Customer engagement and retention has become a real issue for retail banks in today’s market. Customer behavior and needs are changing and there is an increased demand for personalized and more relevant banking experience. Many of the banks are facing challenges in retaining their existing customers, yet they are still trying hard to win new customers even though the process is expensive and time consuming. Banks should start focusing more on profitable customer relationships to increase customer acquisition, loyalty and engagement by being customer-centered. Customers are expecting more and understanding their needs can give a competitive edge against the competition.
Flexible, relationship-based pricing, customisable products and an effective reward/loyalty program can be attractive to customers and increase stronger brand loyalty which leads to profitability, growth and revenue potential. There is a great chance that customers stay longer with a bank that treats them well. They are more likely to recommend their banks to others, voluntarily becoming part of the sales team. Loyal customers will probably purchase more products and serving them is cost saving.
Data analytics can help banks understand customers and their preferences individually, predict their behavior, enabling them to build and tailor products, services and loyalty/reward strategies accordingly, making these programs more appealing and relevant to the diverse customer base.
There are endless options banks can offer through loyalty schemes e.g.: better interest rates on savings accounts, lower interest rates on loans, reduced account and ATM fees, air miles to different airlines, gift vouchers, cash back, discounts. Banks can partner up with retailers and different service providers to offer an even wider range of rewards. Providing more options to choose from gives customers control to let them manage their rewards and decide when and how to use them.
It is of course crucial to get the communication and marketing strategy right. Retail banks should send updates and news to customers via the channel of their choice and also leverage the benefits of social media. It can be used for getting customer service, marketing, getting feedback from consumers and it is also a key to customer engagement. The efficient use of social media gives opportunity for promotion, brand-building and a better insight to customer behavior and demands.
Today’s digital costumers have the chance to switch banks quicker than ever. Customer centricity is the way forward in the future of retail banking. It leads to better loyalty, increase in cross-selling and higher profits. The journey to customer centricity doesn’t happen overnight but it is definitely worth starting the process of change in approach.