Give Your Customers a Reason to Stay

I’ve said it before, and it bears repeating: The best way to distinguish your bank from the competition is by creating value. For most any bank, “value” means offering competitive products and services. But it’s important to note that creating value isn’t about simply lowering the price on your core products or services.

Actually, competing on price is a losing proposition, because customers who are lured by lower prices will simply continue to chase after them. Customers who equate value with price are classic price-switchers. Nine times out of 10, these customers don’t find value in anything else the bank has to offer. As a result, they perceive banks and their products to be all the same.

And, while raising rates or lowering fees may represent a value to some customers, it doesn’t create the loyalty and retention banks should strive for. The bottom line: It’s not your rates and fees that will determine whether a customer continues to do business with you. Differentiating your bank comes down to giving your customers a good reason to bank with you or to buy your products and services instead of your competitors’ offerings.

Based on research and client survey responses, here are some of the top ways customers say banks can get them to stay:

  • Improving speed of service—reducing the time it takes to make a transaction
  • Having attentive, knowledgeable, efficient and friendly employees
  • Delivering personalized service
  • Offering convenient or more branch locations
  • Returning their phone calls
  • Offering extended and weekend hours (lobby and drive-thru)
  • Creating a well-designed, navigable website
  • Reducing front-line staff turnover
  • Giving customers enough information to make wise financial decisions

On the flip side, your bank can create value by taking away those elements of service that customers find frustrating or annoying. That may include:

  • Providing more user-friendly and dependable ATMs with easier access and eliminating foreign ATM fees
  • Installing more customer-friendly telephone systems that allow the customer to talk to a real person
  • Reducing or eliminating delays, statement errors and employee mistakes

Addressing any of these concerns can be a great opportunity for a bank to add value. Obviously, it would be impossible for a bank to focus on all these issues at one time. Therefore, it’s crucial to develop a process for identifying which factors are most critical to increasing customer retention.

The first step for your bank: Conduct research to determine which aspects of the customer relationship is most negatively impacting satisfaction and loyalty levels—with your customers in your market. Don’t rely solely on what your front-line staff tells you; their perceptions don’t always align with the customer’s actual experience or feelings about your bank. So be sure your research is based on customer feedback. You can accomplish this through tools like surveys, focus groups, needs assessments and mystery shopping.

When you increase the value the customer perceives in each interaction with your bank, you’re more likely to raise satisfaction levels—and that leads to lower attrition rates. When customers stay because they feel truly valued, you’ve succeeded in giving them a reason to continue to do business with you. This loyalty translates into increased cross-sales, customer referrals and lifetime value of each customer.