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Same crap, different smell

Before I start this piece I need to be completely honest with you.  I despise bank loyalty programmes.  Has anyone noticed that they all look the same?  Most banks have completely missed the point as they reward the wrong customers for the wrong behaviours.  They treat ‘loyalty’ programmes as a marketing campaign to encourage customers to spend more money on credit. I should know.  I called countless customers during University when I worked in the Collections call centre for a major bank.  With consumer sentiment at an all-time low and new switching rules gaining traction isn’t it time for banks to be bold and actually reward long suffering customers?  


We all know that ordinary consumers have had enough of banks.  A quick search of ‘I hate my bank’ in Google will leave you with a steady supply of angry rhetoric.  The only reason consumers don't switch banks is because of the ‘same crap, different smell’ syndrome that has permeated throughout the banking industry over the last decade.  In highly competitive and fluid industries such as transport, retail and even cafes, loyalty programmes are a necessity for survival.  Most consumers take part in at least five programmes at any one time.  Whilst I could argue for and against the real benefit of these programmes the lack of clear differentiation in the banking industry offers a great opportunity for some to stand out.


The reason loyalty programmes are perfect for the banking industry can be attributed to two simple facts.  Customers are crying out for attention and no one is currently rewarding loyal behaviour appropriately.  Significant benefits are on offer to the bank that achieves first mover advantage in true loyalty recognition.  You can almost guarantee an increase in customer satisfaction and positive media attention.  But being first isn’t the end game.  Behind any successful loyalty programme there needs to be real substance.  Loyalty needs to move from an advertising campaign to a real life experience.  From sound bite to action…


To deliver a successful programme banks need to look at the traps that have made many fail.  A loyalty programme is a multi-channel initiative that needs to be integrated into an overall strategy.  It is not an add-on or a marketing campaign.  It is distinctly different.  It is a partnership where there is no winner, just mutual benefit to all participating parties.  Banks should be transparent to customers about the type of behaviours that will be rewarded and make sure these align to sound financial practices.  Customers will appreciate it. 


In the process of implementing a true loyalty programme, banks need to become more proactive about engaging existing customers.  They can no longer afford to offer special bonus rates or rewards to new customers only.  Existing customers need to know about bonus offers as well.  Imagine the consumer reaction to receiving proactive communication that a bonus interest rate has been applied to an account so that it matches the rate newcomers receive. Talk about disruption!  With social media playing such an important part in the decision process, banks should also look to leverage social media ties in.  This will make it easy for customers to share their positivity about the changes.


Banks can also use the programme to encourage different customer behaviours.  If a customer reaches a certain savings milestone, put some extra money in their account.  If a customer only uses online banking offer them a bonus interest rate. Most importantly loyalty should be a factor in all bank interactions.  If a customer has overdrawn their bank account after banking with you for 15 years make it easy for the call centre staff member to remove the fee.  Nothing frustrates customer’s more than petty fees and generic policies.    


Implementing a loyalty programme is not a path to instant success.  It is not a solution to poor customer service.  It is a way for banks to engage their customers on a different level.  To succeed banks will need to be in it for the long haul and with the right intentions.  As banks struggle to respond to new competitors they need to make the most of one key advantage – the customers they already have.  This is a good opportunity for banks to be different and reward customer loyalty before it’s too late.

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Comments: (2)

A Finextra member
A Finextra member 25 April, 2012, 08:13Be the first to give this comment the thumbs up 0 likes

30 years with one bank.  9 mortgages paid off.  3 loans paid off.  300 credit card payments made on time.  Now there is loyalty.  My reward?  Same mortgage rate as a newcomer.  Good grief.

Loyalty is the way forward and I see none of it right now - just marketing, as you say.

A Finextra member
A Finextra member 26 April, 2012, 18:26Be the first to give this comment the thumbs up 0 likes

That is a perfect example of the behaviour that banks get away with.  I have seen circumstances whereby a customer with your history is treated like crap as soon as they are late by a couple of days on their monthly credit card statement.


The issue is there is no incentive to change or treat customers differently, but hopefully that changes with the new regulations.

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This post is from a series of posts in the group:

Innovation in Financial Services

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