Banking loyalty is falling. Here’s how to reverse the trend
Improving in customer experience generates a range of benefits, including increased satisfaction and loyalty, higher lifetime value, improved brand reputation, potential referrals and data-driven insights for personalization. The challenge for financial marketers is knowing the components that drive CX differentiation in banking.
Improved customer experience (CX) results in several tangible benefits beyond a higher satisfaction score, according to Forrester research. Organizations with better customer experiences show higher revenues, reduced costs, lower risk of attrition and the ability to command a premium price for products and services. But, since the pandemic, the average CX quality for multichannel banks in the United States has dropped and the average CX quality for U.S. direct banks has flatlined.
As a result of this decline in CX quality, customer retention for the multichannel banking industry dropped from 78% in 2022 to 76% in 2023, according to Forrester. The direct banking industry’s retention rate remained stagnant at 72%.
Many banking executives don’t realize how much improvement in customer experiences can impact the bottom line. Without understanding the correlation between a better experience, loyalty and the financial benefits, investment in customer experiences may not get the commitment required.
Beneath the surface, banks and credit unions must understand the underlying drivers of a positive customer experience and greater engagement, and then how the interaction of these components relates to customer perceptions and loyalty. All of these moving parts go into what Forrester calls CX quality.
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