Breaking Down the Customer Loyalty Pyramid

When researching the rash of stealth attrition currently unsettling the financial services industry, we collected lots of data about consumers’ banking habits, preferences, and behaviors. We’ve already broken that data down in several ways to highlight different things – for instance, we broke down the types of customers most likely to switch financial institutions to highlight their reasons for leaving and we divided customers by their level of engagement, to help banks choose the best ways to build stronger connections with their clientele.

Our Customer Loyalty Pyramid, however, might be the most useful tool for understanding how to reduce stealth attrition, improve relationships with consumers and, ultimately, strengthen your bottom line. It can help you analyze your own customer base, predict risk factors, and make decisions based on the preferences of targeted segments.

So take note, because this is important. Here are the four consumer segments that every banker concerned about losing customers should learn, love, and recognize for the unique challenges and opportunities they represent to the financial services industry.

1) Digital Centric Customers

You already know these people. They’re the stars of every click-bait headline about the demise of retail. They’re glued to their phones, almost exclusively bank online, and half of them are at serious risk of switching to another financial institution.

Thankfully, they only make up about nine percent of all bank consumers.

These customers are most likely to leave your bank for a non-traditional institution, like a credit union, or switch to an online-only bank. You might assume it’s impossible to draw them into a branch, but they’re more open to the idea than you think. When asked, Digital Centric Customers indicated that they would visit branches more often if the branch experience offered something they couldn’t find online – like friendly, knowledgeable advice, or staff members who could help make banking easier to understand.

If most of your customers fall into this category, you may want to read up on our research on how retail banks can better engage Mobile Zombies.

2) Transaction Centric Customers

This group sees banking – as the name implies – as a fundamentally transactional experience. They’re only interested in your advice and services insofar as they compare to those of your competitors and – more importantly – your competitor’s rates.

You’ll find that many people in this group bank with multiple institutions because they’re chasing the best rates. They may prefer to bank online or in person, depending on their lifestyles, but regardless, they see the experience as purely functional.

This is the group that most needs better communication about the variety of services offered at your bank.They might never see banking as a relationship, but you can certainly draw their attention to the aspects of the experience that aren’t purely transactional. By transforming their experience of your branch, you can begin to engender real loyalty from members of this group.

3) Branch Centric Customers

These are the customers who think of your bank primarily as a physical space – they might be familiar with digital banking options, but they prefer to visit a branch to get advice, manage their investments, apply for new financial products, make deposits, and resolve issues.

Most of these consumers only have relationships with one or two banks, but they are at risk of leaving you for another traditional bank if it offers better service – this group specifically demonstrated a desire for shorter wait times, extended hours, and learning opportunities for start-ups and small businesses.

Branch Centric Customers account for a full 25 percent of bank users. They’re significantly more loyal to traditional banks than members of the previous two groups and are more likely to consolidate all of their accounts with a single institution. Targeting this group’s unique needs will offer the most bang for your buck every time.

4) Advice Centric Customers

This is a smaller, but equally important group of customers. They consider bank management and staff to be trusted financial advisors and go directly to their primary branch when they have questions about banking and investing.

Although they only make up about 14 percent of bank users, they’re likely the faces most familiar to your front-end staff because they’re lifers. When they find a bank they trust, they stick with it – members of this group demonstrate the lowest rate of attrition when compared to the rest of the population.

But don’t risk taking them for granted! Advice Centric Customers aren’t blindly loyal – if they hear about your competitors offering better advice, service, or opportunities, you’ll wind up losing some of your bank’s most valuable cheerleaders.

None of these categories are blanket descriptions. Some Advice Centric Customers prefer online banking, and some Digital Centric Customers prefer to resolve issues in a physical branch. But by generalizing and understanding the Customer Loyalty Pyramid, your bank can meet your ideal customers where they are, instead of where you want them to be.