Are you connected to your customer ... or to thin air?

As I travel the country and talk with bankers of all sizes and locations, one aspect of the conversations is consistent ... their need to better understand how and why customers act. In most cases, their drive for knowledge is from the acquisition side and that, in a nutshell, is part of the problem. Bankers seem to have trouble aligning themselves with the customer; especially when it involves ensuring retention.

Vox, a Chicago-based customer experience consultant recently completed an interesting study of bankers and consumers. The survey points out the connection--or lack thereof--bankers have when it comes to understanding their customer actions. Asking the stone series of questions to bankers and customers, the survey generated some answers that were in stark contrast. When asked the main reason for customer defection, 73 percent of the bankers indicated rates and fees were the cause. For consumers, only 11 percent responded that rates and fees drove their defection. When it comes to why a customer stays, 45 percent of bankers indicated it was the financial partnership created the kept the customer at the bank. In further contradiction, consumers said only 7 percent of the time did they feel they even had a financial partnership with their bank.

Compounding this issue is recent research reporting that 69 percent of customers are indifferent or skeptical of developing a relationship with their financial Institution.

You need to know your customer

So what does this tell us? We need to ask more questions and move from our "instincts" and Intuition and more into defined knowledge from our customer. We can track channel usage, product purchase tendencies and retention trends. Each provides secondary insight into the overall actions we can predict our customers will make. The primary insight comes straight from the customer. Many banks utilize closed-account surveys and mystery shopping in an attempt to uncover issues of service and product. The Vox survey said convenience rated as the number-one reason why someone stayed at a bank and poor service as the factor that would drive a customer to attrite. Both are issues that am significantly upstream from the account closing. As bankers, we need to get upstream in our customers' behaviors, thoughts and actions. Focus groups, branch intercepts and one-on-one In-depth Interviews with a random selection of customers will provide background and deeper knowledge to build a retention practice and attrition model for your bank.

Interestingly, only 37 percent of bankers interviewed by Vox indicated they actively track retention trends and more than half (55 percent) said retention is a key initiative at their institution. Tracking helps us see trends and ensure that retention is an area of focus for the entire institution.

Seeking alignment with customers, staff

The issue here is that we simply are not as "connected" to our customers as we would like or even believe. Retention is a frontline, marketing, organizational and ultimately a survival issue. Ask the questions of your customers and ask the questions of your staff. When you approach alignment in the answers, you will also find alignment with customer retention.

by Bruce Clapp, CFMP