WHITE PAPER. 6 Best Practices that Increase Check Program Profitability

Transcription

1 WHITE PAPER 6 Best Practices that Increase Check Program Profitability

2 E-payments have unquestionably transformed the marketplace, making the concept of a paperless world seem more possible than ever. Yet for all the dazzle of digital payment modes, checks endure as a viable payment method for consumers and businesses alike. Every second of every day, more than $1 million changes hands in America via checks. In fact, consumers and businesses wrote more than 21 billion checks in 2012, according to the 2013 Federal Payment Study. Checks appear to be here to stay for the foreseeable future, so why not leverage them to your advantage? Is your financial institution maximizing the profitability of its checking program? Many don t, either because they wrongly undervalue the revenue-building power of the enduring check, or because they simply aren t sure how to go about tapping its potential. Every second of every day, more than $1 million changes hands in America via checks. Deluxe prints 350 million checks every month, plus we support programs designed to help financial institutions market their checking programs while streamlining efficiencies. We ve identified six best practices that can help financial institutions increase the profitability of their check programs. Adopting these practices can help banks and credit unions improve branch efficiency, enhance account holder satisfaction, and increase non-interest income. Deluxe Enterprise Operations, LLC. All rights reserved. 2

3 1. Capture newcomers first check orders. Our Check Ordering Survey, conducted by Javelin Strategy & Research, indicates that half of all new account holders don t order checks when they open an account. Worse, half of account-opening discussions never mention the word checks. While your frontline branch staff has multiple priorities during the accountopening process, the check order rarely finds its way into their list of considerations and that s a missed opportunity. Every time a new account holder walks out the door without ordering checks, your financial institution has lost an opportunity for revenue. Half of all new account holders don t order checks when they open an account. By capturing the first-time check orders of new account holders, your financial institution not only boosts the immediate profitability of fresh accounts, you also establish the foundation for an on-going check-ordering and prevent them from going direct through the Sunday ads. This action also creates a level of engagement that kicks off your onboarding process. Remember, consumers now have numerous options for ordering checks other than through their bank. You might think you re doing them a favor by ignoring the check order or even suggesting alternatives, but in reality, it s more work for them, it eliminates another opportunity to get your account holder engaged, and you miss out on additional revenue. Your goal: No one leaves the branch until they re given the opportunity to order checks! Deluxe Enterprise Operations, LLC. All rights reserved. 3

4 2. Enhance their choices. Consumers have more choices than ever in virtually every aspect of their lives. How likely are they to accept limited choices from their check ordering business? To be successful, a financial institution s check ordering program must maximize convenience and freedom of choice for consumers. Deluxe conducts extensive research on a regular basis to study check design preferences among consumers. The latest research continues to show a large gap between what consumers use and what they prefer. Seventy-two percent of consumers use plain/conservative checks, while only 18 percent say that s what they prefer. Alternatively, 28 percent of consumers use a picture/stylish design, but 82% say they prefer this type of design. 82% of consumers say they prefer a picture/ stylish design. Enhance account holder s options by providing a variety of designs, styles, and covers, as well as allowing them to choose the shipping options and discounts they prefer. Creating a choice program gives your branch staff one more tool to secure check orders, and provides your account holders with the perception of enhanced value. Empower staff to offer a variety of discount types, such as half off an initial order, a free first order, or a free upgrade on check options like monogram, specialty imprinting, or fonts. Deluxe Enterprise Operations, LLC. All rights reserved. 4

5 3. Reduce waive losses. Of course, waiving fees and offering discounts comes at a cost to the financial institution. What s more, ever-changing regulations and economic conditions challenge FIs to find new ways to increase revenue while reducing costs. Deluxe has found that about half of all check order fees are waived at the FI s expense. We also learned that 42 percent of your consumers who use free checks are willing to pay for a design of their choice. 42% of your consumers who use free checks would be willing to pay for a design of their choice. To capitalize on this, create a waive-reduction program that can help your FI reduce the costs associated with giving away free checks. One example is a shipping and handling fee. A shipping and handling fee replaces the cost of the checks, generates revenue for the FI, yet still allows consumers to experience the value of free check ordering. Generally, consumers don t mind paying a nominal shipping and handling fee for otherwise free products. This is a common consumer practice that can pay off for your financial institution by allowing you to recover a portion of the cost of waiving check-ordering fees. Deluxe Enterprise Operations, LLC. All rights reserved. 5

6 4. Capture and leverage addresses. addresses are valuable to any business, but capturing them can be a challenge. Capturing addresses during account enrollment not only ensures you gather this valuable information, it can allow you to further enhance the value of your check ordering program. At Deluxe, we make this easy by doing the work for you. Once you supply us with the account holder s and check order, we ll use that address to provide timely updates on their order. Send customers alerts when their checks have printed, shipped, and are delivered. Then we borrow a page from large online retailers and send customers alerts when their checks have printed, shipped, and are delivered. We even queue up reminders when it s time to reorder the average reorder cycle is 14 months so your account holders won t be tempted to try a direct channel. Even better we will include a clickable link in the that takes the account holder directly to an ordering page already populated with the details of their last order, making their reordering process as easy for you as it will be for them. Deluxe Enterprise Operations, LLC. All rights reserved. 6

7 5. Make their lives easier with mobile and online ordering. The migration to digital channels, mobile and online, is here to stay. Forrester predicts twice as many consumers will shop for financial products via mobile this year. Clearly, the conveniences of mobile and online channels are appealing for a broad demographic of consumers. Empowering account holders to shop for and order checks through digital channels can allow you to leverage the digital trend to your advantage and increase your checking program revenues. Your mobile banking app should incorporate a feature that allows consumers to reorder with a few simple taps. Twice as many consumers will shop for financial products via mobile this year. Online channels can expand your program s reach by allowing consumers to access check ordering tools from any Internet-enabled device, including computer, smart phone, and tablet. Integrating this functionality with your online banking website provides a seamless experience for account holders, who can place new orders or reorders, securely change their addresses, and scan your full catalog of checks. Remember, a great online experience can inspire consumers to make additional purchases increasing revenue and improving account holder satisfaction for your financial institution. Deluxe Enterprise Operations, LLC. All rights reserved. 7

8 6. Employ incentives to overcome inertia. The goal of any marketing campaign is to drive consumer behaviors in the direction you want them to go. Consumer inertia is often the greatest obstacle to that progress. The array of choices in the marketplace actually has made inertia more difficult to break through. For consumers, if a choice works for them, it s easier to stick with it than to wade through dozens of other options to find a better one. Consumers who favored incentives say as little as $5 would be sufficient. Consumers need a reason to escape inertia and incentives are an excellent solution. Rather than adding another convenient choice to the buffet of options already laid out before consumers, incentives can make your choice stand out and appear more appealing. In fact, Deluxe surveyed consumers about the effectiveness of incentives and found most said a monetary or interesting incentive could entice them to migrate their business to online channels. Those who favored incentives also said as little as $5 would be sufficient. Once you ve used incentives to woo consumers to your channel, inertia can actually work in your favor to keep them in place. Mobile and online ordering fulfills account holders needs for convenience and ease of ordering, and in the long run it will be much easier for them to continue reordering checks through your financial institution. Deluxe Enterprise Operations, LLC. All rights reserved. 8

9 Conclusion. By capturing more first-time check orders during account enrollment your financial institution can improve account holder satisfaction, branch efficiency, and noninterest income. This list isn t meant to be all-inclusive but it gives you some great options that other financial institutions are currently using or have been testing. If you have ideas or if your financial institution has had any successes we haven t covered, we d love to hear from you. Our goal is to help our banks and credit unions run healthy, profitable check programs that add value to their account holder relationships. WANT MORE INFORMATION ABOUT THE DELUXE CHECK PROGRAM? Contact us today. DeluxeFinancialServices@deluxe.com SEARCH fi.deluxe.com/solutions/consumer-check-program CALL or contact your Deluxe Client Manager Listen. Solve. Deliver. Deluxe Enterprise Operations, LLC. All rights reserved. 9