Digital marketing enables banks and credit unions to attract and potentially convert a significant volume of consumers. But advertising can be expensive—especially at the very top of the marketing funnel. So how can your financial institution keep marketing costs manageable while still connecting with your desired volume of new customers or members?
In order to optimize your marketing efforts, it’s important to first understand the connection between conversion rate and marketing spend. A higher conversion rate means that a greater proportion of the potential customers or members who begin an application on your site will actually complete the process and open an account. Consequently, conversion also has a direct impact on how much you need to spend to drive traffic to your site in the first place.
With a higher conversion rate, your FI will boost the efficiency of your marketing and ultimately spend less per completed application. In this article, we explore the importance of a high conversion rate, how to boost conversion, and a few best practices to streamline your FI’s onboarding process.
When you measure conversion rate, you’re looking at the percentage of started applications that are ultimately approved and booked. You can calculate this number with a simple equation:
Submission Rate x Approval Rate = Conversion Rate
Your submission and approval rates both impact conversion. A high submission rate is achieved by making it easy for customers or members to apply for an account. If your application process is fast, easy, and free of impediments, a greater proportion of those who start an application will actually follow through.
A high approval rate, on the other hand, means that a high percentage of those who apply for an account are approved by your FI’s KYC, AML, and risk processing. Technology offers tools to boost approval rates by using metadata and other safeguards to disallow risky applicants to submit applications in the first place. In addition, high-performing OAO platforms allow your FI to set rules which approve, deny, or recommend applicants for manual review based on a custom set of criteria. This allows applicants to be accepted much more quickly and minimizes the risk of turning away legitimate customers, while reducing the burden on your FI’s compliance team.
Taken together, submission and approval rates comprise your FI’s conversion rate. Your conversion rate, in turn, impacts your FI’s volume of booked accounts as follows:
Applications Started x Conversion Rate = Applications Booked
With a higher conversion rate, fewer application starts are needed to reach the same number of booked accounts. Surprisingly, many FIs dedicate a significant amount of marketing spend to driving application starts without first studying the role of conversion in determining booked accounts.
Improving conversion will unlock marketing efficiency. But what can community FIs do to boost conversion?
On digital channels, conversion is dependent on your FI’s OAO process. The various OAO platforms on the market offer different conversion rates—a low-performing solution may convert as few as 5 percent of applicants, while a high-performing solution can convert 30 percent or more of applicants.
OAO solutions achieve high conversion rates thanks to the following features:
With these features, high-performing OAO platforms make it quick and convenient to open a new account. When customers or members can easily complete the onboarding process from start to finish on their desktop or mobile device, they’re less likely to drop off or abandon the application.
A better OAO process can greatly improve conversion, and thereby help your FI make the most of each marketing dollar. As a result, your FI can choose to reduce marketing spend and still achieve impressive results—or keep spend constant while testing your market’s growth potential.
OAO software is an important investment for community banks and credit unions, and should be considered key to preparing for a more digital future. The quality of your FI’s OAO platform is especially relevant when it comes to conversion rate and marketing optimization.
Ultimately, OAO can help your community institution build valuable customer relationships and grow deposits without a bloated marketing budget. High-performing OAO offers a speedy and user-friendly application process, which more customers and members are likely to complete. This offers your FI an opportunity to cut costs in the initial marketing that drives traffic to your website, which enables sustainable growth and opens the door to your FI’s future in the digital space.
Get in touch with MANTL to learn more.
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