Case study

Increasing loan sales by 49%

The challenge

A major banking group sought to amplify loan sales across its European network.
Loans, though potentially beneficial, are often perceived as gateways to debt and financial strain by many clients.

The approach

Aggressive promotion of products like loans can lead to customer resistance. Why? Because it lacks relevance. Think of it like selling bikes at a gas station – the product just does not fit the customer’s state of mind.

1. Create relevance

The key lies in proving the loan’s value in the client’s life. How is the loan relevant to their situation?

The official term for this is the “Zone of Acceptance” – a pivotal point where customers are receptive to your proposition. But the question is: how does one reach the zone?

Using our expertise in banking products, we discovered two primary barriers keeping clients from asking for loans. Typically, clients are unclear about:

  • what they can finance with the loan,
  • whether it is the right solution for their specific needs.

2. From the salesperson to an advisor

We changed our approach and focused on advising rather than pushing the benefits. Our aim: we wanted to be seen as the clients’ partners, not as salespeople. We wanted to assist them in making well-informed decisions.

The solution

1. Walk the clients to the Zone of Acceptance

We introduced a new communication strategy with a “warm-up” email sequence. Through the sequence, we walked clients across their barriers all the way to the Zone of Acceptance.

In this funnel phase, we weren’t selling; the whole focus was on the client’s question: Is a loan the right solution for me?

We presented clients with multiple financing options. That way, they felt in control and knew enough to decide whether taking out a loan was in their best interest.

Most crucially, the client found real-life scenarios where loans are typically helpful.

Only then did we introduce the loan offer with all its benefits..

2. It’s all about timing

Timing is critical. Whether a client is willing to listen also hinges on when they get the message. That’s why we proposed several moments to get the client’s attention.

A The client is clearly building or renovating their home.
Anyone who has been through a renovation knows it can be a money pit. If the purchase history indicates this type of spending, it opens an opportunity for us to propose a loan product.

B The client has repaid a loan or mortgage in the last 2 months.
This client already has experience with loans. Now, with their loan payments over, they also have spare income. We could say they are “financially ready” to take on new loan products.

C The client has recently started receiving child support.
As with renovation, a new addition to the family is a strain on the budget. A loan might help the family to bridge a financially tough period. 

We got the time right, now to the message…

1. The Endowment Effect

Many clients were pre-selected for the loan – they didn’t need to worry about the loan being declined. We presented the loans as already available for them, leveraging the endowment effect.

What is the endowment effect? Once the client feels like the product is already theirs, they are much less likely to let it go.

2. Perceived effort

Decision-making is heavily influenced by how hard something seems to do. We made sure to emphasize that applying for a loan was quick and straightforward, with funds potentially available in just 20 minutes.

What is perceived effort? If you want a customer to do something, not only does it need to be easy to do. More importantly, it needs to feel easy to do. In fact, objective obstacles only account for a third of what clients find challenging. The other two-thirds? That’s all about how hard it feels.

3. Scarcity

We highlighted the offer was limited, both in time and quantity. This created a sense of urgency, encouraging clients to prompt action. The scarcity principle is heavily leveraged in e-commerce, regardless of whether it is a limited offer sale on shoes or concert tickets. Sometimes we need a little push to stop hesitating.

What is scarcity? When the offer is limited in quantity or time, we feel like we may miss out if we don’t act right away. You can use this to either increase demand (e.g. global oil prices), increase prices (e.g. luxury goods), or speed up the customer’s purchasing decisions (e-commerce).

The results

To see how effective the new approach was, we conducted a simple test: one group received only the sales communication, while another experienced the warm-up sequence followed by the sales pitch.

The results were telling. The group exposed to the warm-up sequence exhibited a 47% higher conversion rate compared to the group that received only the sales communication.

Overall, the new campaign outperformed the previous loan campaign by 49%.


What to take away

  • Relevance First: Clients often aren’t immediately ready to commit to a purchase. It’s essential to first show them how it addresses their specific needs.
  • Timing Matters: Effective communication must be well-timed, meaning the context is just right for the client. Are you targeting clients who currently don’t need a loan, or those already juggling multiple loans? That will likely diminish the campaign’s success.
  • Ease of Purchase: The perceived complexity of the purchasing process can be a major obstacle. It’s crucial to simplify the process as much as possible and convey this ease to the client.