Who does not love a deal? Companies, such as Groupon have made a global business around deals, local ones in particular. Combine that with social media, deliver deals on mobile and analyze the resultant Big Data, and we are talking about an interesting opportunity for banks.
Since banks are constantly looking at ways and means to incorporate cutting-edge practices from other industries, how about some "Groupon" Banking?
Banks are not new to coupons or deals; most banks with a credit card offer deals to customers. So what is the novelty factor?
Let's study some of the key characteristics of Groupon deals:
1. The deals are local.
2. There is a "deal of the day."
3. Deals are listed under categories (e.g. restaurant, jewelry etc.).
4. You can access them from most smart devices.
5. You can immediately buy deals that interest you.
6. You get regular updates on the latest deals.
Let's quickly look at some ideas that banks can work on:
1. Offer deals of the day, tied up with a banking product. For instance, the deal is only valid if bought using the bank's credit card.
2. Tie up with entities like Groupon and offer deals to bank customers via the Mobile Banking App.
3. Offer financial deals of the day, such as special interest rates or fee waivers on housing loans.
4. Offer additional benefits if customers use the bank's card on their deals; for example, an extra 5% off on that day for all Standard Bank cardholders.
5. Present a deal with financing from the bank. For example, book a holiday with an instantly available bank loan.
6. Offer a pre-qualified bank product at a discounted price for financing a purchase, such as a pre-approved car loan, where the car comes at an exclusive price only for the bank's customers.
7. Offer new products not available elsewhere as an exclusive deal for privileged customers - say, a 100 Celerio cars from Maruti Suzuki to be delivered on launch date to these customers, when ordinarily, people would have to pre-book and wait! Despite there not being a price advantage, being one of the first to own a particular car is an incentive in itself.
8. Extra loyalty points or a cash back on the deal.
9. Auto delayed payment or installment payment on the deal.
10. Link a deal with a noble cause, such as a contribution to charity.
11. Enable the bank's mobile app to run in the background and text location-based deal alerts to customers; for instance, list out all relevant deals in the vicinity of a particular restaurant or mall.
12. Offer deals at the time of payment through the mobile.
13. Offer an option to pay for the deals with loyalty points.
14. Browse multiple deal sites and filter out and alert customers to relevant offers.
15. Seek customer preference or harness Big Data and predictive analytics engines to choose and offer pertinent deals to customers.
16. Entice prospective customers with special deal prices or discounts, either for taking a bank product or just for perusing their advertisement.
17. Sponsor a deal on a specific day of the week and associate the bank's name with it. For example, the first 1,000 persons to avail the "Citibank Wednesday Special Deal" get an additional discount.
The above list is indicative and there are innumerable ways in which a bank can play around this idea to engage existing customers, attract prospective ones and associate the bank's name with a good deal.
In its endeavor to be part of "every main street transaction," Groupon now dabbles in loyalty cards, payment cards, devices for POS transactions (add on to iPads) and so on, which are intrinsic to the banking process. All that banks need to do today is incorporate the deal/coupon element and they are in business.
Moreover, banks have the added advantage of mobile banking, approved merchant establishments, card acquirers, customers, suppliers and vendors, loyalty programs, affiliates, partners, social media presence and local presence through branches, which they can leverage to their advantage and bring together in a sweet deal or coupon and achieve customer delight.
It is difficult to resist a deal if it is delivered to your inbox every single day. This also strengthens the bond between the bank and the customer. However, it is not just this stickiness that banks aim for. Research shows that deals and coupons often attract the one-off customer and banks now have a way to profit from such transactions as well. If banks get better at using predictive analytics to make the right offers (deal/coupon), the one-off customers may become regular ones over time.
If Groupon can make a business out of coupons and deals, banks are even better equipped to either take them on or tag along with them for a slice of the pie. A recent survey in the US shows that the younger banking customer is looking at tech providers like Google and Amazon to replace banks. This is a wake-up call for banks to get more innovative and tech savvy with concepts such as "Groupon Banking."