Increasing the loyalty of customers and making them stay is the goal of many business owners. However, in this advanced customer era, along with significant changes in customer behavior, customers are getting more selective, picking businesses that offer them the most personal benefits. At the same time, advancement in digital technology opens up new opportunities for businesses in financial sectors such as banking to retain their customers better. As increasing customer retention rates by 5% can increase profits by anywhere from 25% to 95% (Bain & Co.), it’s clear that increasing customer retention rate and loyalty should be the priority of every business.
The challenge in the banking industry is that the services offered can be stagnant and too transaction-centric compared to other industries. In fact, a Deloitte Employee Survey found that only 19 percent of bank customers can be characterized as truly loyal to their bank. Thus, strategies are needed to enhance businesses’ relevance and value by engaging the customers more significantly through more personalized experiences.
How to increase customer loyalty?
- Reward customers digitally
Having a rewards program can greatly increase your customers’ loyalty! According to Collinson, 70% of customers agree that rewards from financial services have a major impact on their decision. 20% also agree that they would spend more if they are given more personalized and relevant rewards.
From the statistics above, it’s clear that business owners in the banking sector have lots of homework to do in giving more various, secure, and integrated rewards. Giving rewards for every stage of a customer’s journey can make them feel more valued and thus stay longer in your business.
- Empower customers to be advocates
When it comes to choosing a bank, customers don’t easily trust salespersons or ads. Naturally, they would go to their most trusted friends or relatives for recommendations. Imagine if you empower your customers to be your advocates, sincerely and excitedly recommending your business to their friends! Harvard Business Review reports that referred clients will generate 15% more profits than non-referred clients. Moreover, a study by the University of Pennsylvania finds that financial businesses that effectively leverage the power of referrals gain customers with 16% higher LTV (customer lifetime value) and 18 % higher retention rate.
You can create an online referral marketing strategy to encourage your customers to be your referrers. When done digitally, you can also easily track which of your customers are your best referrers and reward them accordingly.
- Leverage the full capability of customer data
Lastly, don’t forget that knowing who your customers are, their demographics, and behavior is crucial to help you determine strategies to increase customer loyalty and deliver a better customer experience. With powerful data analytics, you can collect, integrate, and manage customer data to make more informed decisions and gain competitive advantage over other financial services.
Don’t miss these three key steps to increase your customer loyalty and retention rate! If you have any concerns or need a clearer picture on how to start, you can also download our e-book for the banking industry. Or, feel free to schedule a meeting with us and we’ll be happy to address any questions you might have.