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Dear Community Banks: This is Why Your Customers are Leaving

I recently had to make a deposit and fix a small issue with my bank account. I think my community bank has maybe 5 locations in the entire midwest, which means that everyone is cheery and I can always expect christmas lights in the winter and maybe cookies on the table when I walk in there. The staff are attentive and wonderful and always call me sir. “Is there anything else we can do for you, sir?”

Yes. Yes, local community banks, there is something you can do. But it’s less for me and more for you.

The smiles are great and sometimes I consider visiting the bank if for no other reason than to be surrounded by people who’s job seems to be to boost my self esteem at all costs and make me forget the cruel, harsh realities of this world. It is icing on an otherwise mundane task of paying the bank a visit.

But do you think this is why customers are staying with you?

The real reason people bank with you is because they need a place to put their money or secure a loan. Plenty of places do this, but they’ve chosen you. Probably on a recommendation or because their parents or friends banked there. The FDIC is ubiquitous and that’s all most care about.

Download Our Case Study: Predictive Analytics and Customer Loyalty

As management theory will tell you, money doesn’t make you happy, it only enables your happiness. Not too many people are even thinking of happiness if they can’t reach above maslow’s first level of physiological needs – food, water, shelter, and warmth. Can I trust my bank? Does my online banking work? Can I expect things to move quickly and smoothly when I need to visit? Think of these as your first level of customer banking hierarchy of needs – your minimum level of operation. All banks must employ this level to stay competitive.

To put it simply, there is less of an impact on customer loyalty when more effort is put into “delighting” your customers than effort poured into minimizing inconveniences for your customers. Customers won’t necessarily stay because of your good service, but they will definitely leave because of poor service. Your best course of action then, when addressing customer loyalty, is to revisit the basics.

I had to visit my community bank to reactivate a dormant account that I hadn’t touched in a few months. Why couldn’t I just click a checkbox on my online account that says “yes, I’m alive, and yes I want this account to continue functioning” and be done with it? Nope. I had to visit in person to fix it.

I also wanted to change my online banking password, a yearly pastime of mine (see password security article), something my banks says I can only do in person. Why? It seems counter intuitive. I want to change my password to make my account more secure, but I can’t. Not until I visit. And I guarantee that I’m not the only person who just said ah hell with it, I’ll get to that if I remember it when I visit next time. I’m just not motivated enough to make a visit solely on this issue unless something is dramatically wrong – this is basic human behavior 101. I’ve had more than a handful of experiences where I’ve tried to log on to my online banking portal and been told to come back later because they’re running “account maintenance.”

These are inconveniences, and inconveniences are what influence customer churn in the banking industry. Properly addressing your resources to fix these problems and maintain your systems are what will make the most difference in maximizing your customer lifetime value.

I came across a Harvard Business Review article talking about these drivers of customer loyalty and they mentioned these common customer services problems:

1. 56% report having to re-explain an issue

2. 57% report having to switch from the web to the phone

3. 59% report expending moderate-to-high effort to resolve an issue

4. 59% report being transferred

5. 62% report having to repeatedly contact the company to resolve an issue

What do we do then?

1. Create an online FAQ.  I recommend GetSatisfaction.

2. Web or phone for customer service. Pick **one** and staff it accordingly.  Focus is key to effective customer support.  Pick which platform you can best support, and focus on that platform.

3. Simplify.

4. Institute your own “Napoleonic Code”.  France was notorious for having laws that contradict each other. Napoleon, in seeing this, created one of the first civil legal systems in France which ordered laws hierarchially, top-down, to minimize conflict. Create a system that transfers customers no more than once.

5. Keep tabs on the complaints that require more than one contact and then add to the FAQ and re-train the customer service employees.

So community banks, if you’re interested in keeping me, do less to dazzle me and more to make sure that things just work.

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