How exactly does customer loyalty translate into better financial results for a retail bank? And how much value is at stake? For many bankers, the link between loyalty and financial results is somewhat unclear.
This year’s report, based on Bain’s proprietary research with 190,200 consumers in 27 countries, sheds light on how banks are using (or failing to use) loyalty to improve the economics of the business. The research was conducted online in July and August 2013 through market research firms Research Now and GMI.
Five ways to realize the fruits of loyalty
Winning new customers, limiting attrition and seizing the cross-sell opportunity all start with a bank’s ability to earn loyalty. But the experiences of leading banks show that five other elements are required in order to generate outsize growth.
- These start with insightful and practical customer segmentation schemes. In the US, younger customers place far more importance on recommendations from others and on mobile tools than older customers, who care relatively more about branch location and helpful staff.
- Banks must also ensure that they have a competitive suite of products. In the US, no traditional bank ranked highest on more than one product, so they clearly have room to improve.
- Selling capabilities are critical. In the US, roughly one-third of products get sold, not bought. The leading bank performs two to five times better than the laggard, depending on the product category.
- Service stands as the dominant cause of loyalty in most markets. To delight customers these days, the banking experience must be consistent and seamless in person, online, on mobile and on the phone, because customers increasingly hop among channels to complete a task.
- Finally, these four capabilities should reinforce and be supported by the bank’s brand and reputation. USAA has one of the strongest brands in banking despite its modest investment in advertising, in part because it serves such a specific, homogeneous group of customers—the military, veterans and their families—and consistently delivers on the brand promise.
In general, loyalty leaders outperform on both win rates for new relationships and cross-selling to existing customers. Banks that have advanced on several of the five elements thus have started to translate loyalty to better economics.
Die Studie „Customer Loyalty in Retail Banking 2013“ kann hier direkt heruntergeladen werden.
Die Vorjahresstudie „Kundenloyalität im Retail Banking 2012“ finden Sie ebenfalls im Bank Blog.