How banks can boost customer loyalty to weather the cost-of-living storm

By Magith Noohukhan, Head Customer Engagement Evangelist atBraze

Traditional banks are losing when it comes to customer satisfaction. According to a customer satisfaction survey from Which?, four out of the top five banks in the results were new challenger banks. Therefore, if financial services brands continue to lose the customer experience battle, they should expect poor customer retention.

Creating a strong relationship between consumers and the brand has never been more important as we experience a worsening cost of living, with prices of essentials increasing and banks having to pull mortgage products and replace them with higher interest rates.

In the face of these mounting economic challenges, how can banks improve customer experience to boost customer retention?

Banks must improve their customer engagement

A recent report fromBraze shows that banks are falling behind in engaging with their customers. Engaging with customers forms the core foundation for the consumer-brand relationship, establishing trust and transparency from the very beginning of the customer journey.

Half of the consumers surveyed ranked trustworthiness as the top factor when it comes to their bank, whereas only 15% of surveyed marketers thought the same. This highlights the gulf between what marketers deem as important, and what consumers value. When engaging with customers is done poorly, it has a detrimental effect on the way they view the brand, diminishing customer loyalty.

Brands must engage customers in a way that creates a relationship strong enough to withstand turbulent times. Financial institutions have a responsibility to keep their customers informed and educated about the macro economic conditions that will impact them at an individual level – keeping customers at the heart of every action they take. This form of thoughtful customer engagement strategy can inspire customer loyalty and boost retention.

The research from Braze shows that many banks are underperforming when it comes to customer engagement, demonstrating overconfidence. 84% of the EMEA surveyed marketers questioned said that customers are very or extremely satisfied, however more than half of the surveyed customers disagreed.

How do they fix it?

One thing that many banks are doing is over-messaging consumers. The frequency at which messages are sent impacts how your brand is viewed and the value they place on the messages sent to them. Braze’s research shows 60% of consumers prefer to receive communications from their financial services brands less frequently than once a week. Instead, banks must employ a more sophisticated approach to their customer engagement strategy, which is more personalised and tailored to the way customers are choosing to interact with the brand. For example, sending messages after a consumer takes a key action (e.g. begins the process of applying for a credit card but doesn’t finish) can be far more effective than sending messages at a specified time. Braze research shows that this action-based approach can increase conversion rates by 12 fold and open rates by 30% on email and 25% on direct push notifications when compared to time-based campaigns.

This is a simple fix for banks. Having a well-thought-out customer engagement strategy is essential to ensuring that you are not over-messaging consumers.

Simply refraining from over-messaging consumers is not enough for brands to build customer loyalty. They must also ensure that the messages sent are full of valuable insight. Consumer satisfaction with their bank is at 87% among those who feel they receive relevant communications. This is also easy to resolve by implementing a thoroughly considered customer engagement strategy that builds on the consumer–brand relationship.

To provide insightful engagement that adds value to consumers, you must understand what is important to them, but as highlighted by Braze’s research, not all banks understand what interests their clients. For banks to fully comprehend what clients want and how they interact with products, they must begin activating the first-party customer data that financial institutions have available at the tip of their fingers.

Suppose your engagement strategy is led by the things that consumers are interested in. In that case, they will inevitably be more insightful to any messaging or notifications and therefore valued more by consumers. If consumers gain insight from the engagement, they begin to grow a relationship with the brand, which is exactly what banks need to weather the cost-of-living storm.

Banks have a wealth of first-party data available, and we know that activating this data to provide personalized engagement deepens the relationship between consumer and brand, simultaneously allowing marketing teams to provide insight that resonates better with individuals. If your engagement is based on a consumer’s specific situation, it will add more value to them than a general one size fits all message.

Increased interest rates, the cost-of-living crisis, and banks needing to remove goods to stay alive will all put pressure on consumer relationships. Banks will also increasingly become a source of bad news and sorrow, putting a strain on how they interact with clients. Taking even small steps can significantly impact their customer loyalty and give them a solid foundation to continue their battles with the newer challenger banks.

About the author

“As Head Evangelist at Braze, Magith Noohukhan addresses the company’s global vision for customer engagement and how Braze can help brands feel empowered to create more meaningful, human conversations with their customers. Prior to joining Braze, Magith held Evangelist positions across Germany at XING and Indeed.com and has more than 10 years of marketing experience. He is currently based in London.”