These days, providing exceptional customer service won’t keep customers happy or win you new ones.
It sounds strange. The first lesson in Business 101 is that a happy, loyal customer feeds the engine that drives profits and growth. Satisfied customers love your brand, recommend you to friends and family and would never consider switching banks. A high promoter score means you’re making all the right moves to ensure a prosperous future.
The dramatic changes that have befallen the banking industry over the past decade have altered forever the way customers interact with their financial institutions. The global financial crisis shook consumer confidence in brick-and-mortar banks. And, thanks to the online banking revolution and an explosion in mobile technology, fewer customers are even visiting a branch. Yet the customer satisfaction measurement and evaluation tools used by banks have lagged the changes in consumer behavior, becoming antiquated. Thus, banks are not only misreading their customers and making big decisions about marketing, new products and strategies for attracting news business based on bad information, but may be missing red flags that warn of trouble on the horizon.
Metrics like a promoter score measure the strength of your customer relationships right now. But they fail to provide a complete picture. A low score doesn’t tell you what needs fixing. A high score doesn’t reveal if you’re missing opportunities to better connect with existing customers and lure new ones in the door. It also make it easy to rest on your laurels, allowing you to assume that customers are delighted, when in reality, your market share is stagnating and existing customers are, at best apathetic, and worse have one foot out the door.
Signs that you need overhaul how you company engages with its customers can be subtle. You have to look for the red flags your outdated consumer satisfaction measures may be missing.
Loyalty means different things to do different customers.
A stagnant marketplace may raise your “loyalty” scores. Your growth may lower them. Loyal members are forgiving and their strong loyalty may lead you to ignore flaws that prevent you from growing and flourishing. Exciting new products increase consumers’ willingness to recommend, but don’t guarantee their stickiness. What drives people to connect so powerfully they feel, cherish, and gladly celebrate the reciprocity that comes from working with you?
Are your customers loyal or simply indifferent?
High customer loyalty numbers are useless unless you ask you customers why they are staying with you. Many customers who identify themselves as “loyal” are actually apathetic. They stay with your bank rather than 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.
Satisfied customers will leave for greener pastures.
To retain customers, you need to know which ones are a flight risk. Truly loyal customers tend to be forgiving, which may obscure flaws that need to be addressed. Even those who say they are happy with your services will leave if a better offer comes along. 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. Are you providing the services and products your current customers want? How do your customers view you? You need the answer to those questions before they walk out the door. By then, it’s too late.
Be afraid! Customer satisfaction soars as more customers visiting bank branches less often.
Customer satisfaction and loyalty scores have soared in recent years even as customers have less and less in-person interaction with their bankers. That could be a cause for concern. Many customer satisfaction scores were designed years and years ago with the laudable goal of measuring the interaction between customers and banking staff. If staff compensation and rewards are tied to these scores, you have to ask if staff members are trying to influence customer ratings rather than improve the service they provide.
Older may be richer and wiser, but not always better.
High customer loyalty scores can be a symptom of an aging client base. Sure, Baby Boomers tend to have a higher net worth and are far less likely than younger customers to switch banks. Data from Informa Research Service’s SEA Score shows that those over 55 years of age are 37% more likely than Millennials to stick with their current financial institution. But to grow and flourish, a bank must not only retain their older customers but attract those younger customers. They are coming of age, which means buying homes and setting up investment accounts, but use an app on their iPhone, not a credit card, to pay for their morning trip to Starbucks and never set foot inside a bank. Any customer retention data that doesn’t point out how you can lure those same customers away from your competitor misses the mark.
Why is your loyalty score rising or falling?
Is a rise in your score the direct result of something you’re doing differently, or a sign of changing customer demands or a stagnant market place. A stagnant marketplace may raise your “loyalty” scores, and your growth may lower them. Loyal members are forgiving and their strong loyalty may lead you to ignore flaws that prevent you from growing and flourishing. Exciting new products increase consumers’ willingness to recommend, but don’t guarantee their stickiness.
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 firstname.lastname@example.org.