Why invest in acquiring more DDAs?
Traditional demand deposit accounts are the backbone of many banks’ financial holdings, but banks often focus their marketing strategy and budget on specialized accounts, loans, and trending products like certificates of deposit. While they’re not very fashionable and though they don’t often yield larger, instant payoffs, demand deposit accounts are important financial pillars for your bank, offering stable, long-term revenue with greater lifetime profitability than products like personal loans and timed deposit accounts. DDAs can also offer your bank these great benefits:
- The chance to build lifelong banking relationships
- Greater campaign personalization options for a higher return on your marketing investment
- A gateway for additional sales and account opportunities
If you’ve been neglecting to devote your bank’s resources to demand deposit account acquisition, it may be time to refocus your marketing efforts. In this post, we’ll discuss how to increase your bank’s return on investment (ROI) by implementing effective DDA acquisition strategies.
Strategy 1: Leverage Consumer-Driven Marketing
Generic offerings of cash bonuses or incentives may not yield a significant return on your investment. Many individuals and families are already deeply invested in their current deposit accounts, and one-time (or even ongoing) monetary incentives often do not provide enough impetus to migrate recurring transactions or add yet another account to their collection.
Instead, by using data to tailor offers to specific households, you can both zero-in on potential customers who could be more likely to open a new account and provide specific incentives that may be compelling enough to entice banking customers who already are well-established with other DDAs. So how can you let data drive your marketing efforts? Here are a few ways.
- Target households with few existing DDAs. Customers who only have a checking account may be ready for a linked savings account or money market account to take advantage of earned interest.
- Target households with specific incentives based on lifestyle, pairing DDAs with additional financial products as needed. For example, a travel rewards card can be paired with a checking account.
- Use timing to your advantage. New jobs or increases in income, marriage, or the birth of a child can all lead to a willingness to open a new DDA, whether it’s a joint checking account or designated savings vehicle. Don’t let these opportunities go to waste.
Strategy 2: Use Credit Scores to Inform Marketing Decisions
One of the best ways to tailor your marketing strategy is to use credit information in inventive ways to highlight rising possibilities in your customers and customize offerings based on credit-worthiness. When an existing or new customer opens an account, your financial institution may use a soft credit inquiry to establish the level of risk the individual may present, using the data to set overdraft, debit, or ATM limits. This same data can be used to create tactics for marketing additional deposit accounts, as well as cross-selling credit products.
High-scoring individuals may be prime targets for special rewards programs, like DDAs with paired credit card accounts, or accounts with fewer restrictions or fees. Lower-scoring individuals may best be served with offers of more fundamental products that can meet their needs without balance requirements or other qualifications that they may be unable to meet.
Customizing your strategy based on credit serves two purposes. Firstly, you can avoid wasting your marketing dollars on mailers and online advertisements directed at individuals who have little interest in a given product. For instance, a high-yield money market account with a $5,000 minimum balance may be appealing to a financially-secure household, but of no use to a family living paycheck-to-paycheck who would be better served by a simple savings account. Secondly, examining and comparing credit histories can help you highlight individuals whose financial needs are in motion, creating windows of opportunity. For example, an individual with a rising credit score may indicate readiness for additional financial services which could lead to years of ongoing profitability.
Strategy 3: Speak Their Language (With Careful Segmentation)
Each generation may have different needs and preferences when it comes to their relationship with their bank and the products it offers. You can utilize these when building targeted-marketing strategies for deposit accounts to optimize your results. Here are a few considerations by generation:
- Baby Boomers: Older adults may prefer cybersecurity and face-to-face customer service.
- Generation X: Individuals at the peak of their careers or approaching retirement age may appreciate options for linking to IRAs, 401(k)s, and HSAs.
- Millennials: This generation enjoys the perks of online account opening and robust mobile services. A generation that is both mid-career yet still often experiences financial stress, your strategies may vary based on the specific target.
- Generation Z: It is also important to emphasize online account opening and robust mobile services with this youngest generation, as well as focusing on simplicity.
However, tailoring your marketing based on age can backfire if not done correctly. Reliance on stereotypes can alienate your customers, and if you miss the mark, your campaign may not be taken seriously. Focusing on the product and specific benefits without openly addressing a group based on age is often the most effective approach.
Strategy 4: Aim for Specific Centers of Influence
When looking to discover new markets with a limited marketing budget, it makes sense to pursue outlets that might have the greatest return on your dollar. Centers of influence that can be prime targets for demand deposit account openings can include attorneys, certified public accountants (CPAs), medical professionals, and mid-sized business owners. These clients can provide opportunities for leveraging other accounts in your marketing strategy including:
- Operating Accounts
- Escrow Accounts
- Interest on Lawyers’ Trust Accounts
- Health Savings Accounts (HSAs)
Strategy 5: Implement Comprehensive DDA Banking Education Programs
As the banking industry becomes more complex and sophisticated, many potential customers might not fully understand the advantages that come with owning demand deposit accounts. Therefore, designing a DDA banking education program can be beneficial. These programs can highlight the benefits, functionality, and versatility of various DDA banking products. When consumers are well-informed, they’re more likely to see the value in these products and hence open accounts. Digital resources, seminars, webinars, and one-on-one discussions can all form part of this strategy.
Strategy 6: Collaborate with Local Businesses and Organizations
Engaging with local businesses and organizations can also help drive the acquisition of new DDAs. Banks can create partnerships that provide special DDA banking incentives to employees or members of these businesses and organizations. These partnerships can generate mutually beneficial relationships, with the businesses themselves potentially opening corporate accounts, and their employees or members opening personal accounts.
Strategy 7: Offer DDA Banking Packages
One effective way to encourage the opening of new demand deposit accounts is to offer comprehensive banking packages that bundle various services. These packages could combine a DDA with other valuable services such as credit cards, loan options, or investment advice. By offering a bundle of products that cater to a customer’s wide range of financial needs, banks can provide added value and increase the appeal of opening a DDA.
Strategy 8: Incorporate User-Friendly DDA Banking Technology
A more tech-focused strategy is to provide customers with a seamless digital experience when opening and managing their DDAs. This can be achieved by offering user-friendly mobile and online banking platforms, easy online account opening processes, and robust customer service channels like chatbots and live chats. By creating a positive user experience, banks can encourage more customers to open and maintain DDAs. Incorporating advanced technology like AI and machine learning can also allow for more personalized customer experiences, further enhancing the appeal of your DDA offerings.
Strategy 9: Don’t Forget Your Existing Customers and Services
Remember, not all demand deposit acquisitions need to result from acquiring new customers; your existing customer base can be a valuable source for new account openings. Segment your current retail customers to uncover additional opportunities. Here are a few potential opportunities and suggestions for how you could take advantage of them:
- Existing customers with timed-deposit accounts at your bank, but no demand deposit accounts. A good CD rate may have driven them to your bank and opening a certificate of deposit can be a good sign of a stable financial history. These customers could be interested in other interest-yielding products like money market or high-yield checking accounts.
- Existing customers with loans with your bank, but no demand deposit accounts. Consider offering rate incentives to business clients with ongoing need for financing a commercial fleet or other direct costs if they hold an operating account with your bank. For mature mortgage accounts that are eligible for a HELOC, you can also offer a rate discount if they also have a DDA with you.
- DDA Customers who also have deposit accounts at other financial institutions. Emphasize the simplicity of having all accounts in one place, offering incentives to switch, or highlighting the unique features of your deposit accounts.
You can easily reach all of these existing customers through both printed bank statements or bank eStatements. Reach out to us to learn how you can use your statements to facilitate your acquisition of demand deposit accounts.
Increase Demand Deposit Accounts with PrintMail Solutions
When you increase your demand deposit accounts, you also increase your customer lifetime profitability by creating long-term relationships and opening pathways to additional accounts and services. At PrintMail Solutions, we can work with you to create and implement a DDA acquisition strategy that works for your financial institution, whether it is engaging with your current customers or reaching out to untapped potential markets.
Get in touch today to request a consultation and subscribe to our blog for more tips on how to grow your deposits.
