Published : 9 years ago, on 07/10/2015

By Adam Goran, Divisional Director of Customer Engagement at Grass Roots Group

With the introduction of the seven day switching legislation in 2013, the retail banking industry is at an all time competitive high, and it’s no surprise that its focus has turned to customer acquisition. However, despite the changes in legislation, fewer customers today are looking to switch compared to 2012, according to our recent research. Which means the achievable target market for new customer acquisition has become much smaller and has created an increasing need for banks to differentiate and quickly.

Maintaining relationships with existing customers is imperative for the sector, with the predicted widespread closure of 500 high street bank branches this year alone causing many customers to feel their banks don’t know them as an individual. High importance must be placed upon ensuring existing customers feel happy and valued. Only by becoming a customer-centric organisation can banks truly prioritise existing customers and dispel myths that their concerns lie with acquiring new customers from competitors.

Great customer service, particularly within the banking industry, must focus on a connected view of the customer, from the perspective of the employees and beyond, placing the customer at the heart of the organisation. However, becoming customer centric requires more than a refreshed focus on customer service, but rather a strategy that addresses customer engagement as a core agenda in the boardroom where all customer touch points are examined.

Personalised rewards

All organisations aspire to acquire customers for the long term and many will place a rewards strategy as a high priority to achieve this goal. Whilst this certainly is a great starting point, an issue which is particularly prevalent within the banking industry is that many are failing to offer the right incentives. Whilst more than 60 per cent of consumers named cashback rewards as the most desirable incentive in our recent research, cashback alone does not appeal to the masses. Understanding customers as individuals, and treating them as such, is the key to relevant and targeted incentives, and the key to retaining loyal customers and encouraging other bank customers to switch allegiance from the competition.  One way of ensuring that all engagement, including rewards, appeals to individuals on a personal level is through  precise targeting.

The accumulation and analysis of transactional data is imperative for effectively  targeting customers and through the analysis of this data we are able to gain insight into the daily habits of a consumer, however more than just raw data is needed to make relevant, personal and timely interactions. To achieve a well rounded 360 view of each customer, both attitudinal and transactional data are paramount to understand customers’ preferences and put them at the heart of the organisation.

Consistency of messaging

Not only does  precise targeting lend itself to enabling banks to reward customers personally, but it is also important for ensuring customers are recognised on an individual basis, no matter which channel they choose to connect with their bank; be it in-branch, online or on the phone.

However, the way consumers choose to interact with their bank has rapidly evolved over the past few decades, with thanks to millennials and mobile-savvy consumers. Yet the retail banking industry has been slow to evolve and is now confronted by a digital cross roads. A mobile-first design is needed to accommodate evolving consumer behaviours and attitudes, with an importance placed upon consistent messaging across channels and a level of clarity. Consumers want to be reassured that they’re being treated on a one-on-one basis, and not passed down a line of call centre employees, having to explain their circumstance each time.

Brand advocacy

It has been proven that engaged customers are better brand advocates, as well as more profitable and loyal. With brand reputation now travelling faster by word-of-mouth across social media, more and more consumers are now relying on peer-to-peer recommendations for making a decision between banks. This has brought the dawn of the empowered customer to light and has made brand advocates more important than ever. However, one of the most powerful and readily available tools to recruit brand advocates are employees.

It was evident in our recent research that there is a clear link between employee engagement and customer satisfaction, with the banks who scored well on employee knowledge, also receiving favourable scoring over competitors for consumer frustrations such as poor staff attitude and errors on customers’ accounts. However, employees also need to be equipped with the right tools to be able to address and interact with customers on a personal level, by having clarity on customers’ accounts as to their previous issues and recent enquiries. This knowledge will enable employees to recommend products more accurately and will enable them to communicate clearly with the customer as to why the product was recommended.

All customer touch points must be examined and aligned to facilitate the customer, including the customer’s history of interactions and transactions with the bank in question. All too often this is a trick that many banks miss. The credit card team is not aligned with the in-branch  team, or the team based in the call centres, meaning all touch points the customer interacts with are unaware of the previous feedback that the customer has provided. By taking existing feedback into account, this enables the bank to provide a personalised, relevant and meaningful conversation, across the multiple channels.

If personal customer engagement is placed at the heart of the retail banking industry, we can expect to see the sector go from strength to strength, with customer engagement the predominant differential. However, in order for this to become a turning point for the industry, there needs to be consolidation and consistency across the board. Brand alignment across employees and customers is the key to commercial success. As the Lloyd’s banking group chief executive, Antonio Horta-Osorio, stated recently – “Britain’s banks should stop complaining about new regulations and target the root cause of the red tape onslaught – bad treatment of customers.”