Christopher Evans, director, at the Collinson Group provides advice to financial institutions on how to maintain long-term customer relationships in the modern world
Today’s consumers are bombarded by an increasing number of marketing campaigns and offers, through the proliferation of communications channels. They are also becoming more discerning and savvy, influenced by and using online reviews and promotions to compare products and brands.
This, coupled with the European Parliament’s attempts to limit credit card interchange fees mean lower run-rate revenues from day-to-day retail banking activities. This has resulted in banks facing an increasingly difficult and disruptive business environment.
Meanwhile, the end of free banking in the UK is being touted as a tactic which could boost competition. At the same time, increased global competition, as well as non-traditional competitors, such as supermarkets, is luring customers away.
In this near-perfect storm, adopting a more customer-centric focus across the organisation by understanding more about your customers will be key to maintaining customer loyalty.
Research commissioned by our global loyalty marketing and CRM specialist ICLP and industry analyst Forrester, identified that out of all the different loyalty programmes available, 68 percent of consumers said they would value a banking loyalty programme the most. However, only 15 percent of this group are actually members of programmes operated by their bank. That the gap between consumer need and bank action is so wide, is clear evidence of untapped potential and strong opportunity for the banking industry.
Over the past two years Grant Thornton’s Insight and Peer Analysis practice has produced an annual customer experience and customer loyalty index. This shows how the top 21 players in retail banks are performing in the eyes of their customers. The latest report demonstrated that the best performers are the ones that can show they are tangibly ‘caring’ for their customers. The four top performers are considered to project this, but the largest players are not yet living up to the expectations of their customers.
Finding an effective way to identify, understand and nurture an organisation’s most valuable customers in the long term has a real impact on the bottom line. In the airline industry, analysis has revealed that the ‘best’ customers are 60 times more valuable in terms of revenue than the least frequent travellers and five times more valuable than those in the mid-tier of its customer database.
Financial institutions need to cultivate and serve their customers at every interaction opportunity, rather than just at key sales times, such as acquisition and renewal.
Below we have outlined some recommendations for financial institutions looking to drive engagement, loyalty and increased value from their customers:
- Understand and adapt to different motivations and passions: being able to understand consumer motivations and intent is as important as understanding the products they buy. Understanding customer needs and preferences will provide the foundation for building stronger customer relationships. In banking, rewards and incentives tend to be largely points-based or focus on material benefits, such as cashback. This can be attractive to some customers, but global research undertaken by Collinson Group has shown that for example, the majority of affluent middle class consumers are motivated by spending time and providing for families, by saving for the future and by experiences.
Creating ways of engaging and rewarding customers, which offer more altruistic benefits, which are shareable between friends and family or which offer unique experiences can be hugely valuable to these consumers. Deriving consumer insight starts with being able to meaningfully analyse data from different interactions and channels.
- ‘Keeping it Relevant and Real’: is a good motto for building customer relationships at brand level, rather than attempting to do so solely with promotions around individual products. By ‘real’ I mean to suggest that banks need to reach out to their customers through new channels where brand engagement is increasingly powerful, such as mobile and social.
Real-time data and predictive analysis can improve the way we offer products and services to consumers – delivering relevance in communications and incentives for loyal behaviour. Consumers are willing to share their data if they trust the communication from that brand will be relevant and the brand will ‘make better decisions’ on their behalf using this information.
- Value is king: it is well proven and documented that there is a direct correlation between high levels of customer engagement and profitability. As loyalty experts we know that engagement is driven by the value a brand can add at the various points of interaction.
It is important to identify value drivers that provide the depth and breadth needed to keep customers locked in for longer and also provide the structure to make your programme sustainable and scalable.
Looking forward, we recognise the viability of ‘self-selected’ loyalty, comprising tailored initiatives driven by the value consumers themselves want to derive from their brand interactions.
- Think beyond your sector: banks have been criticised in recent years for an extreme focus on profit at the expense of customer service, as well as for offering better deals to new rather than existing customers.
We are now seeing shifts in the way they engage with customers, offering benefits and services well beyond their core inventory.
For example Barclays has introduced ‘Features Store’, so that customers can choose their own benefits, which include mobile broadband access, anti-virus software, a homeowner property database and a range of travel packages.
Lloyds Bank has introduced Club Lloyds, where members can choose a range of value added services. Clearly these ‘choice driven’ services demonstrate thinking beyond sector specific offers and find ways to appeal to the customer’s personal motivations and lifestyles.
- Immediate reward vs long-term gratification: our research highlights different expectations from consumers in terms of when and how they receive promotions and rewards from companies.
A large proportion of middle class affluent consumers are focused on saving for the future and are unlikely to redeem points quickly, opting to save for the higher value rewards. This audience will be far more engaged if they feel companies are helping them achieve their longer term goals.
In contrast, younger generations in the highest income brackets from markets such as China and the United Arab Emirates want to see more immediate, personalised rewards which give them an instant benefit.
Banks need to work harder to know their customers, retain them and drive loyalty and advocacy. They need to develop a deeper level of customer engagement, by gaining more detailed insights about their profitable customers and adding value consistently.
It is especially beneficial for financial institutions (offering multiple products and services to their customers) to establish a single customer data view to capture – and reward – transactional and social behaviours. In so doing, banks will increase their opportunity to upsell and cross sell. Only when we think in terms of brand value to the customer, will we realise the potential of longer customer lifetime value.
Christopher Evans is a Director at Collinson Group. He joined as a Director in 2013 from Coty, a $4.6bn fragrance and cosmetics company with brands such as Calvin Klein, Davidoff, adidas and Rimmel. His career there spanned 17 years and included both Marketing and Managing Director responsibility within teams based in London, Dubai and New York. Christopher is responsible for bringing together the skills and experience across Collinson Group. Christopher is also responsible for Collinson Latitude, which combines advanced earning, redemption and ancillary revenue platforms with global content and e-commerce expertise to drive engagement and revenue for our clients.
 Forrester online survey on behalf of ICLP Plc, August 2012
Boeing, hit with $6.6 million FAA fine, faces much bigger 787 repair bill – sources
By Eric M. Johnson and David Shepardson
SEATTLE/WASHINGTON (Reuters) – Boeing Co will pay a $6.6 million to U.S. regulators as part of a settlement over quality and safety-oversight lapses going back years, a setback that comes as Boeing wrestles with repairs to flawed 787 Dreamliner jets that could dwarf the cost of the federal penalty.
Boeing is beginning painstaking repairs and forensic inspections to fix structural integrity flaws embedded deep inside at least 88 parked 787s built over the last year or so, a third industry source said.
The inspections and retrofits could take weeks or even up to a month per plane and are likely to cost hundreds of millions – if not billions – of dollars, depending to a large degree on the number of planes and defects involved, the person said.
The Federal Aviation Administration said Boeing had agreed to pay $6.6 million in penalties after the aviation regulator said it failed to comply with a 2015 safety agreement.
The penalties include $5.4 million for not complying with the agreement in which Boeing pledged to change its internal processes to improve and prioritize regulatory compliance and $1.21 million to settle two pending FAA enforcement cases.
“Boeing failed to meet all of its obligations under the settlement agreement, and the FAA is holding Boeing accountable by imposing additional penalties,” FAA Administrator Steve Dickson said in a statement. Boeing, which paid $12 million in 2015 as part of the settlement, did not immediately comment.
Boeing engineers are working to determine the scope of inspections, including whether jets can be used as-is without a threat to safety, two people said. Boeing has not told airlines how many jets are impacted, another person said.
The FAA has been investigating instances of oversight lapses, debris left inside finished aircraft, and managers putting pressure on employees handling safety checks for the FAA, people familiar with the proceedings said.
For example, in August 2020, Boeing told to the FAA about the flaw involving structural wrinkling in the interior fuselage skin where carbon-composite barrels that form the plane’s lightweight body are melded together.
But the defect went unnoticed for months or longer because computerized safeguards that crunch data looking for quality flaws had not been programmed to look for the gaps, a third industry source said.
The 787 production problems have halted deliveries of the jet since the end of October, locking up a source of desperately needed cash for Boeing.
The fuel-efficient 787 has been a huge success with airlines, which have ordered 1,882 of the advanced twin-aisle jet worth nearly $150 billion (74.7 billion pounds) at list prices.
But the advanced production process and sprawling global supply chain caused problems over the years.
As of February, Boeing had fixed the 787 production process causing the wrinkling defect, according to two people familiar with the matter.
However, planes rolled off the assembly line with the flaw for more than a year, at least, continuing even after the flaw was discovered in August 2020.
“It’s difficult to see a definitive fix that is agreeable by the aviation authorities and all going forward,” Boeing customer Air Lease Corp’s CEO John Plueger told analysts on an earnings call Feb 22. “I don’t think that we’re there yet.”
Boeing has been working on the fuselage problem, and two additional potentially hazardous defects that arose since 2019, as it charted plans to consolidate final assembly of the 787 in South Carolina starting next month, at a sharply reduced rate of 5 787s per month.
One senior supply chain source said they will have to cut rate again.
Boeing said last month it expects to resume handing over a small number of 787s to customers later this quarter.
It has an ambitious internal plan to deliver 100 of the jets this year, one person said. Analysts say deliveries are not expected to recover to 2019 levels until at least 2024.
But before any jet is delivered, it must go through invasive inspections and costly repairs.
First, technicians must pull out the passenger seats, open up the floor paneling and use specialty tools to measure whether defects invisible to the naked eye are present, according to three people with direct knowledge of the process.
The repair work – already underway at Boeing factories in Everett, Washington and North Charleston, South Carolina – is even harder.
In the bowels of the jet, technicians have to remove multiple specialty fasteners on both sides of the inner fuselage skin, then install newly produced “shims” that fill out gaps and remove the structural dimpling. Workers then replace all the fasteners, re-paint, and re-install the interior, they said.
“It’s like open heart surgery,” one of the people said. “They’ll be retrofitting the fleet for potentially several years.”
(Reporting by Eric M. Johnson in Seattle; Additional reporting by Tim Hepher in Paris, David Shepardson in Washington, and Tracy Rucinski in Chicago; Editing by Nick Zieminski)
On a retro style milk truck, London entrepreneur chases a ‘zero waste’ future
By Natalie Thomas
LONDON (Reuters) – Heralded by the whirr of its underpowered electric engine and the clink of bottles stacked in crates on the back, Ella Shone’s ‘Topup Truck’ started life ferrying morning milk to the doorsteps of bleary-eyed Londoners.
Twenty years on, and the light vehicle known as a ‘milk float’ – once a ubiquitous sight on British streets – is enjoying a second career selling a range of goods and serving the 32-year-old’s quest to rid the city of single-use plastic.
“The fact that I’m driving around in a milk float does a lot for raising awareness in the local area,” said Shone, wearing a black beanie during her rounds in the borough of Hackney last week. “So now I’m operating at almost full capacity.”
Furloughed from her sales job during the coronavirus pandemic last spring, Shone used savings to start her new business, aiming to meet growing demand for household goods free of the plastic packaging used in supermarkets.
Customers book a visit from the ‘Topup Truck’ online and then purchase goods such as lentils, pasta, olive oil, shampoo or washing up liquid using their own containers.
From a low base a decade ago, the market for such unpackaged bulk goods could hit at least 1.2 billion euros ($1.5 billion) by 2030 in the European Union, according to a report https://zerowasteeurope.eu/wp-content/uploads/2020/06/2020_06_30_zwe_pfs_executive_study.pdf by Zero Waste Europe, an anti-waste network.
While handling the logistics can be a challenge, Shone calculates that her service has eliminated the need for at least 12,700 pieces of plastic since it launched in August.
Planning a crowdfunder to retrofit her milk float to enable her to serve a greater range of products to more communities, Shone hopes her novel approach will inspire others to find creative ways to tackle waste.
“If we want to have real change, it has to be a collective effort,” she said.
($1 = 0.8218 euros)
(Writing by Matthew Green, Editing by Rosalba O’Brien)
Lufthansa adds more summer holiday destinations in bet on recovery
BERLIN (Reuters) – Lufthansa is adding more holiday destinations to its summer flight schedule from Germany in anticipation of a strong rebound in bookings, it said on Thursday, betting COVID-19 vaccines and testing will soon make vacation travel possible.
Germany’s largest airline said it was planning to add around 20 new destinations from Frankfurt and 13 from Munich to locations such as the Caribbean, the Canary Islands and Greece.
COVID-19 vaccines and testing, along with strict hygiene rules at airports and on planes, will be prerequisites for travel this summer, it said.
“We expect many countries to relax travel restrictions towards the summer as more and more people have been vaccinated,” Lufthansa board member Harry Hohmeister said in a statement.
Hohmeister said the airline, which secured a 9 billion euro ($11 billion) state bailout last year, expects a sharp increase in demand once restrictions are lifted.
Concerned about more transmissible coronavirus mutations, many European Union countries have reinstated border controls in what is normally a passport-free travel zone.
“There is a great yearning for travel and we believe that the summer months will reflect this,” Hohmeister added.
In Britain, holiday bookings soared this week after the government laid out plans to gradually relax coronavirus restrictions, giving battered airlines and tour operators hope that a bumper summer could come to their rescue.
Plans for relaxing coronavirus travel restrictions have not been announced yet in Germany. Chancellor Angela Merkel is due to discuss lockdown options with the head of the regional governments next Wednesday.
Lufthansa, which said in January it was losing a million euros every two hours, is due to publish its fourth quarter results on March 4.
($1 = 0.8187 euros)
(Reporting by Riham Alkousaa and Ilona Wissenbach. Editing by Mark Potter)
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