Bank customer retention strategies simplified with data

When it comes to competitive industries, the banking industry ranks highly. With financial technology (aka fintech), new banking brands and even non-banking companies entering with financial products, success in banking requires new strategies. Bank customer retention costs less than acquiring new customers—a simpler, more profitable strategic solution. So, how can using the right data fuel customer insights and improve bank customer retention? What are the next steps after the basic internet search of “Customer retention strategies in banking industry?” 

Why are customer retention strategies for banks important?

Each and every new customer is incredibly valuable, but long-term customers actually spend more than recently acquired customers, so the return on investment (ROI) of marketing to and retaining customers is higher. Moreover, it is more expensive—sometimes up to seven times more– to gain new customers than to keep existing customers.

The key question so often asked is, “How can banks increase customer loyalty?” Simply, by proving that you know them and can fulfil their needs. Acquiring new customers includes digging deeply into data to create a comprehensive targeting and analytics strategy. 

How do banks retain their customers?

Most banks implement customer retention programs, but even with a basic strategy in place, it’s still worth asking, “What are the main keys to customer retention?” There are, of course, many more than three, but to boil it down to its essence, bank customer retention comes down to: 

• Excellent communication
• Building trust
• Providing personalized experiences

Let's dig into the top strategies. 

Top customer retention strategies

Making bank customer retention a primary area of focus is a necessary pilar of marketing, but customer retention cannot remain siloed there. In order to truly succeed at improving customer retention in banking, all teams must participate in keeping existing customers on board and satisfied. Here are seven strategies that can help: 

1. Build a foundation for excellent communication by listening to customer feedback

For many bank customers, their relationship with their bank is a “set it and forget it” situation. They don’t give their bank much thought until there is a need or an issue. While communication is a two-way street, it’s important not to wait until customers are reaching out to a bank to focus on that relationship. Good communication is vital to set customer expectations and anticipate customer needs so the organization can capitalize on them. And listening to customer feedback is a big part of that.

Take every opportunity to listen to the feedback and sentiments of customers—social media, surveys, reviews, focus groups and more. When customers share ideas, feedback and experiences, be sure to truly listen, track trends and implement those suggestions that would result in improvements. 

2. Focus on building trust 

Building trust with bank customers is one of the most important ways to improve customer retention. Being transparent in banking operations and customer interactions and providing sterling customer service are hallmarks of trust building in financial relationships.

Be clear that the bank’s number one asset and priority are its customers and back that up with every action and interaction. Financial services can be stressful and complicated, so be sure customers can always reach someone in ways that can enhance their experience. And in turbulent economic times, position the bank as a stable, reliable resource. 

3. Prove that you know your customer through personalized communication

Most banks have access to basic customer data, but partnering with a third-party data-driven marketing agency can open the door to products, services and experiences targeted at exactly the right customers at just the right time in their lives.

These trigger marketing campaigns (also called “intent signals” or “life event triggers”) utilize scores of deep, highly specific data points to help identify the types of events or milestones most likely to trigger the purchase of a financial product or upgrade of a service. A highly successful for strategy is to improve retention with customer intent signals.

For example, when a bank customer inquires with a competitor about something such as an auto loan and their credit is pulled, that action is quickly flagged so the bank can execute a campaign to reach that consumer with a targeted marketing piece. This is part of a retention program using credit triggers. Other triggers include: 

• Wealth
• Behavior
• Events
• Mover (both pre-mover and new mover)

In fact, Deluxe  clients typically see a 10 percent win rate from mortgage campaigns using credit and mover trigger signals solutions. With the right data, it’s far easier to improve customer retention with intent signals.

4. Provide a seamless customer experience 

Even the smallest “surprise and delight” experiences are easy to deliver and can have a big impact. But, of course, that’s not enough on its own to retain banking customers. Anticipating customer needs, both directly and indirectly, requires the use of data to transform the focus of a banking team to customer-centric model.

Before bank customer service and marketing teams can deliver on this level of customer experience, they need to know – really get to know – the bank’s customers. Just some of the areas of interest include:

• Basic demographic information such as marital status, family makeup, and geographic location.
• Financial information such as income and credit rating.
• Banking information such as transactional history.
• Life milestones.
• Attitudes, such as positions and approaches to financial matters.

With the in-depth data at hand, it pays to analyze customer journeys, create customer personas for a general idea of who to market to, understand communication preferences and more.

A one-size-fits-all approach doesn’t set customer experience programs up for success. Focus on granular, specific customer segments and deliver customized customer experiences that meet their needs.

Some examples include: 

VIP or bank loyalty programs

Banks with very important customers should treat them that way. From waiving fees and free services to priority products (like a checking account) and a direct line to a personal banking assistant, programs that upgrade and reward loyal and high-value customers can not only help them stay with a bank, but also consider additional products and services. There are no customer loyalty banks, unfortunately, only customer loyalty to banks, so it’s vital to take every opportunity to get customers to think long-term. 

Customized communications

Everyone gets (and ignores) spam emails. But imagine getting a birthday text from your bank offering a $100 bonus if you open a CD in the amount of $1,000 or more in the next week. Not only did the bank recognize a milestone day in a personalized way, but a lot of people would choose a $100 bonus over birthday cake! And all it takes is basic demographic and customer transaction data.

For higher level communications, deeper data analytics is helpful to identify customers on the verge of a move, those searching for student loans, families welcoming babies and more. Deluxe has found that trigger marketing campaigns consistently outperform traditional marketing programs. 

Promotions

Just as discounts and sales inspire shoppers to spend, promotions for bank products and services get the attention of customers and motivate them to stay with the bank. Checking and savings account bonuses, referral bonuses, sign-on bonuses, special interest rates and more incentivize existing customers to sign on for additional products and services. 

5. Focus on bank customer loyalty

Changing banks is inconvenient, it’s often inertia that keeps customers with their chosen bank. In fact, U.S. consumers stay with the same checking account with one bank for an average of 17 years. Those customers may not be particularly loyal to their bank, but it’s convenient to stay and they don’t feel a compelling reason to leave.

Recognize the loyalty and duration of the relationship between customers and the bank. Offer rewards for being long-time customers. Understanding that convenience is the primary driver of the relationship, make it even more convenient for customers to stay with the bank using digital tools and omni-channel experiences. 

Banks that can up their game, use data to detect areas of customer loyalty and offer that pool of customers not only a reason to stay, but incentives to purchase additional products with the bank have a good chance of retaining customers.

6. Build a culture of customer service

From discounts and deals to introductory and low rates, even a quick internet search reveals hundreds, even thousands, of available strategic customer retention options. With so many choices, the deciding factor as to whether a customer stays with a bank or takes their business elsewhere is often customer service.

Stellar customer service is the job of every single bank employee and should be a primary area of focus in building company culture. It’s important to know how to improve customer service in banks.

• Take every opportunity to ask customers for feedback, if the bank is meeting their needs, how the bank can do better, etc.
• Empower employees and set them up for success in assisting customers.
• Give customers the opportunity to learn. After all, a customer won’t upgrade to a money market account if they don’t fully understand what it is.
• Provide options for self-service but make it easy to get human support for customers who want or need it. 

7. Successfully onboard customers

Customer retention tactics begin before a customer is even fully committed to a particular bank. So, great customer retention strategies for banks should include onboarding. A successfully onboarded customer becomes much stickier and less likely to leave. A convenient onboarding solution can streamline the process, make it less labor intensive and more successful. Remember, there are always ways to improve customer retention.

Know bank customers, improve customer satisfaction

In the competitive banking industry, financial organizations need every strategy, tactic and tool possible to ensure customers remain loyal and satisfied. How do banks retain their customers? By utilizing data to better get to know customers, provide excellent communication, personalized experiences, incentives, exceptional customer service and more. The more information about customers a bank has, the better it can identify their needs and serve them. The happier bank customers are, the more likely they are to remain loyal to their bank.