Customer Engagement via Email and SMS for Financial Services

March 22, 2023
Tinuade
academy

Two popular channels that are crucial for customer engagement for financial service providers are email and SMS, as they help to build trust, foster loyalty, and ultimately drive revenue.

Let’s explore the effectiveness of customer engagement via email and SMS for financial services through some research and statistics to support our findings.

Effectiveness of Email for Customer Engagement:

Email is a popular communication channel for financial service providers as it provides a cost-effective way to reach out to customers. According to a study conducted by Epsilon, email has an average open rate of 18.0% for financial services, which is higher than the overall average of 16.7%.

Additionally, the study found that the click-through rate for financial services emails is 3.3%, which is higher than the overall average of 2.6%. These statistics show that email is an effective channel for financial services to engage with customers.

The communication and customer engagement services of Nigerian financial institutions, including commercial banks, microfinance banks, and digital financial apps, have undergone a significant shift in recent years. These institutions have increasingly relied on email as a cost-effective means of communication and customer engagement.

Research and statistics indicate that commercial banks in Nigeria do not charge their customers for sending emails, while they charge for sending SMS because email is cost-effective. In a survey conducted by the Nigerian Communications Commission (NCC), it was found that SMS messages are more expensive than emails, with an average cost per SMS of N4.00 compared to an average cost per email of N0.10.

Digital financial apps like PiggyVest, Cowrywise and others have also used email to drive customer engagement, which has proven successful. According to a study by HubSpot, personalized emails have an open rate of 29.95%, compared to non-personalized emails, which have an open rate of 17.85%.

Personalization strategies that some of these apps have adopted, such as using imaginary characters like OPE from Cowrywise to converse with customers, have given them success in the past years of their operations.

The effectiveness of email as a customer engagement tool has brought success to these companies and kept them in business for the past years. As such, email has become an essential aspect of the communication and customer engagement strategies of Nigerian financial institutions

Effectiveness of SMS for Customer Engagement:

SMS is another popular channel for customer engagement, particularly for mobile-first customers. According to a study conducted by EZ Texting, SMS has an open rate of 98%, compared to email’s open rate of 18%.

Additionally, the study found that SMS has a response rate of 45%, compared to email’s response rate of 6%. These statistics highlight the effectiveness of SMS as a channel for financial services to engage with customers.

In recent years, Nigerian banks have adopted SMS marketing as a strategy for improving customer experience and gaining more customers. This strategy has proven to be effective in reaching a wider audience and enhancing the overall customer experience.

A significant indication of the effectiveness of SMS marketing is the fact that a typical Nigerian customer would wait to receive an SMS credit alert to confirm the authenticity of a successful transaction. This implies that SMS marketing has become a reliable means of communication between banks and their customers in Nigeria.

Furthermore, banks in Nigeria also use SMS marketing to send birthday wishes to their customers every day, making them feel special and fostering a strong emotional connection with them. This strategy contributes significantly to improving the customer experience, which, in turn, has led to increased customer retention and loyalty.

Moreover, the combination of SMS and Email marketing has been found to be particularly effective for customer engagement in the Nigerian banking industry.

A study conducted by Digital Doughnut showed that the combination of email and SMS can increase customer engagement rates by 75%. This is because customers who receive both email and SMS communications from a financial service provider are more likely to open, read, and respond to those communications.

In summary, the adoption of SMS marketing by Nigerian banks and other industries has proven to be an effective strategy for improving customer experience and gaining more customers. The combination of SMS and email marketing has also been found to be particularly effective for customer engagement, and this has contributed significantly to the overall success of banks and several businesses in Nigeria.

In conclusion, customer engagement via email and SMS is a crucial component of a financial service provider’s marketing strategy. Email is an effective channel for reaching out to customers, with high open and click-through rates. SMS, on the other hand, has a higher open and response rate than email.

Combining email and SMS can further increase customer engagement rates, leading to greater customer loyalty and ultimately driving revenue for financial service providers.

Also Read: The Values And Benefits Of SMS Marketing For Micro-Businesses