than a recent college grad looking to insure her first car. 

Retention analysis is most powerful when you segment by cohorts — groups of people who share a common characteristic over a period of time. For example, are customers who take out a second insurance policy better retained over time than those who don’t? 

The best FinServ companies not only know their customer segments well, but they create different retention strategies based on each type of customer. Know what drives each of your customer segments and act on that knowledge by tailoring your product experience to respond to users’ actions and to satisfy specific needs. 

Building retention cohorts and retention curves in Heap is helping the Product team at Northwestern Mutual track retention through complex feature flows. “Heap’s allowed us to set up longer term goals like OKR objectives, retention cohorts, and detailed analytics journeys so that we can see if our changes are actually driving our outcomes,” says Joe Pfeiffer, VP of Product at Northwestern Mutual. 

Stage 3: Adapt to changing needs

As your customers’ financial experience changes, their needs change also, and you’ll want to be ready to meet them. The most successful FinServ companies use data to locate the moments of greatest opportunity and adapt to changing marketing demands. 

Act on predictive customer behavior

Satisfying user needs and solving problems before they even happen is how the best in the business keep their customers away from the rest of the competition. 

FinServ product teams can use data analytics to proactively identify trends in customer usage. Consider deprecating features that are not used often but which make your product more complex. Keep up with the features that your customers love — and offer more like them! 

The more you can serve your customers’ needs, the more your site works as an informal loyalty program, and the more likely customers will stick around. Loyal, satisfied customers buy more products. Period. 

Talk to customers

When you’re deep in the weeds of building out awesome product services and features, it can be hard to answer honestly: What’s not to love?

If you’re not doing this already, it’s critical that you talk to customers who have churned. Find out why they’ve left and take copious notes. Base your decisions on this information.

Heap evolves alongside your customers

Heap lets you measure retention at all stages, then helps you target efforts to make sure new and long-term users continue to get value. 

Across banking, insurance, lending, and wealth management, Heap makes it easy for FinServ companies to improve customer retention by surfacing hidden points of friction at the speed of business. Learn more about Heap for Financial Services.