Major FinTech news late last month, a very polarizing company went to market. Can you guess?
On July 29th, Robinhood went public, falling flat on its big debut. The FinTech player ended its first day down 8.2%. Although there are several factors that could have influenced this outcome, some stand out more than others.
Robinhood has endured many ups and downs since its inception. The financial services company has seen rapid growth in the last few years, allocating significant dollars and efforts towards user growth, but slacking in supporting its growing customer base.
Earlier this year, Robinhood was the center of a flaming hot scandal regarding its imposed trading restrictions on the Gamestop (GME) stock. As a result, many customers have boycotted the company, posting unfavourable reviews, and vowing to never return. Robinhood’s lack of customer care during this incident has caused it to endure significant losses in revenue, its customer base, and ultimately, do poorly on the first day of its go to market.
The Robinhood (HOOD) stock has since experienced fluctuations, hitting 3x its IPO price within one week, and currently up about 58%.However, the company remains in poor standing in terms of base management and customer retention.
What players in FinTech can learn from Robinhood’s story
User growth is a key metric in FinTech, but you can’t forget about the experience. Robinhood’s tremendous growth is undoubted, but its inability to manage its customer base and lack of attention to user experience has made it difficult for the company to satisfy and retain new users to back long-term growth. When it comes to user growth and experience, sales support programs will do both. Don’t spend on customer service that doesn’t drive the 1 metric that moves your business forward: user growth.
Let’s dig a little deeper. Why are so many FinTech’s primarily focusing on user growth and customer care instead of sales? The answer is simple, to reduce expenses and cut costs.
The shift to a digital world has seen a surge in outsourced customer support and growth in popularity of FAQ forums and chat bots.
But, are the short term monetary gains really worth the long-term customer dissatisfaction that often accompanies offshore support centres?
Think about it. The push towards offshore customer care is creating a growing disconnect between companies and their customers. Customer service representatives who lack product and industry knowledge are not delivering high quality support, hence customer frustration.
We see this in Robinhood’s business model and the way they handled customer complaints in January 2021. The company was unable to effectively handle customer objections which triggered long lasting resentment.
Sales support programs will lead the future of customer acquisition, base management, retention, and winback
At S&P Data Digital, we pride ourselves on delivering exceptional customer experiences through our sales support programs. Unlike traditionally offshore customer care which emphasizes customer service, our onshore sales-oriented representatives provide care and more. Trained to empathize with customers, diffuse them, work to resolve their issues, and sell, our sales representatives continually search and identify opportunities to build revenue when engaging with customers over multiple channels. When a customer comes with a complaint, our sales approach aims to turn these negative situations into revenue-generating opportunities by resolving and pivoting conversations to upsell or cross sell products/services.
Instead of focusing solely on new user growth, S&P Data Digital works to support, retain, and drive revenue from your existing customer base.
Yes, the most important measure going into an IPO is user growth and we see FinTech companies constantly trying to push this metric. However, in the case of Robinhood, its users’ average account balance remains around $5000, comparatively low to its competitors. As Robinhood’s customers grow their income, continued dissatisfaction with negative experiences may drive them away from the company and towards its competitors. In order to ensure sustainable growth long-term, FinTech players like Robinhood may need to reconsider their business model/priorities.