Project Presentation Draft

Final project report

Katie Melone

GEB 3213

July 5, 2014

Overview

Financial institutions have been competing with each other to maintain customers and appeal new ones. Institutions have created memorable commercials, used promotional coupons through the mail, and have used cold call sales to reach out to existing and new customers to convince them that their institution is more beneficial than its competitors.

In some ways, these tactics have been beneficial and some have not been. Banks and credit unions differ in their own ways, and have different characteristics that appeal to particular audiences.

In order to gain loyalty, institutions need to find out what customers dislike and how to change them.

Introduction

In 2013, research was conducted by Research Now and GMI on the subject of customer loyalty in retail banking. This research sheds light on how loyalty in retail banks is being used to improve business economics. Within the 27 countries surveyed, an average rate of 3% of developed markets and 6% of developing ones gained new customer relationships, customers switching their primary bank to a different institution or those who are new to the banking world. The research found that a customer is more likely to maintain their loyalty if their banks fees are limited, how convenient the bank is as far as location and their internet and mobile capabilities, and the ease of opening accounts whether at the branch or online (Brief, 2013).

Opportunity

The Current Situation

Currently, financial institutions are competing among each other to keep their customers and trying to find ways to attract new ones. The marketing departments have been finding new incentives to maintain and gain customer loyalty. Television, radio and mail brochures are broadcasted or sent to current and non-customers that include a bonus cash-back incentive to open a new checking account.

Opportunity cont.

Key Success Factors

The ability to build and maintain strong relationships with customers has always been a key success factor in retail banking (Herbert, K.). However, the complexity of customer interactions and relationships between banks and their clients has increased due to the increase in usage of online technology with online banking, convenience of contact centers and other channels such as mobile banking.

Opportunity cont.

Analysis of Alternatives

In order to keep customers interested, banks need to make products that pop, or stand out from the rest. The key idea is to understand the features customers value the most. Fees, rates, ease of transactions, rewards, and quality of advice are all features customers look for when researching banking solutions.

Opportunity cont.

Strategic Option

A good strategy banks can use is to build trust with customers. If a banks brand is successful and are able to restore their image, they can begin to build trust. By promoting the institution as friendly, convenient, and service oriented, there is a greater chance for customer loyalty. Having a customer-led, not marketled perspective, managers are able to focus more on customer satisfaction and improve the image of the brand.

Benefits and Risks of Strategic Option

Benefits

Some benefits from gaining a higher percentage of customer loyalty are as follows:

The opportunity to cross-sell products and services; customers will be more receptive to new products.

Some institutions reward loyalty depending on how many years they have been with the bank.

Benefits and Risks of Strategic Option cont.

Risks

Some risks involve not being able to convey to customers the benefits of being a long term customer of the institution. If institutions are not able to maintain customers, stockholders and shareholders will be at a loss. If complaints begin to increase and they are not handled well, profits could be at risk (Linnell, 2014).

Final Recommendations/ Call to Action

Further research shows that consumers are begging for a conversation with a real person more than ever. In a world filled with tweets, status updates and text messages, it is ironic that consumers, particularly young consumers, seek human interaction as part of their shopping experience (Compeau, 2011).

Creating a need for a product or service is also very beneficial while investing in the right customers for ones business also increases the chances of customer loyalty.

Highlighted References

Adams, M. (2014, April 4). Three Ways to Build Customer Trust. Retrieved July 2, 2014, from http://www.forbes.com/sites/yec/2014/04/22/three-ways-to-build-customer-trust/

Brief, B. (2013, November 6). Customer Loyalty in Retail Banking: Global Edition 2013. Retrieved June 27, 2014, from http://www.bain.com/publications/articles/customer-loyalty-in-retail-banking-2013.aspx

Global Banking Survey 2012. (2012, January 1). Retrieved July 2, 2014, from http://www.ey.com/GL/en/Industries/Financial-Services/Banking---Capital-Markets/Global-Consumer-Banking-Survey-2012--Offer-choice-and-flexibility

Herbert, K. (n.d.). Achieve Unsurpassed Loyalty in Retail Banking. Retrieved June 27, 2014, from http://www.frost.com/prod/servlet/ebroadcast.pag?eventid=97956418

Linnell, P. (n.d.). Retail banking: Customer retention at risk as expectations rise. Retrieved June 28, 2014, from http://www.ctmaworld.com/Blog/BankingExpectationsRise.htm

Lowenstein, M. (2003, August 1). Linking employee loyalty with customer loyalty. Retrieved July 2, 2014, from http://www.thewisemarketer.com/features/read.asp?id=27

Plozay, M. (2011, January 1). Trends and Opportunities in Financial Institution Loyalty. Retrieved June 11, 2014, from http://files.firstdata.com/downloads/thought-leadership/FI_Loyalty_WP.pdf

Schwab, S. (2004, July 1). How Financial Services Loyalty Tactics Must Change. Retrieved June 11, 2014, from http://www.thewisemarketer.com/features/read.asp?id=50

Ten Tips to Build Customer Loyalty. (2014, January 1). Retrieved June 11, 2014, from http://www.allbusiness.com/building-customer-loyalty/16675686-1.html

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