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The financial services industry makes extensive use of programs that measure satisfaction and loyalty. To many, the two terms are interchangeable. After all, it stands to reason that a satisfied customer will stay put, and isn’t that the definition of loyalty.

No, it isn’t.

Retail bank customer satisfaction stands at a whopping 85%, according to Accenture’s 2016 Digital Banking Survey of over 4,000 customers in the U.S. and Canada. But while a “satisfied” customer looks great on paper, that figure disguises a much tougher reality for many banks -- that an increasing number of customers, especially the all-important Millennials who are expected to drive future growth, are defecting to other institutions. And research shows that 75% of customers that defect to another bank or financial services company say they were “satisfied or completely satisfied” with your business at the time they made the switch.

It’s a disturbing statistic. Of course, success awaits those who attract new clients. But no one can afford to be complacent about retaining their existing customers and deepening those relationships to create an energized customer base that regards their bank as a trusted financial adviser.

So what is the difference between customer satisfaction and customer loyalty?

Loyalty is about belief

Customer loyalty is fed by belief in the financial institution’s reputation. Customer satisfaction measurements, however, are largely about containing dissatisfaction. Banks use these measurements to improve service delivery, and develop training programs that help staff connect with their visitors, solve problems and sell products without coming across like a used car salesman.

Loyal customers forgive

Data shows that most often defect to another bank in search of cheaper products and a more convenient branch location. True loyalty is a bond that breeds forgiveness of your flaws, a willingness to line up and wait and eagerly try new products and services.

Loyal customers are energized

Are your customers loyal or apathetic? Many customers stay with a bank out of apathy, unwilling to go through the hassle of changing accounts. That sort of customer is unlikely to throw more business to your bank or evangelize on your behalf. Data collected from Informa Research Services SEA Score, which measures members and customer engagement, show there is almost no correlation between a customer’s intention to stay with their current financial institution and whether they would use that same bank’s other financial products and services. Loyal customers do both, becoming not only more profitable customers for your bank, but also a “silent sales force.”

 

For more information on Informa Research Services' customer engagement and loyalty research and The SEA Score™ program, contact us at 800.848.0218 or email info@informars.com.

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