It is a fact, everything in life changes. Unlike nature, where changes can be defined as a gradual process; businesses, markets, and technology are changing in a rapid and erratic way.
Not so long ago, people planned their trips to the bank days earlier. Today, the phrase “banking hours” has become the thing of the past, with people checking their balance, paying their bills and making credit card orders from the palm of their hand. Changes like this are turning the way businesses do their business upside-down. While customers are quickly embracing the changes, and the power that comes with them, some organizations find it difficult to follow in their tracks.
According to the theory of structural inertia, businesses have a hardcoded resistance to change and prefer stability instead. Examples of this can be found in all industries but the one that fears change the most is the financial industry. Not only do they view changes as threats that can disrupt their business, but as a potential cause for disaster. Thus, organizations continue to live in their environments as “they’ve always done”, even though that environment has changed completely in the meantime. Another reason why banks evolve slower than other industries is because the whole financial industry is highly regulated.
Considering the uncertain economic conditions and the fact that today’s customers want to spend less time interacting with traditional bank channels, customer retention is becoming one of the most pressing issues for banks. So, how can banks overcome this challenge? The obvious answer is to focus on the following 3 keys to improving customer retention.
#1 Customer engagement
To help new customers and develop a strong and engaged relationship with your bank, you have to set a strong foundation.
According to a research conducted by J. D. Power, the optimum number of communication messages during the first 90 days when a new customer signs on to your bank is seven messages across different communication channels.
This requires the bank to use email, phone, “snail mail”, and social networks to contact their customers but also to have a deep and realistic understanding of their customers’ wants and needs.
In a time of reduced incomes, ever-increasing competition and constantly changing customer needs, bank employees must do more than simply be well-knowledgeable about their products and services. They have to introduce new systems and processes that will give them a way to build long-term relationships with their customers.
#2 Customer experience
Considering that way of life is becoming faster, more dynamic, interactive and interchanging, the customers’ preferences are changing accordingly. Today’s customers want to spend less time interacting with traditional bank channels and expect quick and high-quality digital communication: comprehensive content and accurate context, instant search results and interactive features, paired with sophisticated design.
The bank’s access channels are expected to offer a highly functional and convenient user experience.
This means allowing digital and or mobile access, 24x7, to banking services from everywhere at any time. The digital customer today does not shy away from quickly sharing positive as well as negative experiences, which can have a rapid and intensive effect on the brand.
Banks must acknowledge the importance of the customer experience, which influences decisions regarding customers’ choice of their primary bank. Any long-term personal decision or choice of a bank is based on opinions of friends, peers and collaborators. Thus, any digital service offering should be built on the understanding of the following:
- Customer behavior is changing faster than ever and is continuously evolving.
- Customers prefer digital services.
- Millennial generation’s lifestyle has been completely digitalized which makes digital a key aspect when choosing their primary bank.
- Digital is continuously spreading and renders old means of communication obsolete.
#3 Customer satisfaction
We said it already, banks are businesses like all others. They benefit from good publicity, customer loyalty, and customer retention. Still, not many banks invest much in customer satisfaction.
Backed by social media, customers have more visibility and knowledge about the markets and their offerings.
This makes banks more vulnerable to customers who are generally very open to changing their service providers. With this and the fact that the banking industry is heading towards customer-centricity, banks must adjust their business and operational model to put their customers into the center.
Currently, banks are in misalignment with their customers and focusing on customer satisfaction will allow banks to improve their retention rates. Additionally, it will allow them to carry out relevant analytics on customer behavior, preferences and needs. Banks have an easy access to a huge amount of information about their customers, and this information can give them a crucial competitive edge. Furthermore, by converting this information into customer knowledge, they can modify their products and services to better address their customer needs.
Customer satisfaction surveys are an easy way to learn more about your customer satisfaction levels, but also about how your bank stands compared to your competitors. By conducting such a survey, you will be able to maintain, deepen and extend your customer relationships. Additionally, you will also be able to ensure your competitive advantage and achieve increased retention rates.