Tax season has a secret language you should consider the next time you conduct financial services strategic planning.
And no, it’s not screams of pain and torment (although that is fitting for many people when they think of taxes). No, it’s something more subtle. A whisper. A nudge. A message that is either a positive “you’re my top choice” or a negative “I’m quietly abandoning you.”
The secret language of tax season is a story about member or customer retention…and how soft switching is consistently eating more of your business. According to a recent article from The Financial Brand, one in five people moved money from a primary institution to a competitor in the past three months – a 17% increase over the last time they collected data.
That stat bodes ill for financial organizations…especially as people receive refunds.
Let’s translate the secret language of tax season by looking at two soft switching signals. Then, let’s discuss what you can do about it.
Signal #1: 1099-INT Tell-All
The 1099-INT form reports taxable interest income under $1,500. It’s also one of the few circumstances forcing even your most complacent consumers to look at how their accounts benefit them. Plus, it prompts them to consider you in general when they see your name on that “IMPORTANT TAX INFORMATION” envelope. If they judge their return is too low, they might pull away.
Key sign: People begin pulling money from their accounts with you. Gradually or quickly, you see deposits drop with certain members or customers. Where’s it going? Your competitors…maybe accounts with several different competitors.
Signal #2: The Case of the Vanishing Refund
Many consumers receive tax refunds. So, where’s the influx of deposits? Unfortunately, this case doesn’t take Sherlock Holmes to solve. People are still getting refunds. They just aren’t listing you as the recipient of the IRS direct deposit.
Key sign: A member or customer typically receives a tax refund deposit each year. Except this year. It magically never arrives. This break from consistent behavior tells you someone else got the direct deposit this year…much more likely than the consumer not receiving one at all.
Be Proactive, Not Reactive
The time to stop someone from abandoning you is not after they did it. It’s before. Your financial services strategic planning must be proactive. As ReconMR Senior VP of Insights & Analytics Chris Riepe told us: “A bad transaction is the straw that breaks the camel’s back. But unless you’ve known that poor camel has been struggling for years, there’s no way to fix it.”
Address the signs in advance. Here are a few tactics:
- Have triggers – preferably automated – for red flags (direct deposit removed, transactions reduced, behavioral changes, etc.)
- Launch reengagement campaigns to consumers who trigger for red flags
- Offer eligible people higher-return accounts before they investigate solutions themselves
- Market what someone can do with a refund that comes into their account with you
- Offer financial counseling or relationship-building services to increase perceived value
Audit Yourself
Audit. Another concept with the secret language of tortured screams (especially when paired with taxes). But an audit need not harm you. In fact, it should help you. Look at your consumer base for soft switching signals. Identify the endangered accounts. And then do something about it!
Do you want to discuss soft switching at a financial services strategic planning session that’s actually fun and has actionable results? Book a free consultation today and let’s schedule you.
