Customer Experience Articles

Contact Vox to discuss how we can help you create a comprehensive Customer Experience that drives bottom-line results dramatically higher.

When Developing a Lasting Partnership, Are Banks and Customers on the Same Course?

A Vox Survey Summary on Bank Retention

Recently, we surveyed bankers about their customer retention. Their responses led us to some interesting conclusions. Even more intriguing was the comparison we made to similar questions we asked bank customers. Altogether, the findings suggest that bankers and their customers are not quite on the same wavelength. Here's what we mean:

Bankers Missing the Boat

Bankers who answered our Bank Retention survey think rates and fees are their biggest nemesis, with 73% saying it's the main reason for why a customer leaves. (Several side conversations we've had with other bankers also support this notion.) Competition is stiff. It seems obvious that when the next great rate comes along, even the most loyal customer may be tempted to jump ship to another bank. However, our customer poll results actually dispute that. Only 11% of our respondents said they'd leave a bank because of high rates and fees. Convenience rated most important at 56%, followed by 15% stating they'd leave a bank due to poor customer service. These kinds of results suggest that customers may be willing to pay higher rates and fees in exchange for a better customer experience.

Back to convenience; we know it plays a big role in banking for customers. So big, that 53% of customers we polled say it's the number one reason they remain with their current bank. Only 6% say that rates and fees determine if they will stay with a bank and 17% say it is customer service. It seems that customers just want an easy way to bank. Could this be true? And what is a customer's definition of convenience? It's something to ponder anyway. This idea contradicts our bankers, as 45% of them believe that a feeling of financial partnership is the main reason a customer chooses to stay with a bank. But only 7% of customers actually feel they have a financial partnership with their bank. We can take further stock in these customer sentiments when we look at recent BAI research on "The Frontline Experience" reporting that 69% of customers are indifferent or skeptical of developing a relationship with their financial institution.¹

Charting the Way to a Profitable Relationship

Fortunately, 55% of the bankers we surveyed said they are presently focusing on customer retention as their top initiative. Acquisition followed next at 27%. The question we pose is how will bankers increase their retention numbers and obtain loyal customers if the same customers only care most about convenience? It's not an easy dilemma. Half of our bankers say they have an onboarding process to lay the groundwork of cultivating loyal customers. We think that's a great start!

Surprisingly, only 37% of bankers in our survey said they actually track their retention numbers. Tracking is only the first step. Once a bank grasps a benchmark for retention, it's critical for that bank to look within for barriers and opportunities to increase it. There are three major categories of relationships a bank can pursue with its customers: transaction-based, service-based and advice-based. Typically, customers looking for convenience want their bank to sufficiently manage their money and provide up-to-date and accurate communications: statements, email alerts, etc. This defines a "transaction-based relationship," but this type of relationship will only get a bank so far. To break into a more desirable "service-based relationship," a customer needs to feel that her interactions with her bank are professional, fair and friendly. This is where customer service begins to creep up in the list of reasons why a customer stays. It's also how satisfaction increases and loyalty begins to solidify. But the pinnacle relationship every bank should be working toward is the "advice-based relationship." Here, a bank earns the right from the customer to evolve into the role of trusted advisor - someone who approaches the relationship in a customer-centric way. While in this role, a bank can, and is able to, manage more products and services for their customers. This is the stage in which truly loyal customers are born and solid financial partnerships are nurtured. If our polled customers are not feeling that partnership, banks have a long way to go in building profitable customers.

Clearly, there is work to be done. The first step is for banks to commit to analyzing how they communicate with their customers from every touchpoint and assess their effectiveness. For example, our bankers told us that their weakest touchpoint was their tellers. Lobby atmosphere and statements tied at second. Whether or not these elements are truly weak touchpoints, they most certainly are addressable. After all, positive interactions at the frontline are vital. If customers can't resolve issues quickly and satisfactorily there, banks simply must take responsibility for making customers work too hard. Herein lays the vulnerability of customers to look for other banks that can make things easy. Without real connections with tellers and other key frontline personnel, a customer's perception of good service or a financial partnership won't improve. No level of convenience felt by the customer can change this or reinforce customer loyalty. Hence a bank in this situation will always struggle to build its customer relationships.all the way up to the advice-based relationship level.

¹ The Frontline Experience: Building Client Relationships Requires Improving the Frontline Staff Experience, BAI Research Report, 2005

‹ ‹ Previous Article

Article Index

Next Article › ›