Financial services is an industry where, if a customer is lost, it can be a significant loss to the company—possibly even fatal, especially when considering how difficult winning these kinds of customers back can be as well.
One study1 shows that many financial services businesses are doing a good enough job of winning the attitudinal loyalty of customers (people who intend to stay loyal). However, they’re not always adept at turning the intention of loyalty into engaged customers that effectively buy more products and refer the company to others.
Another report by Bain2 shows that earning high levels of customer loyalty for financial services businesses, helps win new customers as well.
What does this mean? There’s a massive opportunity for developing customer retention strategies for financial services, in order to to get more value out of existing customers.
Here's how you can get ahead of the curve:
1) Cross sell
A lot of businesses miss opportunities for cross-selling to their existing customer base.
With the expansion of digital platforms, it has become easier to find and buy products online, which has also created a huge opportunity to cross-sell. Of course, this also means that the competition is much fiercer.
Consider extending special offers to your most loyal and valued customers, based on their particular needs. Retention rates often increase with more products purchased.3
2) Embrace digital channels
Many institutions have already expanded their services to cater for the multitude of digital devices that their customers are using—but are you truly making the most of digital transformation? This is where businesses really can excel in the customer experience, such as resolving fraudulent account activity or offering expert advice.
Being quick and nimble in this space will help, as for example, having a slow interface will deter and annoy customers very fast. Features such as remote deposit capture, seamless online transactions and transferrals are just a few of the ways you can win at digital.
3) Focus and specialise
Segmenting your customer base is crucial for financial services in particular as the industry has a history of treating their customers in an uniform manner. They need to specialise their services to be able to focus on each customer base, to avoid being too “average”.
Naturally, each customer segment will differ when it comes to priorities, expectations and lifetime value. Often, senior customers place more value on branch location and the quality and interaction with branch staff, whereas for younger customers things such as mobile device interactions will be key.
As a leading financial institution, you’ll want to know what drives each segment but then also act on that knowledge by having a different strategy for each. For example, by having premium services for high value customers.
The bare minimum is keeping up with the latest features that are valued the most by your customers. Businesses can differentiate through bundling certain product sets together, allowing online applications, offering special rewards, ease of transactions and creating an overall excellent customer experience.
For products such as wealth management, the quality of advice will take precedence.
As ever, the key to success is striking the right price-value balance for the customer. Remember to always be there to lend a helping hand when needed.
Specific strategies for insurance businesses
You could provide additional value by conducting annual coverage reviews for your clients, or at least focus on the ones that provide the most value.
Another tactic is to give your clients a call before their premium increases. This will be much appreciated and will show that you’re “on their side”.
Setting up automatic payments that make it easier for your customers to stay is another great tactic. Stats show that clients on EFT payments renew their policies at a much higher rate than those who don’t. 3
In order for financial services to increase customer loyalty, firms need to regularly monitor their customers and proactively manage marketing initiatives based on the changing behaviour of customers.
1. Peppers & Rogers Group and Carlson Marketing
2. Customer Loyalty in Retail Banking: Global Edition 2013, Bain
3. InsuranceSplash, 2013
