The finance industry controls one of the world’s largest markets. According to the report, the market cap of the global banking industry amounted to €6.9 trillion in 2018, which makes it a highly lucrative business opportunity for banks of all sizes.
But it also means that the banking industry is extremely competitive. Attracting clients in this field is both difficult and expensive as the cost of acquiring new customers is 7 times higher than retaining the existing one.
While both tactics are critical to the success of the company, it is clear that customer retention represents a simpler and more profitable solution. In this post, we will show you 7 effective bank customer retention strategies.
Types of Bank Clients
Before we begin explaining our customer retention strategies, we want to discuss a few bank client types. In general, there are 3 different types of customers:
- New clients: This is always the biggest customer group and you need to invest a lot of efforts to turn them into loyal clients. We will talk about the concrete methods soon, but the basic rule is to give your best to build quality relations and educate new clients.
- Existing clients: These are the organizations or individuals who have been working with your bank for a while already. They often give you the chance to cross-sell different products, which makes the existing customers great ROI boosters.
- Exiting clients: It’s impossible to retain every customer, so some of them will be leaving your bank sooner or later. Of course, you should try to get them back, but the odds are not great and ROI is never too high in this case.
How to Retain Bank Clients
Now that you’ve seen the customer retention fundamentals, it is time to focus on the main part of our post. Here are the 7 most productive bank customer retention strategies you should try in your business:
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Know your clients
Customization is an essence of modern business, which means you need to learn even the smallest details of your client’s banking requirements. Who is this person? What does she/he expect from you? Use one-on-one interviews, surveys, and questionnaires to get valuable feedback and understand how your customers think and behave. This way, you can create tailored offers that perfectly match the expectations of your target users.
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Be honest and clear
The worst thing you can do is to overpromise in the attempt to win over new customers. This usually leads to underperformance and poor delivery, which is the main cause of low-level retention rate. A report shows that 34% of customers switch providers because they are dissatisfied with the service at the old company.
Therefore, it’s much better to keep the communication clear and straightforward right from the beginning. Don’t forget to mention minor but annoying things such as hidden costs and extra transaction fees because it makes customers angry. Just be sincere and rest assured the client will appreciate your honesty.
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Take customer service to the higher level
Being polite and keeping promises is mandatory, but retaining customers requires you to take an extra step in the process. You should surprise clients occasionally with an unexpected gesture.
Jean Patterson, a customer service manager at EssayOnTime, explains how this process works: “For instance, you can send a personalized, hand-written “Thank You” note to the customer to acknowledge the privilege of working with him/her. Such a gesture takes only a little time and effort from your side, but it can do miracles in terms of customer retention.”
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Offer VIP programs
This strategy works well for the existing clients who need the additional push to keep using your bank’s services. We all want to feel appreciated and VIP programs exploit this trait to indulge customers. This type of retention tactic gives clients the feeling of uniqueness and exclusivity, while it doesn’t even have to be too expensive – all it takes is a small incentive to convince users to apply for your VIP membership.
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Create top-notch email newsletters
Another way to convince users that your bank is the right choice is to write high-quality email newsletters. Let it be the real source of financial news and industry reports, allowing your customers to learn about the hottest topics and trends in the banking market. It will help you to present yourself as an industry thought leader, which is the easiest way to earn professional reputation and win over clients’ trust.
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Offer one-time promotions
Banks can come up with a number of time-bound promo offers such as lower interest rates or some other types of ancillary products. You can invite the current clients to take part in special campaigns that last only a limited amount of time. Such offers will have two benefits: first of all, you will drive engagement and additional conversions, while you also get to increase retention rate simultaneously.
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Predict industry trends
The last tactic to improve bank customer retention is to utilize data analytics to predict the forthcoming industry trends and client demands. Just think about it – is there a better way to indulge your customers than to suggest them what they need before they even ask for it? This is the ultimate customer retention model that can elevate your bank head and shoulders above competitors, so make sure to take advantage of predictive analytics.
Conclusion
It’s a well-known fact that retaining a customer is much cheaper than acquiring a new one. The same goes for all industries and the banking system does not make an exception in that regard. In this post, we presented you 7 effective bank customer retention strategies.
Using these tactics, you can provide new clients with an effortless onboarding experience and successfully retain the existing users. Make sure to test each strategy and adapt it so as to fit the needs of your own organization – it will make the clients happier and the bank more profitable in the long-term perspective.