How Banks Can Increase Customer Retention: 5 Key Steps for Better Engagement & Business Decisions
Thursday February 26, 2015, by Anunay Gupta
Banks are facing a hyper-competitive marketplace – competitors are just a click away, and consumers expect a superior customer experience. And if you are unable to keep your existing customers, then you’re losing out, not only through brand reputation, but also, your bottom line. Acquiring a new customer costs six to seven times more than keeping an existing customer.
What the banking industry needs to realize – now – is that increasing customer retention is no longer just about “the customer is always right.” Today’s customer is sophisticated, knows about your competitors, and expects their needs to be met (if not by you, then someone else). For example, most customers want their banks to invest in online banking, and since 2012, customer expectations that banks will invest in mobile has increased by 50%. Yet, despite these overall trends, the customer expectation has evolved to be highly varied:
• 32% of those with negative banking experience cited poor matching of channel and products as a reason
• 45% of dissatisfied customers will discourage friends from using the bank
• 73% of women are dissatisfied with the industry
• 66% of customers still prefer to talk to a real person when banking
• 25% of customers rely on staff for research, 47% for product selection and 63% for problem resolution
And most alarming is that less than 20% of banking executives feel prepared for the future.
How can banking executives overcome these challenges? The obvious answer? Understand the value of analytics to identify your customer’s needs.
Yet, the reality is that they are at data overload. Moving forward, they need to be smarter on how they analyze and use the data – what data is the most important, what makes the most business sense, what gives the most business impact? This means that banking executives need data analytics to engage and measure consumer behavior and sentiment. Only then can they know where and how to engage.
When analytics is used effectively, we can model, measure, predict and provide actionable business insights. We can uncover the pressing business questions to future proof your brand:
• How do customers feel about your brand?
• What types of products and services are your customers looking for?
• What is your customer’s multi-channel journey as they make purchases?
• What are there interactions with various media, influencers, and other products?
• What is the lifetime value of your customer?
Over the coming weeks, we will share with you our insights on how to improve the customer experience so as to increase customer profitability. We will examine the five ideas you can do today such as:
1. Leveraging Customer Segmentation Models to significantly enhance targeted offerings
2. Making smarter decisions about forecasting through Customer Lifetime Value (CLV) analysis
3. Increase profits and expand the customer base through Profitability and Loyalty Analysis
4. Increase revenue contribution from existing customer base with effective Cross-Selling and Upselling Strategies
5. Future proof your business by employing the right Customer Retention strategy