I recently attended a webinar by Yahoo! Finance Canada entitled “Money Matters – Understanding Canadian’s banking needs”, presented by their Research Manager, Sarah Bradley. It contained a lot of interesting statistics and thought-provoking information. But one point in particular – the three main features customers look for from their financial institutions – gave me pause for thought.
From a consumer perspective, what would make you switch your bank account(s) or other bank products from one financial institution to another? And from a corporate perspective, what strategies or opportunities exist for banks to differentiate their offerings to attract and retain customers, particularly in such a competitive industry?
Yahoo! Finance Canada found that when customers were asked what they look for from their financial institutions, the three prevailing responses were
- the best customer service;
- the best rewards and;
- the lowest fees.
Here are some ideas on how each can be leveraged so that customers’ expectations can be met, and resultantly, banks can retain their most profitable consumers, and attract more like them.
Delivering Value That Customers Deem Valuable
Customer Service. Customers’ demand for excellent customer service goes beyond the 1-800 numbers that banks provide, or the even the interaction a customer may have with an officer at the branch. Superior customer service applies to all the interactions that a bank has with its customers, every one being an opportunity to improve a customer’s level of satisfaction. But here’s an additional thought – technology also plays a key role in providing excellent customer service. Today, large customer segments are no longer going into the branch, but are making their decisions online, Bradley confirmed in her webinar. Customers are using banks’ websites and mobile applications to perform their research as well as to perform routine transactions, and customers are expecting excellent service when interacting with these tools too! In fact, according to the report Customer Loyalty in Retail Banking, customers with a higher frequency of mobile transactions are more likely to recommend their bank than low-frequency users. This delivers a simple yet clear message – delight your customers on every interaction across every channel, and they are more likely to become advocates of your brand.
Customer Rewards. In such a competitive landscape, rewards can also play an important role in customer satisfaction and retention. Today, customers are looking for better rewards and banks are working hard to respond to their needs with different programs, programs such as everyday chequing accounts and personal loans that offer rewards, credit cards that award miles or points, etc. In fact, rewards and incentives are often a bank’s opportunity to bait new customers. For example, customers are often incented to open credit cards that offer rewards such as miles or miles equivalents. Customers accelerate their earning potential by making their everyday purchases with these credit cards, and use the rewards to reduce (or offset) the cost of their travel or annual family vacation. Other customers look for more immediate incentives such as movie passes, or cash back.
Customers like to be rewarded, but they also like to feel empowered. Just think, how much more could banks delight their customers by putting them in control of the benefits or rewards they could earn for the business they bring to the bank? Customers’ banking experience can be enhanced to one that is more of a one-to-one individualized experience, one that empowers consumers with choice and control both over the products and services that they bring to the bank, as well as the rewards that they would earn as a result. Incenting customers with rewards that are most relevant to them, can drive – if you will pardon the pun – more rewarding banking experiences and more engaged, loyal consumers.
‘Winning’ a customer using rewards and incentives gives the bank the opportunity to ‘win’ in more ways than one. For example, an excellent on-boarding experience followed by ongoing best in class customer service can be the ‘foot in the door’ a bank needs to entice that customer to consolidate their balances with the bank and for the bank to maximize its share of wallet from that customer.
Bank Fees. As mentioned earlier, the decisions customers make today regarding their financial matters are often first filtered on the web. Customers are always in search of the best deals. Fees are at the top of the list that contributes to dissatisfaction among customers, and can drive customers to consider switching their bank, according to Bradley. In today’s market, there are a lot of options for customers to choose from –“no fee” chequing and savings accounts with minimum balances, no fee credit cards, and more1.
While fees are one of the top concerns for banking customers, it is not the sole consideration point upon which consumers are making their banking decisions. This again spells opportunities for banks. Rather than using a ‘one size fits all approach’, consider how fees can be used to individualize the customer experience, and thereby deepen customer relationships.
At the end of the day, customers are looking for value, and therein lies the opportunity for banks to differentiate and delight. Customers will continue to make decisions based upon not only the value that financial institutions are able to offer, but how banks are able to tailor their offerings on a customer-by-customer basis thereby driving value that is most relevant to them.