Banking consumer loyalty pays big dividends on sales growth

Consumers bought one-third of the banking products sold last year from an institution other than their primary bank. Loyal banking customers own more products, and buy more products… but that doesn’t mean they’re going to make your sales for you.

How exactly does customer loyalty translate into better financial results for a retail bank? And how much value is at stake? For many bankers, the link between loyalty and financial results is somewhat unclear.

Most banks are missing prime opportunities to deepen their existing customer relationships and are ceding new product sales to competitors, this according to the “2013 Customer Loyalty in Banking Report” from Bain & Company, a study encompassing 200,000 consumers in 27 countries. The research was conducted online in July and August 2013.

Key findings that highlight the calculus of lost revenue. About half of customers in developed countries and 84% in emerging countries opened a new banking product over the past year. And customers purchased fully one-third of those products, on average, from a bank other than the customer’s primary bank.

Less than one percent of those surveyed were new to banking in the developed world (2.7% in the developing world), with another 2.5% switching from their primary bank (3.2% in the developing world).

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