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Bain Shares Keys to Building Loyalty in the Retail Bank

We recently reviewed the new book from Bain & Company about the Net Promoter® Score and noted that a key point in the book was that NPS had progressed from “score” to “system” over the past 5 years.

A new study “Customer Loyalty in Retail Banking Americas 2011” provides evidence of how the “system” has been put to use to help banks, both big and small, create customer loyalty.

Especially important are these key findings of the report:

  1. Loyalty is built interaction by interaction through exceptional customer service, convenience and experiences that strengthen the bank’s brand reputation
  2. Customer loyalty is not another initiative that banks can drive; loyalty can only be earned over time.
  3. Loyalty is a way of doing business built patiently on a foundation of daily leadership, behaviors and actions, with a culture of continuous improvement

Bain cited three types of customer interactions that define the retail banking customer experience, each of which with opportunities to impact customer loyalty:

Routine transactions

  • These include mundane activities such as making deposits, withdrawals, funds transfers and account-balance inquiries
  • Research showed these transactions made up almost one-third of all customer interactions. Surprisingly, they have minimal influence on customer loyalty but garner a high percentage of attention from bank managers
  • The research showed that customers value speed and efficiency, expect flawless performance, but will not reward their bank just for meeting expectations

“Moments of Truth”

  • Loan applications, replacing lost cards and resolving incidents of fraud are the moments of truth that impact customer satisfaction and longer term loyalty
  • These transactions comprise less than 10% of all customer interactions and occur mostly in live channels like branch and call centers
  • These are areas where, if banks can do a better job, they can delight customers and differentiate from the competition

“Wow” Experiences

  • Routine transactions delivered through online and mobile channels can create a memorable experience for bank customers by making their lives easier
  • The Bain research indicated that by focusing technology investment to create more “wow” experiences, banks can increase loyalty across large numbers of customers

It has often been questioned whether banks can generate genuine enthusiasm from customers towards their service offerings, bland as they can be. It’s made increasingly more improbable since banks are driving more transactions online and through the ATM – eliminating interaction with personal bankers and tellers. How loyal can we be to a faceless, no personality ATM? The Bain report shared several examples including USAA and ING Direct which debunked this myth.

It also showed that an enterprise approach to loyalty integrated with well executed customer experience is the path to success.

Author: Bram Hechtkopf

Bram leads the “marketing of Kobie Marketing”. He consults with current and prospective clients on new business opportunities, helping to develop customer retention and loyalty marketing strategies and solutions that drive increased retention and spend. Following in the footsteps of his father, Kobie’s founder, Bram is eager to continue Kobie’s vision of technology and data analytics as enablers of leading-edge marketing executions for world-class customer loyalty initiatives. Bram has consulted with a wide array of leading brands including AMC Entertainment, TGI Friday’s, BJ’s Restaurants, Verizon, Bank of America, RBC, Flagstar Bank, JPMC, Sagicor, Coca Cola, Cox Enterprises, Ruby Tuesday, Hawaiian Airlines, and Royal Caribbean Cruise Lines. Prior to Kobie, Bram worked with the Human Capital Transaction Advisory Services practice for Ernst & Young, LLP, where he developed and presented analyses and recommendations on executive incentive and equity plan design and due diligence findings to senior management and the Board of Directors of Fortune 1000 clients. Prior to Ernst & Young, Bram worked with Towers Perrin in Manhattan as a consultant specializing in incentive plan design for executives and sales forces. Bram received his Bachelor of Business Administration degree with honors from the Goizueta Business School at Emory University with a concentration in Marketing and Information Technology.

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