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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.

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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.

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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.

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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.