The longer a customer stays with a bank, the less it costs to retain him. In a recent study of banking customers, average product ownership and profitability was found to be 20% higher among those who thought favourably of their bank. I can cite many figures,
but the point is made – there is a huge incentive for banks to retain and sustain customers.
So, how can innovation play an enabling role towards realising this objective? While innovation of products or services is important, with most banks going down the same path, it offers little competitive differentiation, which is so crucial to retention.
However, if a bank can anticipate unstated customer needs and fulfil them with imaginative products and services, their customers will enjoy an experience that will be hard to beat.
Sustaining strategies must become equally innovative. For instance, relationships need not be defined by their present value alone – a metric such as “Customer Lifetime Value” can be used to assess the total business potential of customers over their lifetime.
Banks can go on to mine this opportunity through innovative loyalty strategies that reward customers based not just on the size of their business, but factors such as channel preference and advocacy. This way banks can show customers that they value the entire
relationship and not just the business.
Banks must continuously refine their understanding of loyal customers’ expectations through finer segmentation and fulfil them through right-selling. If they’ve remained with their bank over the years, does that not count for something?
Checklist Item 1: Let customer interest drive innovation
Checklist Item 2: Focus innovatively on each customer