“If you make customers unhappy in the physical world, they might each tell SIX friends. If you make customers unhappy on the Internet, they can each tell six thousand friends.”
Customer Exits and Risk
Dear bankers, I am sure you have all gone through a painful customer exit before. Someone may be wondering what risk has got to do with customers. Yes, it has a lot to do with it. One of the risk factors in operations is “People Risk”, which involves the behaviour of internal staff and its effect on the bank’s bottom line. Another factor, is External Events, which may involve external parties including customers’ operations with the bank, some of which includes exits. When customer attrition levels are high, banks need to investigate the reasons, especially when they include very key customers. It also indicates that customers are not pleased your services and have a better alternative.
Why is it important to know about customer exits?
Customer exit can affect the success of your bank. A rising exit rate may indicate major problems for a bank and even threaten its survival. Customers may be unhappy with the terms and conditions, or relations with staff. They may be switching to competitors, or overall demand may be falling due to a change in the economic climate. Therefore, if you do not research and address exit rates, this can have a serious effect on your bank’s financial performance. Recent research from McKinsey & Company revealed that only 13 percent of customers surveyed said they were loyal to a single brand. The research found that 87 percent of customers surveyed said they shopped around, and 58 percent had switched to a new brand.
Here are some self-audit areas that banks can examine to avoid more painful customer exits:
- Are you taking your customers for granted?
- Are you meeting their expectations?
- Do you fulfil the promises you give them?
- How caring are you when customers face difficulties?
- Do you take your customers’ loyalty for granted?
You have expertise and knowledge. You know what’s happening in your industry and you know your customers’ needs. Make a serious effort to share your thoughts. Try to help the customer get what’s needed. It’ll build confidence and trust for you and your bank.
Are Sales Persons Suffering from Burn-out?
Some salespeople may be apathetic because they have outgrown the schedules they are given.
- Do your sales people feel over-burdened for being around the same customers for a long time?
- Do they feel over-whelmed by the demands of their customers?
- Are they following up on customers’ feedback about digital banking?
How well do sales persons understand the customers’ business operations.
Up-to-Date with customers?
- how do you retain your value in the minds of your customers?
- Are you aware that retention of customers require persistence and focus?
- Do you have assumptions about your customers, because their needs change frequently?
- Do you ask yourself, “What’s happening to my customers? What changes are taking place? What problems are they facing? What difficulties are they encountering in the marketplace? What are their opportunities?
Being up-to-date with customers is one big step ahead for winning your customers over and maintaining loyalty.
Utilizing Artificial Intelligence
- Is your bank making the best use of the banking software with its in-built artificial intelligence to track your customers and pre-empt their needs?
- What does the exits mean for your bank?
- Have you studied and measured your customers’ exit rate? Do you profile them to know the different types of leavers?
- Do you find out why people are exiting from the bank?
A bank which finds out and tracks who leaves and why they leave can avoid many dangers. First, knowing who is leaving can be an indication of whether the bank is meeting its goals. Sometimes this may be an indication that the products need to be tailored to suit certain customers, or that institutional changes need to take place. Second, knowing who ex-clients are and why they leave is an important part of market research; it helps banks to monitor customer satisfaction. If customers are leaving because they are unhappy with some aspect of the bank’s services, managers can use this knowledge to recommend changes and improve the programme. If clients are drawn to the competition, managers will benefit from knowing what the competitors offers that not. This is vital information in an increasingly competitive market.
Do You Know Your Competition?
Knowing your competitors and learning from ex-clients can be invaluable in terms of getting to know the advantages your competitors may have over your bank. What you learn can enable you to fine-tune your products and policies to the requirements of different types of clients in response to market demand.
Profiling Ex-customers: Who, When and Why?
- Who are the customers leaving?
- Is it older or younger clients?
- Is it first-time borrowers or mature clients?
- Is it men or women?
- Are those leaving concentrated in a particular location or business sector?
- Are exits concentrated at specific times of the year?
- Why? Even though you may be able to produce statistics that tell you who is leaving and when, they do not tell you why clients leave or for how long. The best way to know about clients’ past experiences, and whether they intend to rejoin, is to ask them.
- Building ex-client profiles One way to start building profiles of exiting clients is to sort them into categories. This will enable you to establish patterns and make comparisons between categories and groups.
If you are losing your customer base you need to act fast to retain their custom. The best way for repeat business is getting them to love your products or your company. An advocate of your brand will also positively advertise your business too through word of mouth. So how do you get a customer to climb the loyalty ladder and move from a first- time buyer to a brand champion?
- Start with an internal audit of the policies that govern your team. Conduct interviews with customer-support managers and representatives.
- Assess what company policies have led to customer dissatisfaction. What internal issues are preventing your reps from supporting customers quickly and effectively? Use this data to improve your customer service practices.
- Then, bear in mind these three golden rules of customer service:
- Respond quickly. Acknowledge when a mistake is made and make it right.
- Treat the customer with respect and empathy.
- Support your customer support team.
- Identify your unique value proposition. What awesome value do you bring to your customers that other businesses don’t? This is your unique value proposition.
- Clearly articulate your unique value proposition on all platforms. Publish the benefits of your product or service on your website home page.
- Educate your customer support and sales staffers so that they can speak fluently about the value included in your pricing.
- Ensure a good and consistent brand
- Deliver an experience customers can rely on. This starts with you and your employees.
- Educate all of your employees about what a good customer experience should look like.
- Create a branding guide to establish uniform branding guidelines and share it with your team.
- Hold your employees accountable for delivering a consistently positive customer experience.
- Identify your long-term customers.
- Make direct contact with them and build closer relationships by meeting them or phone or emails.
- Discuss your latest products with them and ask for their opinions and recommendations.
- Analyze customers’ buying behaviour
- Utilise artificial intelligence to work out whom your biggest customers are and prioritize time with them around their buying habits. This is one of the best ways to cross sell additional products and build long-term relationships.
- Treat a customer like a valued partner – two way communication.
- Deliver what you say you’re going to do.
- Don’t mis-sell to your customers. Be transparent and completely honest.
- If you cannot do something for them, tell them. Manage their expectations and sustain the trust they have for you.
This is a year of crisis but also full of opportunities, so seize it.
Enjoy your banker-customer relations.
ABOUT THE AUTHOR
Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.