Banking on loyalty? I wouldn’t…
posted by: Nick Roman on 5/12/2010
Everyone still hates banks, apparently. Ok, that’s an exaggeration, but as an industry, banking has taken something of a publicity-bashing from all angles. I imagine many banks will be hoping to keep their heads down and not do anything to inspire more public condemnation for a while. But while they might be focusing on not rocking the boat, it doesn’t look like they’re earning our love in the process.
According to a recent survey in the US by J.D. Power and Associates, the loyalty shown towards US retail banks has declined for the fourth year in a row. Not surprisingly, they’re seen as more profit-driven than customer-driven. I suspect that the balance between increasing profits and focusing on the customer is tricky, but to retain customers, banks are going to have to try harder.
The metric that the survey focuses on is the decline in the number of customers saying they “definitely will not” switch banks—down to 34% this year, from 46% in 2007. Barriers to changing banks are low these days, and there’s limited opportunity for differentiation in a world where interest rates are too low for savers, and new mortgage offers are thin on the ground. That means that a focus on the customer is crucial. And banks need to talk to customers to find out what will make the difference.
I confess to finding it strange that “maintaining a clean branch and greeting customers upon arrival” are quoted as drivers of customer satisfaction. But then I’m a pretty anti-social cow who prefers to be left alone by staff and who goes into an actual, real-life branch about 3 times a year. But whatever turns out to be the real drivers of loyalty, banks need to find them, address them, and build relationships with customers that will override small differences in interest rates, overdraft fees, and mortgage options.
Notably, one finding of the report states that customers can still be very highly satisfied if charged fees, as long as the communication is good. Surely that’s got to be a clue that talking to, and building relationships with customers is crucial in retaining them in an industry where the default position is often “Ugh … banks.”