Increase Retention by Adding Value

With increased competition and saturated markets, banks are seen as interchangeable commodities. In commoditized situations, customers are easily swayed to leave by the free offers and special rates being offered by competitors.

Banks that can identify, create, and maintain a sustainable differential value advantage will be less vulnerable to competitive pressures. Therefore, one key to making your bank defection-proof, without lowering your prices, is delivering more value to your customers.

The following are five ways you can add value to increase retention, differentiate your bank and gain a competitive advantage:

  1. Providing Information. Customers want more than just products. They want to feel they’ve made the right decision and they can only do this when they have enough information about your bank and the relationship it is offering. The more they know about your bank, the more they believe in its offerings and its people. Providing information also enables your customers to fully benefit from the products and services they receive from you. The better you educate and inform your customers, the more products and services they will purchase and the longer they will stay.
  2. Two-Way Communication. Another way to create value is to develop and build a dialogue with your customers. When a customer complains, “I never hear from you” he or she is really saying that there’s not a consistent flow of communication between you and the customer. You don’t have a dialogue when your customers feel the only time they hear from you is when you’re trying to sell them something and the only time you hear from them is when they have a complaint.
  3. Continuity of Message. To create a dialogue your communication needs to be consistent and there needs to be continuity between successive messages—it’s important that each message builds upon the last message—no more random offers, at random times, through random channels. Otherwise, all it takes is a rude personal banker to undermine all the hard work and investment that has been put into building and managing the customer relationship.
  4. Frequency of Interaction. Customers feel closer to a bank that makes regular, meaningful contact. The more involved the customer is with you the less likely they’ll be to switch banks. Therefore, consistent communication, both in message and in the frequency of message is a key to retaining customers. Consider frequent value-focused touch points as an opportunity to give your customers an ongoing education in what your bank has to offer. Repeat that message, and often (every 6 to 8 weeks), and you will reap plenty of what you sow.
  5. Personalized Communication. Frequent personalized communication helps solidify customer relationships. This means no more “Dear Valued Customer” communications—it’s hard to get a customer to believe their business means something to you if you don’t know their name when communicating with them.

Every customer is vulnerable to the competitive pull when more value is offered elsewhere. Unless you add value for your customers, you will not succeed in creating enough compelling reasons for them to stay and purchase additional products and services. In addition, if you don’t add value, they will not see a differential advantage for your bank over the bank across the street, which will result in higher attrition rates and lost revenue.