Building a stronger connection with banking customers is crucial to maintaining their loyalty, and yet, this is often a difficult task since each customer has unique attitudes and needs.
In SLD’s research on stealth attrition, we identified three levels of engagement among customers, based on their connection and involvement with their primary bank, ranging from low to high.
Those with a strong connection to their bank showed high loyalty, frequent engagement, and a preference for in-branch banking, while the group with the weakest relationship with their bank reported disinterested or dissatisfied sentiments. Respondents with a medium level of connection felt that the majority of their basic financial needs were being met, but may look for alternative services with more customization and convenience.
Based on the survey, the majority of customers do not feel a strong connection to their bank. Almost three-quarters of the respondents did not feel that their primary bank was “a trusted relationship with long term benefits” or “a resource for professional financial insights and advice.” This finding may be leading to more transactional-type relationships and less customer loyalty. If customers do not feel a strong connection to their bank and their needs are not being met, they may be more prone to switching to competitors, having multiple accounts based on rates/promotions, or using non-traditional financial services.
So, how can financial institutions create a closer relationship with each group? The following tips will focus on specific strategies to cater to the needs of each customer depending on their current level of engagement with banking.
Customers with a Low Connection to their Bank
The group with the weakest ties to their primary service provider has the highest likelihood of leaving. The biggest concerns for this group are disinterest and dissatisfaction.
To address disinterest in banking (reflected in low activity levels and reports that they don’t really think about banking), we need to think about engagement strategies. Respondents in this group said that they would be more likely to visit a branch if it were a more comfortable and enjoyable experience. So, how can the banking experience be made less unpleasant and more interesting, engaging, and fun? Engagement initiatives can include interactive and playful elements in the branch design, gamified apps and digital channels, and goal-oriented progress tracking. Or, are customers avoiding banking because it makes them feel negative emotions such as worry, and the branch experience feels cold and sterile? In this case, how can we shift the experience to be more positive? Creating “warmer” perceptions through branch design, service design, and corporate identity and social responsibility can help to make customers feel better about banking (for more detail, please see “Build Warmer Relationships with Your Bank Customers.”
Dissatisfaction is another story. In the SLD survey, respondents with a weak connection to their bank revealed that they often find branch staff unfriendly, unhelpful, and unknowledgeable. In fact, respondents from this group often prefer to search online for financial advice or ask a friend/family member rather than speak to a bank manager or staff member. They also have low levels of trust and satisfaction with their bank and are more likely to consider alternate services and shop around for better rates. These issues of trust and satisfaction need to be addressed through branch design, deep understanding of customer needs, staff training and hiring, and brand messaging.
Customers with a Medium/Strong Connection to their Bank
These groups do not pose as much of a threat to financial service providers looking to retain their customers, however there is still room for improvement in these relationships. In the medium connection group, what appears to be missing is personalized services with more customization, convenience, and a focus on their individual well-being, loyalty, and goals of saving money. Those that currently have a strong connection to their financial institution (which is more likely to be a smaller bank or credit union) already feel like valued customers, but it is still important to not get complacent with these relationships. They reported that they would react positively to community and small business spaces, seminars and other learning opportunities, and would visit their branch more frequently if it was made more fun and exciting.
By focusing on the needs of each customer type, stronger connections can be built to encourage loyalty and increase satisfaction. This approach attempts to shift transaction-based interactions to more relationship-based, with trust and financial advice being major attractions. It is increasingly important to build strong connections with customers in this transitional time in the finance industry with tough competition and emerging fintech competitors.