Lessons in loyalty: How financial institutions can create ‘forever customers’

October was a month for customer-centricity. October 1^st marked CX Day, an annual global celebration of companies and professionals creating great experiences for their customers, with Customer Service Week following just a fortnight later. It was a time for celebrating the critical role customer experience plays in driving real business impact – a reminder that success isn’t just about what you sell, but how you make people feel.

Financial services organisations know this well. They must meet customers’ needs across the whole emotional spectrum: when they buy their first home, start a business or fall victim to scams. They must provide customers with positive and purposeful experiences through their highs and lows, and earn their loyalty through every interaction along the customer journey. 

As we near the busy holiday period marked by spiking consumer spending, finservs should take heed of the learnings of October’s CX celebrations and apply them to create ‘forever customers.’

Experience as the driver of customer retention

According to recent research, customer loyalty comes down to product quality and experience. Customers who feel loyal are almost twice as likely to care about the quality of a company’s products and 1.8 times more likely to care about having the best service experience. What’s more, experiences contribute to stronger feelings of loyalty than price. Customers look for consistently seamless customer experiences and the ease to engage with a company across online, in-person, phone and other methods. 

The good news is that just one great experience can convert a customer into a brand ambassador. The bad? Nearly 60 percent of customers say there is at least one brand they have sworn they will never purchase from again due to a bad experience. What’s more, one in eight customers will abandon a brand after just one bad experience. 

However, customer loyalty is not binary – customers are not either “loyal” or “not loyal.” In fact, the majority (71 percent) of customers say they feel some degree of loyalty towards brands, but only a quarter consider themselves “very loyal.” It turns out that customer loyalty has many competing definitions. Let’s take a look at the facts.

Don’t fall foul to customer loyalty myths 

There are three prevalent misconceptions that might lead finservs astray in their quest to create ‘forever customers’.

1. “Loyal customers are consumers we successfully retain.” In reality, customers can be successfully retained without being loyal – particularly if they lack other choices.

2. “Nobody likes to give feedback.” Direct customer feedback has a plethora of rich insights, but many organisations are afraid to ask for it at the risk of alienating customers. However, it turns out that a large portion (44 percent) of customers outright appreciate when companies seek their feedback in order to ensure their satisfaction.

3. “We know who our loyal customers are.” But do you? It might be surprising, but nearly half of consumers (45 percent) confess that companies have assumed they’re loyal, when in fact, they weren’t. Companies can only see the clear picture once they have collected true and holistic feedback.

The many faces of customer experience 

Research suggests that consistency, convenience and personalised experiences are key to retaining customers in the long run. What’s more, customers actually value the opportunity to share feedback on an experience to help ensure future satisfaction, so it’s imperative that organisations have the tools to monitor, evaluate and optimise experiences at every step of the customer journey – especially if that spans online and offline touchpoints. 

A great strategy marries technology with investments in customer-facing teams’ human-centric skills, so they can connect with customers on a deeper level. A great example is using AI to analyse and summarise themes from customer feedback at scale – helping agents prioritise fixes and understand what the ‘next best action’ is in the customer journey.

Ask, analyse and act

Today, when consumers have more choice than ever, finservs cannot be complacent and expect to retain existing customers with little effort. The message from CX Day and Customer Service Week is clear: encourage customers and employees to share their feedback. This will help you to uncover valuable insights to drive long-term customer loyalty. Those that do it well, and are able to differentiate on the basis of customer experience will increasingly benefit from better customer retention as well as stronger financial performance