Building Customer Loyalty

While giving a day-long seminar recently at a state banking meeting, I was surprised at the level of strong feelings about the decline in bank customer loyalty. My audience certainly wasn’t hesitant to talk when I opened this subject.

Most felt the customer forgets too quickly all the good things the bank has done for them and the community. Some were really angry that a customer shopped loan rates. And some couldn’t understand why long-term customers felt it necessary to “split” their account with other financial institutions.

It was refreshing to hear a CEO or two who actually stood up and said bankers themselves were to blame for the decline in customer loyalty. “We have taken them for granted. We don’t communicate with them when they don’t need something. It’s no wonder some seek appreciation elsewhere.”

Amen! Customer loyalty and retention doesn’t come without some real proactive work. Does your bank have a customer loyalty action plan? I would guess not. Most banks have plans for seeking new customers but not keeping ones they already have. If you need a jump-start on this idea, call me.

• Bank Insurance Sales are picking up. Last year US banks sold twice as much as the year before. This is probably coming from big banks for the most part but there are efforts underway now to put that capability into the hands of virtually any financial institution. $9.4 trillion of individual life insurance policies were sold in 2000. Another $6.4 trillion was sold as part of group policies. Banks sold about 1.5% of the combined total. Does this look like an opportunity for banks to get a bigger share? You bet! If your bank doesn’t know where to start, call me. There are 4 proven options.





• Bankers should be paying particular attention to the Baby Boomer market. They account for some 81 million people now in our population of 280 million. And they are using the Internet more and more to buy products and services. They are shopping for financial planning and long-term care insurance because they don’t believe Social Security will be there for them. Most big banks have bought up financial planning groups to capture this customer segment but there are other options for smaller institutions. It just takes commitment and now is the time to make it. If your bank isn’t offering more than typical trust department advice, jump on this wagon before it leaves you at the hitching post.





• Keep your eyes on a new organization that can mean new profits for financial institutions. It is called the National Association of Certified Banking Professionals. The NACBP, headquartered in Washington, D.C., is training licensed insurance and securities professionals on how to help banks capture new customers, retain old ones and avoid any problems with the GLB privacy act. Financial institutions can trust graduates of this training.





• The new privacy legislation does not prevent financial institutions from making money from their customer information. Don’t be intimidated! Pursue those options available to partner with others to add new profits to your bank’s bottom line.





• Customer mindsets continue to change noticeably. Most Americans want a better balance between work and personal time. More and more are concerned about retirement but are saving less and less. And there is a permanent change is the search for “value-add” in products and services. Bankers should note these changes and make appropriate changes in their communications to customers and prospects. There is great opportunity in these changes for bankers IF they will only take advantage of them.





• Poor customer service continues to drive away financial institution customers. A recent report indicated some 43% of those surveyed terminated their banking relationship due to poor service. How does your bank handle customer complaints? When was the last time you conducted an independent survey of customers for their honest opinions? (And statement stuffer mail surveys don’t count!)

Is your bank ready to grow faster? Are you ready to stop customer loss? Are you ready to stop the competition from reducing your profit margin? If so, give me a call. We have several programs that will address each of these desires and they cost less than the business you are losing now.

First published on BankersOnline.com 4/1/02