The Factor that Impacts Bank Customer Loyalty the Most

The latest Banking Benchmarks came out the end of January, and there were clear indicators about overall banking strategies community bank and credit union managers should employ to maintain and grow in their markets. To understand where your bank specifically rates and ranks vs local competitors, be sure to request yours.

The One Factor that Determines Loyalty Above All

The most recent Benchmarks reflect that the most important differentiator community banks and credit unions have is their ability to deliver excellent customer experience.

CESCX Bank Customer Loyalty

Out of more than a million reviews, only about one-third of households and business can be classified as loyal. Loyalty is down significantly over the past 18 months. 

How Do We Measure Bank Loyalty?

Loyal consumers are those that have given the vast majority of their banking business to just one bank and are planning on giving the vast majority of their future business to the same bank.  These are customers or members that, barring any big unexpected problems, are going to be with you for at least the next 5 years. Statistically speaking, it is impossible to predict out longer than 5 years because of vagaries in the economy, people moving, changing jobs, etc.

What Can My Bank Do to Improve Customer Experience?

To improve your community bank customer service experience and generate more loyalty from your bank customers, we recommend this 7-step approach:

1. Compete with technology.

Customers expect even the smallest banks to compete well on technology. It’s an expectation, so if you fall short, you will lose share. But because technology is so ubiquitous, it also cannot be what you hinge your differentiation on. You need it, but you need more.

2. Consistency from every touchpoint.

No matter how your customer reaches you – phone, website, drive-through, walk-in, phone call – every experience should feel seamless and focused. Everyone should be on the same page about your services, and every single person who has any potential of coming into contact with your customers should deliver exceptional customer service and know how to use all of your technology.

3. Make your bank customers feel welcome.

Don’t forget the community in your community bank. When customers do walk in, they aren’t looking for an austere, corporate climate. They want smiling faces and people who know them by name.

4. Your employees should know how to bank at your bank.

As we interviewed thousands of banking customers, we discovered that staff training is typically one of the top reasons that people decide to switch banks.  Your staff – all of them – should be able to answer questions and demonstrate a clear understanding of existing technology.

5. Build a culture of customer service.

Nearly all bank managers think they prioritize service, but our surveys reveal that at least a third of customers report getting the runaround. Getting the runaround is a major reason households and businesses tell us they want to switch banks. Customer service has to be a culture in your bank from the top down.

6. Get personal.

What sets community banks and credit unions apart from big banks is that they can compete technologically while still being personal. When your banker is also your neighbor, has kids in the same schools, and understands the challenges of your specific community, it makes a difference.

7. Community involvement.

The customer experience is driven by your involvement in the community. Sponsor local teams and celebrate regional traditions. Reinforce that you are an important part of the community. And take every opportunity to promote what you do. Our surveys show that when a community contribution is accompanied by marketing spend to promote it, the impact to the bottom line can grow by more than 350%.

Want to know the specifics about your bank?

To understand where your bank specifically rates and ranks vs local competitors, be sure to request your benchmarks.

Customer Experience Solutions Benchmarks Highlighted in Banking Mid Atlantic

As the most recent banking benchmarks reflect, the most important differentiator community banks and credit unions have is their ability to deliver an excellent customer experience. When bank customers feel valued, listened to, and cared about at their bank, not even better rates can pull them away. Unfortunately, only a little more than one-third of the banking customers surveyed (over one million responses) are “highly loyal.”

This means two-thirds of banking customers throughout the northeast market are looking for a new bank. To make sure your customers aren’t the ones looking – and to attract the ones who are looking – you need to understand what your customers and prospects think of your bank.

New benchmarks are now available – request yours now.

Read the highlights about New Jersey’s and Pennsylvania’s banking benchmarks in the winter 2019 edition of Banking Mid Atlantic.

 

 

Consumers Are Looking for These 3 Digital Banking Services

Community banks have a lot of advantages over their larger counterparts, but that’s no reason to slack on technology. Regardless of the size of the bank, consumers expect certain digital banking services. Luckily for smaller banks and credit unions, the latest Benchmarks reveal that most households and businesses assume smaller institutions have about the same quality digital tools as the largest banks. Beyond delivering amazing customer service and employing strong community engagement practices, be sure these digital banking services are up to speed:

  1. Mobile Banking

A rapidly growing percent of consumers want everything accessible on a mobile device. The latest CES Banking Benchmarks reveal that 64% of consumers expect to increase their mobile and online banking in the next 12 months. Although you want your customers to feel comfortable coming into the branch, they shouldn’t have to come in for routine transactions if they don’t want to. Remote transfer, bill pay, and remote deposit have grown by up to 35% per year at some of the more proactive institutions. Person-to-person (P2P) payments are also more popular than ever, with friends using Venmo and PayPal to cover a shared cab rather than exchange cash. It’s essential that your mobile app can communicate with the preferred apps of your consumers, making every monetary transaction as easy as possible.

  1. Financial Planning

Consumers want more from their bank than the exchange of money. Financial planning is high on the list of what community banks should be offering, and this shouldn’t be limited to an in-person visit with a representative. Give your consumers the freedom to use files stored on their personal devices to make comparisons with your website or app. Budgeting, loan calculators, and tax preparation are only a few financial planning tools that are valuable to your customers. And once they start using these tools with your bank, they are far more likely to use your value-added services in the future.

  1. Online Account Management

Community banks can’t afford to forget about basic account management services. There’s nothing more annoying than having to fill out paperwork for something like a change of mailing address when it should be something the customer can do online. Allow your consumers the flexibility to make changes to their account digitally, without the hassle of paperwork or a trip to your branch. It should be easy to change contact information, switch mailing addresses, and check balances of different accounts. It may seem like common sense, especially since convenience is valuable to your consumer base, but these basic functions are often overlooked or not properly developed.

Bank technology is easily available, and it doesn’t take much to implement tools that make a difference to your customers.  An oft-forgotten aspect of employing banking technology is how important it is to educate your own employees on how to use them.  If your employees do not know how to use the technology you offer your customers, you can be assured that your customers question how good your bank really is if the employees don’t know how to bank there. During the interviews CES conducts for the Benchmarks, we see thousands of comments from customers who question the quality of their bank when they believe the bank’s staff themselves are not expert users of the banks’ technology.

An investment in digital banking services is no longer an option if your community bank wants to remain competitive. Community banks should always leverage their unique position as a member of the local community, but they must also deliver the level of functionality consumers expect from every bank large or small.

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.

7 Secrets to Providing a Better Community Bank Customer Experience

Technology has done much to level the playing field between big banks and small community banks and credit unions. Digital interfaces are available to every business, regardless of size, which leaves the battle over customers to be fought in a different realm. It is customer experience that is more important than ever, and community banks need to leverage from these 7 secrets, to gain advantage over the competition.

  1. Don’t fear technology.

Big banks have done the hard work of mainstreaming technology, so don’t let this be your downfall. Technology assists in providing customers with the integrated experience they expect from businesses, and your bank is no different. Even the smallest bank or credit union is more than capable of capitalizing on the software that is available in the marketplace.

  1. Unify all touch-points.

The customer experience is not linear. Customers may complete a single financial task using multiple touch-points, and they all must connect seamlessly. Those who use your bank should be able to access their balances easily via mobile app, discuss financial decisions with an expert by phone or at a physical branch, and keep track of their finances on a desktop computer. Every form of communication needs to be instantly responsive to the needs of every customer.

  1. Create a comfortable atmosphere.

Digital components to your community bank are crucial, but the atmosphere of your physical locations still matters. Even as you integrate each touch-point, you  want to avoid making your community bank feel like a sterile government office. When your customers do pop in, they want to feel welcomed. Lighting makes a huge difference, and you could easily swap stiff chairs for comfortable couches and friendly décor.  Some leading institutions are even experimenting with olfactory ambiance to help customers feel more comfortable.

  1. Empower through training.

Staff training is often what makes the difference between a growing business and a dwindling one.  When we interview hundreds of thousands of banking customers, we learn that poor staff training is typically the #1 or #2 reason that people decide to switch banks.   When your employees have and understand all the relevant product and service information about your community bank, they can better serve your customers. Staff should be able to answer customer questions, and with a solid understanding of existing technology, your staff can teach customers how to search for answers that they don’t readily have.

  1. Build a culture of customer service.

When the customer is central to every process, your staff can provide superior customer experience. This tenet starts at the top, with upper-management implementing processes that enable frontline staff to solve issues immediately for customers, rather than always having to refer the problem to a manager.  Our surveys reveal that 27% of customers report getting the runaround when trying to get questions answered.  For businesses, this increases to 35%.  And in both cases, getting the runaround is a major reason households and businesses tell us they might switch banks.  If you prioritize the customer and their experience from every angle, you achieve an approach that naturally eliminates most of the problems they face.

  1. Personalize your service.

Your overall infrastructure may be amazing, but customers need help marrying their needs to your products and services. It is not a case of “If you build it, they will come.”  Community banks are in an amazing position to be able to learn about the unique needs of their patrons, and then provide them with the tools and advice to meet those needs. A familiar smile, remembering their names, and recalling that they are in the process of purchasing a home, for instance, can build lifelong relationships.

  1. Contribute to the community.

The customer experience is driven by your involvement in the community. Many customers want to know that you are aware of what is relevant to those that live there. Sponsor local teams and celebrate regional traditions. Reinforce that you are an important part of the community.  This will improve your own customer loyalty and will actually attract more business, especially from middle market and small businesses in your area.  And do not feel shy about promoting your good works.  Our surveys show that when a community contribution is accompanied by marketing spend to promote it, the impact to the bottom line can grow by more than 350%.

Community banks and credit unions have unique strengths. If you want to offer a truly impactful customer experience, you have to offer personalization that is also convenient. Your frontline staff must be fully trained and confident enough to offer financial knowledge in addition to providing account services.  Your electronic banking should be an extension of that service, not a replacement for it.   A concerted, thoughtful examination of your processes, and more importantly, an unblinking understanding of your current customers’ opinions of the bank will enable you to excel beyond your peers.

Winners & Losers

2.28 Million Northeast Households and Businesses to Switch Banks this Year

Banking New England Sept/Oct 2018
Published on Oct 16, 2018

In this special marketing issue, learn how to optimize your mobile site, understand why customers can be easily enticed to switch banks, and get an inside look at the New England Financial Marketing Association conference, featuring an article by Bruce Paul.

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.

Continue reading “How Community Banks Can Capitalize on Advantages to Beat Big Banks”

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.

Continue reading “Community Bank Challenges: Is Technology Your Achilles’ Heel?”

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.

Continue reading “Community Banking Challenge: Anticipating Problems”

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.

Continue reading “Community Bank Challenges: Providing a Personal Touch in a Digital Environment”