Customer Experience and Trust in Banking: The Links in Loyalty
Customer Experience and Loyalty
The main driver behind customer experience for companies is building and maintaining customer loyalty. Happy, loyal customers tend to buy more products at higher margins with less associated costs (vs the banks’ cost acquisition of new customers). Loyal customers are also great marketing channels for the banks- word of mouth marketing (and therefore referrals) are the best way to attain well-qualified prospects.
Customer Experience and Loyalty in Banking- 5 Key Factors
“In banking, every 1% increase in loyalty is associated with a 17% higher likelihood of repurchasing. “ (Lariviere, 2008 banking study)
According to Market Force Information Inc, there are 5 contributing factors that enhance the customer experience and therefore loyalty in banking :
Efficiency
Problem Experience
Knowledge
Relevancy
Trust
(Efficiency and Problem Experience are “the critical and necessary factors,” and Knowledge, Relevancy and Trust are “the factors that drive truly loyalty”)
So what is it that bank clients want?
The Market Force studies showed that customers wanted a knowledgeable banker (“value”) who is engaging (“relationship”). “Being enthusiastic, sincere, and having a good rapport with customers has the highest impact on customer satisfaction, reinforcing the need to build knowledge, relevancy, and trust.” (Why the Bank Customer Experience Matters. Market Force Information 2008) This will help drive loyalty.
Building Trust to Build Loyalty- One Piece to the Customer Experience Puzzle
There is a lot of talk around building trust, but there is very little action. How to build trust and trustworthiness? It is not simple and it takes time.
Trust in banking needs to be inherently absorbed both internally and externally. Internally is within the organization- front office, back office and management. Externally is between the customer facing individuals and the customers. Without both forces at work, trust does not work.
Trusted Advisor Associates uses the Trust Equation, which consists of building trustworthiness:
Credibility
Reliability
Intimacy
Self orientation
So building trust and trustworthiness is one of the key factors in customer experience and therefore customer loyalty. Live it and breathe it to increase your business.
For more information on trust, see: Egyii- trusted advisor edge and Egyii’s partner in crime-Trusted Advisor Associates
Trip Allen, Team Egyii, Singapore
Tags: Customer Experience, People Skills
August 14th, 2009 at 8:52 pm
Had to RT this posting. It’s HARD to design the appropriate customer experience but this example shows that not only can it be done but that it is an imperative these days. Thanks for not giving us a “one size fits all” description.
August 19th, 2009 at 9:48 pm
An interesting component of trust that came up in a conversation I had with a Private Bank the other day was the trust created by NOT doing anything.
Clients want to be reassured that their interests are taken care of.
Yes, this requires excellent performance a) at the front-line and b) at moments of truth. Also, research we have done into restoring trust in the sector has shown that banks would do well to: avoid mass media, and make communication close and personal. The motto being “Be good, don’t tell it”.
But this does not necessarily mean that clients want banks to be pro-active and e.g. have a meeting with clients every month to be reassured.
Think of how the public relies on the Fire Brigade to show up if their house is on fire. This trust is not created by the Fire Brigade having meetings with every home owner on a regular basis. Simply communicating every now and then that you are looking after their interests and have found no reason to do anything can also be very reassuring and can build trust.