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Winning and keeping customers

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http://www.infosys.com/finacle …

http://www.infosys.com/finacle

Winning customers is only half the battle won,the task is not only to win the customer but also to keep them for lifetime, this is achieved by gaining their loyalty Customers are more likely to be loyal in a customer oriented climate, one in which products are designed to satisfy their genuine needs. This applies even more to high-value customers requiring personalized services. Recognizing their likes and dislikes and catering to their requirements will go a long way in retaining them

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  • 1. Winning and Keeping Customers’ Trust Universal Banking Solution System Integration Consulting Business Process Outsourcing
  • 2. ITS SOMETHING that makes a serious is more important than getting new ones. Andifference to building and maintaining customer equally compelling argument in support ofrelationships. It is part of every organization’s this statement is the fact that the cost ofpriority list. It’s the glue without which any retaining a customer is only one-tenth that ofrelationship would fall apart. acquiring a new one.We’re talking about trust, the bedrock of all From the above, it seems self evident that banksrelationships, especially those involving money. should try to satisfy their customers. Satisfied customers usually stay longer and buy more; theyDifferent organizations have taken different tell other people about their experiences; andapproaches to building trust. Some have they may well pay a premium for the reassuranceintensified their customer focus, taking greater of doing business with a bank they trust.care to see things from their customers’perspective, understand their needs, and work Therefore, besides launching innovative measuresin partnership with them. Others have improved to acquire new customers, banks must directcommunication by developing practical skills their efforts at retaining existing customers andsuch as listening, probing, summarizing, and reclaiming those that have gone away.rapport building. Winning CustomersHistorically, banks have thrived on the implicit Although banks do recognize the importance oftrust of their customers. That changed dramatically winning loyal customers, they find it difficult toin the recent financial crisis. A recent report earn their trust, which takes deep understandingconfirmed what we already knew - that despite of customer needs and attitudes. There are fourbanks’ attempts at building public confidence, it pivotal steps that banks can take to addresswas at a low, particularly in those countries that customer-related challenges and channelize theirhad been most impacted by the economic crisis. efforts to garner customer trust:Specifically, the report highlighted that: 1. Assess customers’ perception of the bank• Globally, 44% of customers felt less confident and set a plan of action about the banking industry in 2010• Within Europe, the UK (63%), Germany Banks must act quickly to understand the (61%) and Spain (58%) saw the largest fall reasons behind customer churn and in customer confidence demonstrate their ability to recognize changing behaviors and meet new needs.• Globally, 36% of customers had changed their By developing a more accurate picture of main bank, and 7% were planning to do so various customer relationships, banks can determine those most at risk and accordingly• Indian and Chinese customers were align retention strategies to those “priority” most likely to switch, with 11% and 13% segments. This is possible through various respectively, declaring their intention to do so statistical modeling tools, which performThis leads us to ask an obvious question, namely, predictive analysis to indicate whichwhat can banks do to rebuild customer trust? customers are likely to attrite and why, and suggest possible strategies for retaining them.Customer Satisfaction Customers’ attitudes are not static. TheFew things are more important than the customer relationship lifecycle is punctuatedcustomer, to any industry. The business of by “moments of truth” when customers maybanking cannot function without customers, nor change their attitudes or behaviors oncan it sustain without constantly acquiring more. account of a shifting context or need. BanksHowever, because a long-term banker-customer must set up a proactive Customer Relationshiprelationship evolves over many years and many Management System to capture suchtransactions, keeping existing customers happy opportunities when they arise. Winning and Keeping Customers’ Trust
  • 3. 2. Identify priority customer needs and mobilize it is the branches that nurture it. Therefore, it to meet them is important to bring the human touch even to electronic channels, by providing a facility to Once a bank has developed a stronger connect customers to relationship managers understanding of their customers, it can over video calls or soft phones, and improving respond to their changed needs with innovative service by responding quickly over email to measures, such as product and service customer queries and complaints. solutions or pricing and marketing campaigns, coordinated across the organization. 4. Establish ways to measure and monitor customer satisfaction metrics. A proactive move by banks to offer products based on customer need awakens Banks should continuously monitor customer trust as customers acknowledge these satisfaction metrics to gauge whether efforts. Intuitive, relevant and compelling their action plan is achieving its intended offers can not only boost the loyalty of result in terms of improved trust and existing customers, but also increase the customer satisfaction. effectiveness of marketing activities targeted at prospective ones. To ensure that new customer initiatives achieve the desired effect, banks must Two factors are crucial to the creation of implement comparable metrics to track other the most profitable offerings. The first is the key parameters, such as customer attrition, enablement of customer-facing sales and revenue velocity and revenue volume. When service representatives such that they can a bank invests in a more customer-centric identify customer needs and attitudes. The approach, it needs to know which elements second is the provision of sophisticated of customer experience are making the pricing tools. Advanced pricing capabilities greatest impact on loyalty, satisfaction, can help banks steer clear of simplistic and profitability and growth. As it implements costly incentives, such as fee discounts and improved metrics, the bank must determine waivers, reduced lending interest rates or whether to use them at the individual higher deposit rates. customer level or the broader segment level — a decision that largely hinges on3. Execute across the right channel mix its resources and competitive situation. It must then decide how frequently to measure Banks must focus on delivering their results — for example, quarterly or monthly — innovative solutions through the right mix and to what degree of detail. By doing so, it of channels – targeting the right offering to can alter course quickly in response to rapid the right customer over the right channel – changes in market conditions, segments or to maximize customer convenience and customer demands. improve their own profitability. For some customers, the branch will always be the Customer Loyalty primary banking channel; however, the proportion of consumers who prefer the Winning customers is only half the battle won, Internet for most interactions is growing. By the task is not only to win the customer but also understanding how each person wants to to keep them for lifetime, this is achieved by transact, and tailoring interactions accordingly, gaining their loyalty Customers are more likely banks can not only strengthen customer to be loyal in a customer oriented climate, one in loyalty and trust but also reduce product and which products are designed to satisfy their service delivery costs. genuine needs. This applies even more to high-value customers requiring personalized That being said, banks must realize that services. Recognizing their likes and dislikes the human element is the key to winning and catering to their requirements will go a long customer trust; in most countries, even today, way in retaining them. Winning and Keeping Customers’ Trust
  • 4. Customer acquisition is a costly exercise that retain customer goodwill. Service recovery effortcan turn highly unprofitable when not integrated plays a crucial role in achieving or restoringwith Retention Marketing. Retention marketing customer satisfaction. In every organization,ensures that the bank generates profit from certain events may negatively impact customerexisting customers while keeping them happy. relationship. A bank’s commitment to satisfactionSome of the major benefits of customer retention and service quality is reflected in the way itinclude greater customer predictability and insight responds when things go wrong for customers.which allows the bank to target their offers better Effective service recovery requires thoughtfuland increases customers’ trust in them. procedures for resolving problems and handling disgruntled customers. It is critical for banks toKeeping Customers have effective recovery strategies, as even a single service problem can destroy customers’To retain more customers and gain their loyalty, confidence in them. In case of service failure, theybanks should do the following: may have to apologize, repeat the service to achieve the desired solution, or offer some other1. Begin to track customer retention as a form of compensation to retain customers. key performance indicator. The ability to accurately measure customer retention on What more can be DONE? a regular basis quantifies its ROI. The banks should maintain transparency in2. Get regular context specific feedback from their transaction with customers. For instance, at their customers on the services consumed. times, banks collect “junk fees” from their Feedback is all the more important in cases customers in the form of hidden charges, thus where the bank feels that a particular product making the customer feel cheated. Banks should or service did not perform well with the avoid any steps that might confuse customers or customer. Upon receipt of feedback, banks raise doubts about their credibility. must respond with a thank you letter citing how they will implement the suggestions. Paying close attention to Compliance and Risk Management is another way to improve3. Understand how customer retention rates customer confidence. Banks are now required vary by vertical to determine which ones are to meet a number of regulatory requirements not being effectively addressed. More and follow contractual obligations such as importantly, vertical analysis allows banks TCPC (Tele-marketing and Telephone Consumer to appropriately allocate resources to their Protection Act), Basel II and the Sarbanes-Oxley most valuable customers. Act. Basel II requires organizations to collect and store a minimum of three years’ worth of It is not possible to attain high levels historical data. The Sarbanes-Oxley legislation of retention overnight. Institutionalizing (SOX) aims to make companies’ accounting customer retention as a key means procedures more transparent to investors and to measuring and improving business regulators. It also requires stricter disclosure performance takes time and energy. The within company financial statements and sets out best way is to establish customer retention ethical guidelines to which senior financial as a goal, define relevant metrics and track officers must adhere. performance against the same. This helps banks to collect better information onWhat to do when things go WRONG? their customers, improve internal processes and identify new revenue streams as an extension ofService recovery is an umbrella term for their strategies for addressing risk, moneysystematic efforts by an organization to correct laundering, and fraud, in addition to helping thema problem following a service failure, in order to garner the trust of their customers. Winning and Keeping Customers’ Trust
  • 5. References: Performance Of Commercial Banks: Egypt Case/ HebaSadek, Amr Youssef, Ahmad1. Justice Oriented Recovery Strategies and Ghoneim, Passent Tantawi, Customer Retention in The Retail Banking Industry in Malaysia by Nek Kamal 4. A New Era of Customer Expectation, by Ernst & YeopYunus/International Review of Business Young Report 2010 Research Papers Vol. 5 No. 5 September 2009 Pp. 212-228 5. Banking On Intelligence/sascom2. Accenture Banking The Point Customer Author Imperative Full Report Hema Singh3. Measuring The Effect Of Customer Associate Consultant Relationship Management (CRM) Infosys Limited Components On The Non Financial Winning and Keeping Customers’ Trust