How To Overcome Customer Attrition?
From NPS scores to customer account depth and new customer acquisition, financial institutions track a plethora of metrics to gauge the health of their business. But what if these metrics are lagging predictors of future success, and financial institutions need to focus on what is truly important? With a significant shift in customer banking behavior and a growing concern about their financial security as a result of rising interest rates and never-ending inflation, are there any other metrics banks should add or prioritize?
We asked this question as part of a three-continent study of over 50 financial institutions and reflected on the responses of 100,000 banking customers. The insights detailed in our previous article and expanded on in the attached presentation offer recommendations on how financial institutions can reduce customer attrition. With the cost of acquiring a customer exceeding $200, churn is not ideal when leadership and shareholders want to grow.
Attrition Strategy #1: Importance Of Customer Satisfaction In Financial Institutions
Institutions must prioritize tracking customer satisfaction with the financial advice they provide. Organizations must question their current level of direction. Is it of value to customers, perceived as transparent, and not solely focused on product sales? Does it consider the customer’s financial anxiety or life stages as a whole?
Using the same rigour in measuring NPS scores, account depth, and profitability will ensure that what matters to customers is measured and improved. Customers were more confident in their financial future at banks with low attrition rates in our study, reflecting a higher rating level and significantly higher quality of advice.
Attrition Strategy #2: The Importance Of Human Interaction In Banking
Humanizing all aspects of the banking journey, ensuring customers have access to human-provided advice. Our study on the seamless banking experience discovered that when customers need answers, they turn to bankers rather than technology. Customers believe they should be able to interact with real people regardless of whether they use chatbots, the web, mobile, or more traditional assisted and physical channels.
The desire to reduce transactional costs through AI-enabled technologies should only be viewed as supporting front-line employees’ capabilities. APC, a leader in employee engagement, has seen the power that comes from providing customers with qualified and engaged employees.
Attrition Strategy #3: Challenges In Transitioning To Universal Bankers For Quality Advice
Delivering quality advice is also dependent on the banker’s ability to interact with customers. Over fifteen years after its inception, the transition to universal bankers remains a source of consternation for many institutions. The success of providing advice is determined not by the willingness of customers to receive assistance, but rather by the transactional mindset of organizations focused on reducing wait times at the expense of creating empathetic interactions with customers.
Higher employee engagement and NPS scores have been observed in institutions that have evolved their sales choreography to include appointment-setting tools and queuing in branch platforms such as Engageware.
Attrition Strategy #4: Privacy In Branch Experiences For Quality Financial Advice
Customers can feel more at ease sharing their financial difficulties with better-tiered privacy branch experiences. Current branch layouts that keep teller lines and queues in place may provide quick transactional services, but they limit the ability to provide higher-level financial advice.
The first step is to transition to service pods, which are similar to US Bank’s new branch design and include convenient cash recyclers. The other option is to free bankers from their desks by utilizing mobile tablet platforms such as Ebankit’s offering, which allows for a seamless transition from transaction zones to more private settings such as meeting rooms. The sales choreography must be thoroughly reviewed as traditional structures such as teller lines are replaced with consultation pods and teller queues are eliminated. Industrial Bank was one institution that revitalized its bank through advice-centric design, showcased by its consultation rooms.
Image Source: SLD
Attrition Strategy #5: Seamlessly Integrating Advice Into The Customer’s Banking Journey
Advice must be seeded throughout the customer’s financial journey, with the level and complexity of advice matching the customer’s needs at each stage of their banking journey. Institutions must shift away from a siloed and linear approach to providing advice and towards aligning the appropriate information for the given customer task and journey.
It begins at the customer’s residence and anticipates their needs throughout the banking journey. Institutions should reconsider not only their sales choreography but also how to train and reward their employees for shifting from transaction to advice. Coaching is frequently insufficient to support the new branch layout and sales choreography, leaving each banker to decide how to engage with customers, resulting in confusion and friction points.
Consumers today have many new banking options to explore, thanks to the growth of fintech and novo branches. Managing attrition is becoming a more significant challenge for institutions, one that will not be solved by quick fixes or traditional measuring models. Humanizing the banking experience through higher-quality advice is an important factor for institutions to consider when driving growth.