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5 Customer Retention Solutions for Banks and Credit Unions

October 16th, 2019

It’s no secret that customer retention is critical to the ongoing success of every financial institution—you can bring in all the new business you want, but your most valuable customers will always be the ones who stick around to open multiple accounts and use more financial services. But if there were a cookie-cutter formula to increase customer retention, the banking industry would have found it by now. 

In a sea of conflicting advice, it can be quite difficult to figure out what actually works. Fortunately, we happen to know. At Avannis, we’ve spent decades helping financial institutions improve the customer experience, and we’re dedicated to sharing our expertise with the banking industry. We’ve pulled together some actionable approaches for boosting customer loyalty and satisfaction—and therefore increasing retention. 

Customer Retention and Lifetime Value

It’s important to consider the lifetime value of each of your customers. The ones that will stick with your financial institution and use a variety of your services over the years are typically the most valuable. But that doesn’t mean that customers who only open and use one account are not important—indeed, if they stay with your institution for years, they can also reach a high lifetime value simply because your staff will have more time to identify and present relevant opportunities to them. 

Additionally, keep in mind that loyal customers are likely to refer their friends and family. And although it can be difficult to accurately quantify the impact on lifetime value, we do know that likelihood to recommend does increase the potential value of those loyal customers. If you are interested in a more solid picture of this particular stat, the Net Promoter Score takes likelihood to recommend into account.

5 Retention Solutions That Work

Whether your financial institution is large or small, well equipped or getting by with the bare minimum of technology offerings, retaining more profitable customers is likely one of your primary objectives. Segmentation strategies can help you isolate profitable customers and ensure they stick around—but make sure you’re still delivering quality service to every single customer. 

With online reviews and social media amplifying both positive and negative customer experiences, it’s essential to provide high-quality service to highly profitable and unprofitable customers alike. Here are a few ways you can boost your customer retention. 

1. Resolve Problems Quickly

Take a look at your problem resolution process. Are there outstanding issues that have never been addressed or followed up on? That could be the root of many a departing customer, so it’s essential to shore up this process as soon as possible. Make sure that your staff members are trained in responding quickly and professionally to any issues, and make sure that every identified issue gets resolved to the customer’s satisfaction. When done correctly, you’ll find that competent problem resolution can actually increase customer loyalty, providing an excellent reason for your customers to stick around.

2. Send Insightful Emails

Do you have an email marketing program or newsletter in place? If you don’t, look into starting one now. The average open rate for financial marketing emails is about 40%, so you want to hit or exceed that mark. But more than that, you want to provide value to your customers. Consider personalizing your emails, creating multiple customer segments to further tailor specific emails to, and even asking your customers what information they would find most helpful. 

3. Personalize the Banking Experience

For a more in-depth approach, consider the potential value of developing a personalized banking experience for your customers. In an age of highly targeted ads and services, why shouldn’t financial institutions follow suit? Go beyond tailoring your emails to customize the entire banking process for your customers, presenting them with relevant opportunities at exactly the right time. Make sure that each customer is matched with the right set of products and services for their needs, and that they can access those services through the channels they value the most.

4. Analyze and Respond to Customer Behavior Patterns

If you’re losing customers at a higher rate than you’re gaining them, there’s clearly an issue with some aspect of your financial services. But how do you find it? Becoming better acquainted with the various segments of your customer base will go a long way in helping you isolate pain points. And in addition to addressing existing problems, familiarizing yourself with the needs of your different customer segments will help you anticipate future needs, leaving your customers satisfied that they’re getting a high level of care and service. 

Be sure to implement a process that identifies at-risk accounts—customers who are at the point of closing—and checks to see if there is another product that might better fit a customer’s needs. It’s also important to collect feedback from customers who do ultimately chose to take their business elsewhere. Avannis offers a customer retention tool that allows financial institutions to survey people who recently close an account, which can provide insight into existing issues. 

5. Drive Engagement With Charity Donations

If you’re hoping to attract and keep the business of younger demographics like millennials, you’ll need to go beyond being just a brand—your financial institution has to show that it cares about the world in which we live. Millennials alone are 70% more likely to spend more on brands that support causes, and it’s probable that they’ll look for the same charitable habits in a bank or credit union.

By donating to a local or national cause, you can show socially and environmentally-conscious customers that your financial institution is invested in bettering the world. You may want to consider spreading the word about your charitable donation in a press release, asking people to participate in donating, or even hosting a local event.

Refine Your Customer Retention Strategy With Avannis

You’ll notice that almost all retention strategies are informed by analyzing data. That’s because your customers offer a wealth of relevant demographics and behavioral patterns that you can and should use to tailor your banking services. 

That’s all well and good, but just because you know you should use that data doesn’t mean you know how to access or analyze it. That’s where Avannis can help. Whether you want to compare your financial institution to industry benchmarks, develop strategic decisions based on the customer voice, or minimize attrition risks, we can help you accomplish your goals. 

Reach out today to learn more about how our measurement methodologies and reporting tools can increase customer satisfaction, loyalty, and retention at your financial institution. And for all things financial marketing, follow us on Facebook and Twitter.