How to build banking loyalty without inertia
Posted on Friday, November 18th, 2011 by Empathica
In my weekly research I came across a great post on the Bank Think website. In the piece entitled – Banking on Inertia: Not a Customer Retention Strategy, the author brings up a compelling point.
For too long the financial industry has relied on the inconvenience of switching as the driving force of customer loyalty. Most customers stay with the institutions they use simply because of how difficult it used to be to switch to a competitor. This has led many banks to take advantage of this captive audience, by putting less focus and resources on providing great service, or worse, steadily increasing the fees associated with day to day banking.
The economy has forced a lot of consumers to take a closer look at their budgets and where their hard-earned dollars are going. It makes sense then that the tactics employed by the financial industry are beginning to face scrutiny. In fact, Empathica’s own Consumer Insights Panel indicates that as little as 30% of banking customers are fully satisfied with the experience they receive from their institution of choice.
In addition, the competitive landscape of financial services is heating up with competition coming from both online and traditional banks. With increased options, customers are now finding that the traditional roadblocks to switching institutions are being eliminated. As the article’s author puts it, banks need to realize that inconvenience is not a sustainable retention strategy.
The suggestion made is to shift the focus of retention on to more positive attributes, such as loyalty, value and rewards. As institutions begin to take notice of this, the natural question is “where do I start?”
That’s where the notion of an end-to-end CEM program comes in. Rather than focusing exclusively on the feedback portion of customer experience, a more accurate way to look at experience management takes the employees into account as well. Increasingly the feedback chain is also being extended to include advocacy. Word of mouth has always been the best advertising for finding new customers. The rise of social media and mobile technologies makes this more important now than ever before.
By not only understanding but acting on delivering the best experience for your customers and creating an internal culture where employees can champion this, the banking industry can erase some of the negative connotations that have been built up over the recent years. The banks who are most successful in this will not only find their customer counts increasing but also find that those customers will share great experiences with their trusted networks. It sounds so simple, but it’s not only the right way to build loyalty, but also a great way to spur growth at the same time.