Blog

How Community Banks Can Capitalize on Advantages to Beat Big Banks

Community banks are constantly competing against big banks. To remain relevant, it’s critical that community banks find and capitalize on the competitive edge their unique positions offer. It’s impossible to play the same game as big banks and expect to win. However, with a unique strategy that leverages the advantages offered by community banks and credit unions, customers can be drawn to a local choice.

Community banks can offer customized services for a better banking experience.

Larger banks do what they can to provide a well-rounded service, but it’s a cookie-cutter approach that forces local branches of large banks to conform across regions, not taking into account differences in the local communities they serve. Large banks are rarely attuned to the needs of the individual banking customer, focusing more on quantity than quality. But customers of every generation, from Baby Boomers to Generation Zers, want a trusted financial advisor. They don’t want a pamphlet on services or a web page on APRs. They want their bank to know who they are and what they personally need to do to improve and manage their finances.

Community banks deliver exceptional bank customer experiences by being able to recognize their individual customers and know who is looking to buy a house, expand their family, or perhaps go back to school. A large bank does not have the resources to personalize and customize services, which is where community banks can excel.

Community banks must prioritize relationships.

Taking any type of financial risk is extremely personal, but large banks can only assess risks based on numbers, making the relationships community banks build with their customers crucial. Community banks get to know long-time customers in their communities and may be able to offer creative financial solutions that fall outside a big bank’s cookie-cutter approach. Build loyal customers for life by giving opportunities to people who may otherwise not be able to qualify for a loan.

Community banks must be easily accessible.

One significant deterrent that customers experience with big banks is the struggle to find assistance. If there is a problem, finding a staff member that has the answer can take a long time. In our surveys, we see that “getting the runaround” is often the first- or second-most-important reason that defectors left their banks. In Boston and New York City, for example, almost 30% of big bank customers report getting the runaround by a bank staff member.  This does not even include the frustration of trying to find answers online, or hold times on the phone, all before getting the runaround in the branch.  If a community bank can streamline their processes, reduce hold times for phone calls, make sign-ins on mobile apps easier, and hold convenient hours for personal appointments, community banks can deliver the kind of bank experience that allows them to attract and retain more customers.

Community banks must provide a banking experience that every consumer will remember. By knowing your customers, not just as account numbers but as people, you will find a very special niche with which large banks find difficulty competing. Yes, a digital infrastructure is still important as consumers want their banking services available by any avenue that is convenient for them. However, it is knowing individual needs and providing customized services that will make your community bank stand apart.

Community Bank Challenges: Is Technology Your Achilles’ Heel?

Community banks and credit unions often believe their strengths lie anywhere but with technology. Given the variety of personal interactions in demand by customers, it may seem unlikely that technology shortcomings would be harmful. Unfortunately, even the best customer service cannot make up for a lack of the tech-based services that customers expect in their desire to make transactional banking easier and faster. Yet, most community banks and credit unions do have the technology they need to compete. So where is the issue?

Technology is rarely the problem.

Technology is rarely the problem, but how it is implemented and presented to customers certainly can be. A community bank may think that a basic technology package is all they need, but you can’t just introduce technology and walk away. While offering online banking services and mobile banking services is important, your customers must know how to use the technology, or it can become a source of frustration, causing some customers to defect.

Many community banks assume that if they shell out for an expensive new managed service in support of online or mobile services, then the problem is solved.  After all, isn’t technology supposed to be intuitive and easy to navigate?  That is what core processors will tell you.  But they would be wrong. In our interviews with millions of consumers and businesses, we know that almost half say they need some help from the bank to make use of the technology. Once they learn how to use online and mobile banking services, the vast majority of customers are happy with any banking technology, but the key is getting your customers to that point.

When we go through in-depth interviews with consumers and businesses about their banking technology, it becomes clear that being trained to make the most of technology is every bit as important as the technology itself.  What this means for community banks that are underperforming in terms of technology is that usually the problem is not the tools, it is the people behind those tools: your staff.

Improving the community bank customer experience begins and ends with your staff.

The challenge with technology often stems from a lack of staff knowledge. If a staff member isn’t a confident user of the banking tools your branch offers, they won’t be able to educate customers and provide the excellent customer service required to keep your customers happy. Customers often think, if the people at my bank don’t know how to use the tools, how can I be expected to?  Best-case scenario: Bank customers think the tools themselves must be too complicated and difficult; worst-case scenario: They think the community bank staff is incompetent. Based on our surveys, customers believe the latter to be true over 25% of the time. Either way, expensive online and mobile tools can be a waste of both time and money without proper education to accompany them.

Change your training, not the tools.

There are many companies that will insist you should replace your current tools so that your customers can make better use of technology. They will tell you how much money you will save in cost to serve. They will tell you that getting the “right” banking technology is the most important thing you can do. We have proof that this is not the case.

We regularly interview customers and members across 1,453 banks and credit unions. We know what they think of the technology at their community banks or credit unions. We know which tools each institution uses. Can you guess which institutions score the best? None of them. There is no consistent pattern. Two banks using the exact same tools can achieve very different ratings from their customers. Two credit unions with different tools might achieve the exact same ratings despite differences. The clear differentiator is not the technology; it is the support and training associated with the technology.

An understanding of the technology your branch uses should be a requirement for every bank employee. Once every staff member can navigate the utilized technology, incentive plans can be rolled out to your customer base. Staff will be ready to field any questions and promote the use of technology with confidence. If staff are resistant to adopting new technology, offer incentives to them as well. The most effective incentives that I have seen are at banks that pay all bonuses through peer-to-peer apps, such as Zelle®. Using this technology, each staff member can go online, open a bank account at the bank where they work (crazy that they haven’t already, right?), sign up for peer-to-peer services, and receive the money.  In short time, you will have 100% of your staff knowing how to open accounts online and how to use peer-to-peer banking.  Customers will see the difference in the confidence of the staff. Regardless of how you train your staff to use the tools you spent so much money on, it’s guaranteed to be cheaper than changing the technology you use.

Technology is necessary to attract and keep your banking customers, but technology must be properly implemented as well. Providing amazing community bank customer service means the community bank is everywhere customer needs are, from the local branch to the mobile app. Your customers will be able to tell you if your technology is truly lacking. However, you must first attempt to determine what works and what doesn’t, and this starts with your staff.

There is enormous opportunity for you to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

Community Banking Challenge: Anticipating Problems

Although every bank prides itself on customer service, no bank is perfect. Our Benchmarks gather millions of customer reviews across thousands of banks, and on average, 12% percent of banking customers tell us they have encountered a serious issue or mistake with their bank within the past six months. Some banks are higher, and some are lower. None are zero.

The good news is that reacting to and fixing problems is where community banks often excel. The lack of hierarchy allow staff at community banks to address concerns and remedy problems quickly. And our surveys show that, on average, 79% of those customers said that when they told the bank about the issue, they are happy with how the bank resolved the problem. Some banks are better, with several in the Northeast US approaching 95%, while several others are well below 50%. (Please contact CES if you want to know how your customers rated you).

While that is a pretty good resolution rate, resolution is only possible if the customer tells you about the problem.  Unfortunately, not all of them do.

Banks are not always aware of mistakes.

It may surprise you that more than 20% of customers who encounter a serious problem with their bank DO NOT TELL THE BANK.  Again, that is the average across thousands of banks, and can vary widely by area and by bank. For instance, in Boston, the number is 18%. In Western Massachusetts, it is 49%.

This can be extremely frustrating for a bank: how do you solve a problem you don’t know exists? Every decent bank really wants to know if their customers have had a problem, because they want to resolve it.  Needless to say, customers who have a problem but don’t tell the bank are much more likely to quietly leave the bank.

Why are customers not telling their bank when there is an issue?

Some deep dive meta-analysis that we conducted across more than 1,000 banks show three main reasons:

1. The customer does not believe the bank can or will resolve the issue.

This is typical in a bank that provides lower-than-average customer service or has had multiple unresolved issues. We have seen this quite often when a bank had a change in core services or in a managed service provider and the customers experience multiple recurring problems over time. Eventually, they just have no faith the bank can resolve issues well or permanently, so they think telling the bank is a waste of time.

One way to fix this problem: focus on the speed of problem resolution.  Every bank strives for first-call resolution (fixing the problem the first time a customer contacts the bank about the problem). While this is great, and many consultants will tell you how crucial it is, your customers tell us something slightly different. Our millions of reviews revealed that the clear majority of customers are forgiving, to a point. Our analysis shows that while first-call resolution is great, even if you can’t resolve the issue until the second contact, there is no long-term damage to the relationship. The customer feedback clearly shows that only when it takes three or more contacts to resolve a question does customer vulnerability (the likelihood they will change banks) really spike. This might impact how you design your systems. You should know when someone walks into the branch with a question whether they have called the call center about it or checked your website already. 

2. The personality of the customer or the culture of the area.

Many people feel reluctant to complain because it is just not their style. Our data shows this is much more common in more rural areas or less confrontational areas like the Midwest or South (it is not an issue in New York City!). So it is a cultural issue to overcome: How to get “nice” people to feel comfortable sharing their issues, without making it a “not nice” thing to do.

One way to fix this problem: Provide consistent, thoughtful outreach. Banks that survey their customers regularly will get broader, more honest feedback, especially as the “non-complainers” get used to the practice. To make everyone comfortable, and to be respectful of their time, here are some keys:

(A) ask you customers’ opinions no more than twice per year. Anything more than that can be a nuisance, drive down response rates, and negatively impact their overall customer experience with the bank. 

(B) Start with some broad measures, like customer service and technology, and if those are fine, then STOP.  Do not waste your customers’ time by asking them 20 different aspects of customer service if they have told you the customer service is fine. You only need to dig deeper when there is an issue. 

(C) Absolutely DO NOT ASK YOUR CUSTOMERS’ OPINIONS if you are not prepared to do anything about the feedback. If you are not prepared to act on feedback, they will quickly recognize they are wasting their time trying to help.  The most progressive banks actually share the results of their customer surveys with their customers and also tell them what they are doing as a result of the feedback. There are fewer ways to better build customer loyalty than to gather and use customer opinions. 

3. The customer really likes someone at the bank.

This might seem counter-intuitive, but many customers tell us the main reason they don’t voice their concerns is that they do not want to get a particular staff member (maybe their favorite teller, or a nice branch manager) in trouble. We see many instances where a front line staff member gave some bad information or was unable to answer a question, and the customer just gave up rather than bring that person’s lack of knowledge to light.

One way to fix this problem: Obtain customer feedback in another way, preferably from an objective third party. This can be an external syndicated survey, a high-quality mystery shop (that can actually get to true issues) or a customer panel. It is important, however, to never provide specific customer survey results to a staff member unless absolutely necessary. The worst problems I have seen are when a teller asks a customer “why did you rate me a 4 instead of a 5 on customer service?” That puts the customer in an uncomfortable situation, usually ending in them leaving the bank since the bank has betrayed their trust. It often destroys the feedback measurement program.

How to tackle each of these identified challenges in obtaining feedback from bank customers differs based on the area, the bank, and the customer.

First and foremost, a bank has to determine just how prevalent the issues are. Are 10% of customers experiencing significant issues? Or is it 25%? Or is it just 1%? Discovering how prevalent the issue is can only be done through asking the customers themselves.  A standard survey of customers (where you contact them directly) is a good way to do this, especially for problems that fall in #1 and #2 above. Typically, the customers in category #1 will tell you and those in category #2 will under-report a bit but at least you get some of their complaints. Unfortunately, customers in category #3 will usually not tell you even when you ask them directly, out of fear that the criticism will get back to the boss of that nice teller and get them in trouble or cost them their job. The only way to get objective results from all three groups is to have the data collected by a third party that your customers will be honest with. Just be sure to work with a partner that knows the intricacies of getting bank customers to open up fully about their experiences. A poorly constructed survey can do more damage than good.

One important note:  a bank cannot fully quantify customer problems and issues only through analyzing internal analytics like numbers of calls to the call center, downtime of the mobile app, length of lines in the branch, etc.  Those metrics, while helpful, only tell you part of the story, since customers’ opinions are what matter: One customer may not care about waiting on hold for three minutes, while it may be extremely frustrating to another. And your customers may have issues with your people, processes, and technology even if they are performing exactly like you trained them. Getting objective customer feedback can help you to take a step back to see where your processes, training, and technology need to be improved. Remember: your customers’ perceptions are your reality.

Banks are not capable of fixing problems if they are not in tune with the issues their customer base experiences. Often, the solution can be found by simply asking. In community banking, you should never assume that no news is good news. The secret to a competitive edge is to identify problems before they result in defection, and open lines of communication will assist you in offering the best service possible.

To learn more about how your customers and potential customers rate your bank, subscribe to our benchmarks. Learn more.

Community Bank Challenges: What is Hurting Your Relationships?

Community banks should be relationship experts. Smaller branches have extensive opportunities to immerse themselves in their communities, which allows staff to know customers on a personal level. Customers prefer engaging in a friendly conversation with familiar faces to standing at an ATM, so why are people switching to other banks? You could have the friendliest staff in the world, but if you do not understand what is hurting your relationship with consumers, your bottom line will suffer.

Customer loyalty is process driven.

After analyzing the hundreds of millions of data points we collect from customers of small, medium, and large banks, we discovered that difficult processes are a primary point of contention between customers and banks. For example, a customer typically comes into a branch for a reason, expecting help with a loan or other financial document that they cannot complete without assistance. A painful personal loan process can frustrate a customer to such an extent that they look to switch banks. If your branch is unhelpful with common financial needs and questions, the relationship with your customers will deteriorate quickly.

Expectation management is crucial.

The assumption that loan applications are generally difficult leads to expectations of frustration. However, the process does not have to be difficult. In our research, we have seen community banks that increased customer loyalty by offering a better process and better handling of documents.  But we have also found other banks that increased loyaltly even when their loan processing was average in terms of length and complexity. The question is, how can a bank make customers happy even when their loan process is average at best?  The answer: expectation management. Before a pen is put to a single loan application, the best thing your staff can do is to stop processing and just talk to customers about the entire process. Take the time to walk the customer through the necessary steps and offer estimates regarding how long the typical process takes. Informed customers are more likely to feel positive about their banking relationship when their expectations of the process are managed, even if the loan is ultimately not approved.

Efficiency is appreciated.

Although mistakes do occasionally happen, such as incomplete paperwork or missed steps, if you do not keep customers informed of things that might delay or derail their application, the relationship might take a negative turn when expectations are not met. Banks that were able to approve a loan, but only after an onerous process, saw those customers more likely to leave the bank in the next 1.5 years than customers who did not get a loan, but whose expectations were met.

It is not the outcome of a banking transaction that is most important to the relationship with consumers, but the process. Staff cannot always prevent a loan from being denied, but they can facilitate a straightforward process and offer consultation for alternative financial action. If you are wondering why customers are leaving your community bank, the first place you should look are processes or procedures that are potentially frustrating those who walk through your door. All too often, very friendly and responsive front line staff are not enough to overcome those internal issues.

There is enormous opportunity for you to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

Community Bank Challenges: Providing a Personal Touch in a Digital Environment

By now your customers already assume that any community bank or credit union can handle basic transactional functions associated with banking and have technology on par with the big banks. So, how can you further meet the expectations of your customers, succeeding where larger banks may fail? Where community banks can compete with – and ultimately excel beyond – the competition, is by balancing personal service and customer experience with the digital component.

Digital banking is important, but it’s not the crux of a successful branch.

Most adults would prefer to do their transactional banking online or by using a mobile app—our Benchmark surveys show that ranges from 55 to 75% of banked adults, depending on the town or city they live in. Transferring funds, checking balances, depositing checks, and completing similar transactions can all be handled comfortably without human interaction. These recurring tasks are not when consumers need or want their banking professionals. Most banked adults, and businesses, prefer to perform these tasks electronically (yes, even Baby Boomers), so you can deploy your personnel resources elsewhere.

Important interactions require a human touch.

Although an ATM or mobile app can handle most monetary transactions, the results of tens of thousands of interviews confirm that banked adults want to work with a person for more complex interactions. Don’t be swayed by the assumption that millennials rely solely on technology, because our latest Benchmark results which includes tens of thousands of millennials in addition to Baby Boomers and everyone else in between, clearly shoe that millennials want a personal touch for complex banking interactions.

Consumers across multiple generations seek personal, customized, human interaction for:

  • personal financial advice
  • assurance that they are protected against fraud
  • information about new products that could improve their financial well being
  • guidance on how to handle their next loan
  • better understanding of how their credit impacts being approved for a mortgage
  • advice on whether they should apply for another credit card

These are some of the important interactions for which a customer needs the support of an experienced banking professional. Focusing only on marketing your digital capabilities won’t communicate to current and potential customers the degree to which you can meet their needs as a personal financial advisor or provide hands-on customer experience.

It is important to remember the “personal interaction” encompasses both the branch as well as the phone, where customers can talk personally to someone who is trying to help them.  Too often we see community bank customers happy with the in-branch service, but unhappy with the phone assistance.  It is not uncommon for us to learn from customers in our interviews that the only reason they went into the branch for advice is because the call center they initially tried was inadequate.  This can lead a community bank to the false conclusion that their personal assistance is adequate when it is not.  This is one other reason it is crucial to track your performance across all channels.  You cannot improve what you cannot measure.

Improve your servicing image to attract customers.

Community banks must separate themselves from the digital rush and broadcast what is unique about their services, drawing a distinction between them and what big banks may provide. Emphasize the personal approach that a local community bank can offer. A successful bank competently provides both digital and personal services, but it is the balance of the two that defines the accomplishment. Find out where you stand with your customers and push beyond the obvious expectations of a functioning digital interface.

Round out your professional servicing image, emphasizing the community and how your branch can contribute to individual needs. Market your community bank by demonstrating how your bank can assist the community in reaching their financial goals – and employ the staff to back up those claims.

There is enormous opportunity for you to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

Hitting the Right Note with Community Bank Marketing

Community bank marketing requires a comprehensive strategy delivered to a targeted audience, but this is not as simple as replicating the marketing strategies of the banking giants. Forget about advertising the fact that you have technology that every customer expects you to have in the first place. Instead, find ways to differentiate your bank from big banks and competitor community banks. Your strategy needs to emphasize what you do best. What makes your community bank special?

Hyping technology is not effective.

The first effort many banks make with their marketing strategy is to emphasize their use of current technologies. Mobile banking and chatbots are no longer new to the banking industry, and within competitive markets, consumers don’t differentiate among which banks have what technology. They simply assume that all banks have decent technological capabilities, regardless of the size of the branch. And if you don’t, it’s to your peril.

Our ad recall research has even shown that although adults can correctly identify the intent of tech-focused bank ads like billboards, they usually can’t recall which bank the ad was for. So as a result, consumers are simply getting the message: banks are good at technology.  This results in wasted marketing dollars that could be put to better use on a more effective initiative. Your larger competitors are improving the image of technology within the banking industry, which allows community banks to benefit from the net impression that all banks have strong technology.

In addition, our Benchmarks show that technology is not even among the top 5 reasons people are dissatisfied with their current bank and want to switch. Responsiveness, getting the runaround, proactivity, and banking knowledge of the staff are all significantly more likely to drive away customers.  Don’t be fooled when a firm trying to sell you technology tells you that technology is the main reason people choose a new bank.  It simply is not the case. These firms ask consumers leading questions to get that answer. If you think about it, safety and security trumps everything else when choosing a bank, but people do not choose based upon that because they have the tacit assumption that all banks offer the same level of safety and security. Technology is now the same in market after market.  Our Benchmarks currently cover 109 markets and in over 75% of those, prospects see very little technological differentiation in most of the banks (and credit unions).

Market your community engagement.

Community banks are adept at moving their community engagement beyond donations to local charities and local sports sponsorships. But what happens when you are heavily involved in your community and no one knows it? One of the most beneficial marketing efforts you can have is to make sure people know about your involvement in the community.  This is doubly important in attracting the profitable new commercial customers.  Being a strong community contributor is a major reason you might be invited to compete for a company’s new line or loan.  True, no company will pay you an extra 400 basis points just because you support the local homeless shelter, but it can at least get you in the consideration set.

Market to the individual needs of consumers.

How are you managing individual customer relationships? By learning the habits, needs, and wants of your customers and prospects, you can provide better service by recommending products that are useful. Whether customers want to know how their spending habits are affecting their credit or how they can improve their chances of getting a loan to buy their first homes, when you deliver a personalized customer experience, you have the potential to outgrow your competitors by more than 100%.

Consumers don’t want to hear about the latest technology; they’ll assume you have it as a matter of course. What they want is to know that their banks can provide a reliable, knowledgeable service without getting the runaround to find basic answers. Rather than market technology, put your efforts towards a strategy that will have the best returns. Determine what sets your bank apart from others, and market that which is unique about how you do business.

There is enormous opportunity for you to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

Community Banks: Are Your Customers Cheating on You?

As a community bank, you might think your customer is loyal and devoted. Many of them are, but are you doing everything necessary to keep your current customer from “cheating” on you? There’s more going on behind your back than you might think: 11% of banked adults say they will change banks in the next 6 months. Community banks may find that previously loyal customers are cheating on them with competitors, and it’s not rates that lure them away.

What’s the primary reason your customers are cheating on you? It’s the runaround. Some community banks struggle to answer basic questions, and customers find that they are having to speak to multiple staff to get the answers they seek. For some banks, up to 45% of their customers report getting the runaround from their current bank.

How to Keep Your Customers from Cheating on You

Needless to say, a large percentage of customers are currently shopping for a new bank. For a few high-performing banks, less than 5% of their customers report having to ask multiple staff to get their questions answered.  High-performing banks have much higher loyalty levels, because customers are confident that they can easily access information.

Deliver on customer experience with no runaround.

To keep your community bank customers from slipping away, take the issue of runaround seriously. Make sure your staff is well-trained; increase the emphasis you place on customer service and customer experience. Large or small, a bank that treats its customers like more than numbers on a ledger increases loyalty.

Embrace the digital era.

Technology is essential banks must make available mobile apps and tools that provide ease of use for transactional needs but access to information as well. Delivery channels are expected to be easily accessible, whether the customer is using a computer, tablet, or mobile device. Make sure all the most important information is available to your customers online, through your banking app, and on your website.

Provide a personalized experience.

Although emerging generations may demand enhanced technological capabilities from their community banks, all generations demand a personalized experience. Not only do customers want banks to remember their individual preferences, but they are seeking wealth-building and money-saving tips from their local branches.

Understanding why your customers might be cheating on you is the first step in preventing it from becoming an issue. Build loyalty and strengthen your relationship with your customers by providing them access to well-trained, customer-focused staff; high-end technological solutions; and answers to the questions they ask – the first time.

If you want to know what percent of your customers are cheating on you, and what percentage are currently looking around, let us know and we can tell you.*

 

*Our customer experience benchmarks track the loyalty and vulnerability of every bank’s customers (including the percent that are currently shopping around). If you are a bank or credit union in the Northeast, we already conduct interviews with your customers.  If you would like to see your customer experience results please contact us.

Insights from our Recent Bank Benchmark Surveys

Customer Experience Solutions, LLC conducts a comprehensive scientific statewide survey of banking customers twice per year, in Spring and Fall. The Customer Benchmark focuses on how your customers rate your bank, and how those ratings compare to your competition. The Prospect Benchmark focuses on how your prospects (non-customers) view your bank and how you might gain their business. We gather millions of ratings from your customers and your competitors’ customers every year.

The 2018 results have just come out across the Northeast, and here are some of the latest findings:

  • Technology is becoming less and less of a differentiator. Over time, we have seen customers’ perceptions change as they relate to technology. Five or six years ago, customers assumed there was a big gap between big banks and small banks in terms of technology and the use of digital tools. While that still exists to some extent, that gap has closed significantly. As a matter of fact, in most local markets in the Northeast, there is at least one community bank that is rated higher than most national, super-regional, and regional banks in that market. Contact us and let us tell you if you are that bank.
  • Technology is more about convenience than saving money. While that might seem obvious, it is important to know that banked adults across the region are conducting more and more financial transactions electronically. That does not, however, diminish the importance they place on relationships with the bank. As a matter of fact, this trend toward electronic banking is benefiting a lot of community banks that see it as a way to eliminate the more trivial interactions, and to embrace the fact that the in-person interactions are now much more valuable because they are far more likely to be on a subject that is substantive and truly important to the customer. Whereas most community banker-customer interactions were transactional ten years ago, the majority of banker-customer interactions are now focused on solving problems, planning, or creating greater financial well-being.
  • The vast majority of customers do not want a 100% transactional relationship with their banks. They want proactivity instead. Proactivity is one of the key drivers of customer service in the eyes of customers. They increasingly want a bank that will suggest new ideas and products. And contrary to popular belief among community banks, customers are willing to tolerate a little bit of pushiness from time to time, if they sometimes see the positive outcomes . The key issue is about striking the right balance. For example, in the latest benchmarks for New York State, 9% of customers said their banks were too pushy, but 29% said their banks were not proactive enough. These numbers can vary from bank to bank, so it is important to know where you stand with your customers. But the lesson is clear: Erring on the side of passivity is not a good way to satisfy your customers or grow your market share.
  • Customers need to feel secure. Bank security is a big deal today, so your customers should always know that you are using cutting-edge security protocols to keep their information safe. But you should also make them feel secure in their decision to bank with you by being knowledgeable – not just about checking and savings accounts but about all of their financial needs, from investing to mortgages to annuities. This is very clear from the latest benchmark results in New Jersey. A full 7% of banked adults said that they did not feel their money was safe at their current primary bank. For the banks that ranked higher than this, fixing this perception is a matter of survival.

There is enormous opportunity for you to improve your ability to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

How Can Your Community Bank Outgrow Competitors by 100%?

Did you know that one of the biggest ways you can become more competitive as a community bank is to provide a better customer experience and better customer service? It seems simple, doesn’t it? Just give great service, provide a great experience, and watch your business grow. But of course, only one bank per community can actually be #1.

Unfortunately, providing exceptional customer service is not as simple as it seems for a number of reasons. But the biggest reason community banks and credit unions aren’t competing more effectively is that about 95% of them believe that they’re already giving the best customer service and experience. This problem is compounded by the disconnect that happens between what banks say and what they do. Ninety-six percent of bank CEOs say that customer experience is a top priority; however, when you ask on-the-ground managers who are charged with providing that experience, only 40% say that the customer experience is actually a day-to-day priority at their banks.

What We Know about Your Bank Customers that You Might Not Know

Your customers don’t always complain. How do we know? We ask them. When we collect the hundreds of thousands of ratings directly from customers to form our benchmarks, we ask them whether or not they have experienced a significant problem with their banks in the last 6 months. On average, 13% of those customers across the Northeast said that they had, and at the individual bank or branch level, the percentage was as high as 40%. The problems ranged from errors on statements to mobile app issues to rude tellers.

We asked the customers surveyed if they had told their banks about the problems they had experienced. The sobering truth is that over 50% of them said that they had not told their banks. That means they are upset with their banks, but they are keeping it to themselves. Quite often, this makes customers susceptible to the  next $200 offer to open an account elsewhere. They may even be actively looking to end their relationships in their entirety. As every banker knows, customers almost never say goodbye; they simply stop engaging. They open new accounts elsewhere, and they slowly draw down their balances until the banks are left with empty sleeper accounts. In 2017, 11% of US consumers changed their primary banks, and almost never did their banks see it coming until it was too late.

The way to understand the satisfaction—and vulnerability—of your customer base is not actually that difficult: you ask them. On a regular basis. You can do that internally, by recurrently surveying a representative sample of your customers. The drawback with that method is what is called respondent bias. If you ask 1,000 of your customers for their feedback via a mail survey, an email survey, or a phone survey, who do you think will respond? The very happy customers will respond. The very unhappy customers will respond. But the ones in the middle are far less likely to respond, so the result is a partial view of your customer feedback at best and a highly inaccurate one at worst.

A better and more accurate way of gathering customer experience feedback is by using a third-party, objective source that does more than survey the happiest and unhappiest customers. This can be done by targeting all customers (your and your competitors’) though a random population survey. In that way, happy customers, unhappy customers, and everyone in between are proportionately likely to give their feedback. You end up with a far-more accurate, far-less skewed picture of your customer base. This approach has the added advantage of possibly providing your results in comparison to your competitors, so you can see if you really are beating the competition. This approach is also typically much cheaper than a single-bank approach, since the costs are shared across many banks. On the flip side, the disadvantage is that you typically cannot customize the individual questions if you have a large market research department that prefers to create and distribute its own surveys.

Delivering on Customer Service

Your bank can grow 100% faster than the competition if you simply focus on delivering exceptional customer experiences. But you can’t just assume your bank is already doing that. Nearly 95% of banks think they are exceeding their customers’ expectations and doing so better than the competitor across the street. But such an assumption is not based on fact. There is enormous opportunity to improve your ability to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

2018 Community Bank Marketing Trends

Community banks are cornerstones of their local markets, and the 2018 trends in our benchmarks continue to reveal opportunities for success. Community banks must be ready to embrace changes, particularly in the realm of technology, to step up their competition with the big banks. Size is no excuse, with technology being readily available to banks of all sizes, and lack of training is not a good excuse either. No longer can smaller banks cede the higher ground to the larger banks.

In our latest Prospect Benchmark results, we have seen that the technology gap between big and small banks is narrowing. While this a result of what is happening inside the banks themselves, as the smaller banks continue to improve managed services, there is a tightening of the gap in a place at least as important: in the minds of consumers.

Below is a specific example of what I mean. In New London County, CT, retail customers were asked what they thought the technological capabilities were of all the banks they do not use. As you can see from the chart, they see very little differentiation between the big banks, the small banks, and even the credit unions. Consumers believe more and more that there is little or no difference in tech capabilities between institutions – and they are right.

Chatbots are the future of communication.

By 2020, it is expected that 85% of consumers’ interactions will occur via chatbots. As they can be accessed by any social channel, website, or app, chatbots are essential to communicating with both millennial consumers and the emerging Gen Z consumers. They can also be programmed to provide personalized answers and offer predictable information such as account balances, spending activities, and bill pay reports. Artificial intelligence is at the center of emerging trends for every industry, and banking is not excluded.  Smaller banks need to stay on top of this trend to ensure that, in the eyes of potential customers, they are keeping up with the market.

Micro-moments will determine your reach.

With most consumers checking their phones regularly as it is, your bank should be available to take advantage of customer reach regardless of when your banking information is accessed.  Many decisions are made impulsively, and it could be as simple as someone searching for banking opportunities in your area. Based on our most recent benchmark results, 47% of adults in the Northeast are currently looking for at least one new banking product.  While this percentage varies (with some counties at almost 60%), that means there is a very large amount of potential market share in play right now.  It will be up to you as a community bank to decide who will come up first in the search engine with the right answer: you or the big bank around the corner?

Cross-departmental integration is the key to success.

It’s no longer enough for community banks to rely on separate departments to reach overall business goals. To achieve success, collaboration between departments is an absolute must. With the customer experience, not necessarily the services provided, becoming the center of attention, everyone must work together to meet new expectations. This is particularly important for community banks that do not have the same upper management resources as big banks. Collaboration will be that which evens the playing field.

Over the past few years, we have seen that the quality of what I call “quarterbacking” is becoming ever more important, especially for commercial customers.  A decade or two ago, commercial customers relied on their loan officers to be the font of all knowledge.  And those loan officers very rarely introduced customers to their colleagues.  However, starting with younger business professionals a few years ago, the value of the team started growing in importance.  The commercial relationship managers who were able to display a broad team of experts – as opposed to functioning as one-stop shops themselves – started to become more successful. That is now the case, not just among younger customers, but baby boomers as well. They too see the value of a broad team, instead of a funnel leading to one person. Successful quarterbacking is now one of the major drivers of success for banks both big and small. As an added benefit, if a commercial customer sees value in the entire bank team, they are much less likely to leave if the regional manager moves on or retires.

Digital specialists are what’s missing from your team.

Digital marketing is at the forefront of 2018, and banks would be ill-advised to not invest in this industry. According to the latest benchmark results, when customers begin looking for new banking products, 55% say they start by searching on Google.  This can lead them to you or to your competition.

It is the era of social media, and if your community bank is not present on social platforms and in other digital arenas, you will not show up in searches, and the big banks will drown out all attempts at engagement. Community banks are no longer able to rely on friendly contacts that occur in person, and most consider employing digital specialists that can heighten their online marketing strategies. A digital specialist can also assist in making sense of the data that is now required to fuel a marketing strategy to effectively reach your target audience.  The most progressive banks have dedicated professionals focused on reacting to social media posts and questions, and monitoring what is happening among competitors’ customers.

The foundation is being laid for community banks to excel in 2018, but such achievement will not be realized without effort. Understanding the latest trends will be the first stepping stone towards your business growth and how you can leverage the resources available to you.

There is enormous opportunity to improve your ability to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.