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.

Why XX Should Mark the Spot of Your Banking Outreach

banking new england jan feb bruce paul
Image Source: Banking New England Jan/Feb 2019

In the latest issue of Banking New England, Bruce Paul discusses why community banks and credit unions need to make sure they are doing what they should to cultivate female customers.

Banking New England takes a look at both the importance of women as bank customers and how banks can solve the gender problem in leadership.

Customer Experience Solutions analyzed over a half million reviews from men and women to discover differences by gender in banking across the region.

Read the full article in Banking New England Jan/Feb 2019.

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.



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.

Community Banks: Big Bank Customers Are Waiting for Your Excellent Customer Service

One of the biggest myths out there is that community banks are always better at customer service than big banks. While this may be true in aggregate across the totality of the US, no community bank that I know of is competing on that level.  Every community bank competes on the local level, and the reality is that in over 75% of local markets that we cover in the Northeast, at least one big bank ranks in the top three in customer service. That means that in the vast majority of markets, community banks cannot say to local prospects that small banks always outshine the big guys.

Community banks may be more personal, more involved in the community, and more likely to know the people who bank with them, but if they’re not delivering on key service areas, they will struggle to compete with big banks in their community. In our latest New York benchmarks, more than 40 community banks across the state were rated lower in customer service by their own customers than any of the big banks in their market. So much for the service advantage.

Yet delivering on customer service should be low-hanging fruit for community banks as a way to compete with and take customers from the big banks, so if your community bank or credit union is getting bad marks on customer service, it’s an easy place to make rapid changes and retain the customers you have and attract new ones away from the big banks. Start with these three areas:

Improve Customer Service with Better Training

Employees who are knowledgeable about your bank’s products and services make banking customers feel confident that they are putting their money in good hands. Hire the best talent for your bank. You can teach banking, you cannot teach attitude or a true desire to help customers. Once you hire the right people, make sure your employees can answer questions, provide insight, and make recommendations that make sense for your customers, beyond just which checking account they should open. This sounds obvious, but both big and small banks often are not up to the task. In our latest survey, 38% of banked adults said their bank was not proactive enough in offering solutions. Customers are asking to be cross sold more! 

Improve Customer Service with Better Communication 

Not only do your customers and potential customers need to know that you’re capable of meeting all of their banking needs, but they need to know that you offer other financial services as well. From mortgages to retirement accounts, make sure your customers know you are more than just a place to have a Christmas savings account. In our latest survey, only about 50% of bank customers concentrate most of the banking with one bank, even though the vast majority say they want to consolidate. The two top reasons customers gave for not giving their primary bank all of their business were:

  • “I did not know they offered other products” and
  • “They never asked me.”

In several cases, well-meaning community banks were missing out on potential 25%-35% growth rates, simply by not being as proactive as their own customers were wanting.

All banks also need to make sure communications are effective in letting your target market know about your community involvement – one of the ways community banks and credit unions are able to set themselves apart from big banks. This is especially important in the commercial space since community involvement is a strong driver of consideration.

Improve Customer Service with Better Technology 

Being small and local doesn’t mean you can get away with not having the latest and greatest technology to make your banking services easy to access for your customers. From mobile banking to online check deposits, customers expect you to have all the conveniences of a big bank – and when you do, it levels the playing field and gives you an opportunity to draw dissatisfied customers away from big banks. Just because you are small does not mean you cannot compete in technology. Don’t believe it? Ask your customers. We did, and found that in almost every county in the Northeast, at least one community bank ranks in the top 3 in technology. Those community banks know that the key is not just the tools, but the servicing and training around the tools.

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.