The stakes are higher today than they’ve ever been in the past for leaders at banks and credit unions to effectively navigate customer retention. Attracting new clients can cost up to five times as much as retaining your existing ones. Meanwhile, JD Power’s 2024 U.S. Retail Banking Satisfaction Study found that 13% of retail bank customers indicated that they’re likely to switch banks in the next 24 months. Combine these dynamics with marketing challenges in the financial sector, such as low engagement across owned channels and limited scalability of personalized experiences, and it’s clear that financial institutions need to be intentional with their plan of attack.
- What Bank Marketers Will Learn From This Retention Playbook
- Play 1: Deliver Consistent Experiences Across Channels
- Play 2: Leverage AI for Hyper Personalized Experiences
- Play 3: Lean on the Strength of Your Front Line
- Play 4: Leverage Card Loyalty Programs to Drive Bank Customer Engagement
- Play 5: Financial Wellness as a Loyalty Driver
- Get Expert Help Developing Customer Retention Strategies for Banks
What Bank Marketers Will Learn From This Retention Playbook
This playbook identifies and delves into five customer retention strategies for banks that executives and marketers can implement to aid in maximizing client retention and set a strong financial foundation for your institution. These are proven retention tactics tailored for banking that aim to improve customer engagement, decrease customer churn and grow the lifetime value of customers. Given that acquiring a new customer can cost up to five-to-seven times more than retaining an existing one, this is already a compelling benefit, but that’s not even factoring in the lifetime opportunity loss of those customers as it applies to mortgages, auto loans, investment products and referral opportunities.
Another way to look at it is that if you’re investing heavily in customer acquisition without investing in retention strategies, then you could find yourself paying to fill a leaking bucket. Now, let’s get to it and start patching that bucket together.
Play 1: Deliver Consistent Experiences Across Channels
Financial services marketers have preached the importance of consistency for years. The genesis of this was typically tied to establishing and maintaining trust, and a lot of the early emphasis was put on the consistency of branding. This simply isn’t taking it far enough. Every interaction with a customer is an experience they have with your brand, whether it’s an ad you’ve run or a voluntary interaction they initiated, such as logging into your digital banking platform or walking into a branch.
What to do
Not only should your brand image be consistent across channels, but you should also aim to deliver a highly consistent customer experience regardless of where the user is meeting you. This is where being too siloed can be detrimental. Your CX, marketing and IT teams should be coming together with any third-party vendors to drive consistent customer engagement.
Why do it
If customers need different information, whether they’re completing a transaction on your website or your mobile app, if their experiences are highly inconsistent, that will lead to a frustrating customer experience.
The payoff
When customers know what to expect, there’s less friction, resulting in a better customer experience. But don’t underestimate the added benefit of reduced operational strain on your staff and resources when there’s less CX friction in CX.
Play 2: Leverage AI for Hyper Personalized Experiences
The likes of Amazon and Netflix have impacted personalization expectations across all industries, and financial services is no exception. The good news is that a robust CRM offers a plethora of datapoints when fully integrated with banking systems due to the high frequency of touchpoints with everything from account deposits to digital banking sessions. When AI is effectively layered with CRM data, cross-selling can truly be helpful to customers rather than being blatant marketing. You also don’t have to develop a robust proprietary solution like JPMorgan’s Coach AI to play in this space. Off-the-shelf solutions, such as Pega Customer Decision Hub and NICE CXone Mpower, can be integrated with common CRM solutions to make smarter use of your data.
What to do
Start by bringing your marketing, compliance, CX and IT teams together as this is the best way to identify risks early in the process. Once you understand the data you have and the restrictions, engage with your marketing agency to begin brainstorming ideas for creating memorable experiences for your customers.
Why do it
This tactic delivers right at the intersection of sales and retention. Smarter personalization will improve your hit rate with cross-selling efforts, while unique experiences will build favoritism with your customer base.
The payoff
A recent study from BCG Global found personalized promotional offers could generate up to three times the returns of mass promotional offers. This alone makes the case for personalization, even before factoring in the customer retention benefits.
Play 3: Lean on the Strength of Your Front Line
Frontline staff are called that for a reason. Even in the case of online only banks, your digital storefront isn’t a replacement for human service. Sooner or later, most customers will find themselves needing the help of an employee. Ensuring that your staff has the knowledge and resources to be effective in these engagements is critical. Tools such as decision trees to help staff better predict what product or service might fit the needs of a customer who’s struggling to articulate their needs can make a huge impact.
What to do
Put a frontline enablement strategy in place by leveraging first-party data to provide guidance and tools to make them more effective in their roles. Have KPIs in place for tracking the success of the program. Once you can claim success and your customers have noticed the difference, consider a marketing campaign highlighting real frontline staff.
Why do it
Enabling your staff for greater cross-selling success will make them appear more knowledgeable and helpful to your customers. Building a marketing campaign around your staff can celebrate their achievements while authentically humanizing your brand.
The payoff
When executed properly, this play has game-changing potential to increase retention of both customers and employees.
Play 4: Leverage Card Loyalty Programs to Drive Bank Customer Engagement
Card loyalty programs have been around for years and are ubiquitous at this point. But they’re not all created equally. When loyalty programs first made their way into banking, they were transactional in nature and were typically correlated to how much money was in your account. This made the programs less valuable to the customer types who needed the programs the most. The trend more recently has been for the programs to reward usage or engagement more than dollar amounts. The more you use your debit card and interact with your provider, the more your loyalty account grows. The idea is that the volume of interactions deepens the relationship between a financial services provider and a customer.
What to do
Analyze your customer base, your prospective target audience and typical usage patterns of your customers that most closely resemble your target audience. A survey of existing customers can be a good way to get additional context. Then review potential card loyalty options that align with your findings of what’s most likely to draw in prospective customers. It’s important to make the program customer-centric. Many institutions offer customers the ability to customize their loyalty program. This is a great way to ensure customers see it as something that’s being done for their best interest rather than simply a customer acquisition strategy.
Why do it
Loyalty programs in general can be a great way to earn new customers and retain current ones. When these programs are structured to be all about driving customer engagement, the benefits go from being more transactional in nature to being deep, relationship-based benefits that build trust and comfort over time. This leads to a better financial services customer experience.
The payoff
Deep relationships with customers that stick with your institution, leverage a multitude of bank products, and even become a strong bank referral source for you.
Play 5: Financial Wellness as a Loyalty Driver
Generally speaking, banks and credit unions try to improve the financial wellness of their customers or members through a two-pronged approach, with education representing one arm and products designed to improve financial wellness being the other.
What to do
Install a strategy for improving the financial wellness of customers through both education and products. When institutions get the education prong correct, it’s more than just resources that can be viewed. Interactive resources such as online calculators, credit health tools and interactive quizzes can add a layer of personalization to the experience that provides more benefit to the customer while also providing data to the institution. On the product side, it goes back to the point in play four about making sure the products you design not only appeal to new customers but also truly have their financial best interests in mind. This will allow them to improve their financial health, but keep your institution’s impact on that improvement obvious for the customer.
Why do it
The obvious reason is that if customers experience greater financial health, then they will be more loyal to their bank and will also leverage a greater percentage of the products and services that the institution offers. A less discussed reason, though, is the impact it makes on their confidence. Educating your customer base on their finances and your offerings will make them more confident about coming to your bank and engaging in a discussion about a product or service they haven’t previously used.
The payoff
You mold your customer base into one that’s more financially capable and also more financially savvy. This will help with the adoption of more products and services through cross-selling attempts and will result in a more loyal and engaged customer base.
Ready To Increase Retention To Unlock Your Growth Potential?
As we’ve covered throughout this playbook, customer retention strategies for banks isn’t about identifying ways to keep dissatisfied customers around. It’s about increasing customer satisfaction and engagement with all bank customers in a way that deepens the relationship and drives both trust and favoritism for your institution. And while the format of this article was to identify a set of tactics and delve into each one, it’s critical to keep in mind that any given retention tactic is only as successful as the greater banking CX strategy it supports. Ensuring that all the pieces are working together is just as critical as identifying the individual tactics.
Ready to improve your bank’s retention strategy? Let’s talk. Connect with our team for a free marketing audit.
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