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How To Match Bank Customer Retention Strategies to the Customer Lifecycle

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There are many different bank customer retention strategies but to maximize their effectiveness you need to match them with their position in the customer life-cycle.

The life cycle is shown below, along with the value that different types of customers contribute to the business at different parts of the cycle.

New: Customers new to your organisation

The single largest group of customer retention strategies that can be implemented in the New section of the customer lifecycle is customer onboarding. Customer onboarding is the process of bedding a customer into your organisation and includes ensuring that their personal data is correct, that they understand the products they have purchased and how to quickly contact the organisation.

We have proved time and again that customers that are properly onboarded have a higher customer retention rate and spend more money than similar customers who were not onboarded.

Other areas of New customer management include:

  • Data integrity management
  • Cross-sell leads management
  • Product benefit education
  • Product activation
  • Payment automation optimisation

Existing: Customers you already have

The best bank customer retention strategy for existing customers is to classify each type of customer (silent attrition, ideal and unhappy) and create appropriate initiatives to change their behaviour.

For instance, customers in “silent attrition” are those that have reduced or stopped using a product, but where the account is still open. Examples for instance are credit card accounts with little or no spending. For these customers, you must determine why they are no longer using your product (are you are their “back of wallet” card) and create initiatives to change their behaviour.

Examples of Existing customer management programs include:

    • Product design evolution
    • Payment automation optimisation
    • Active customer complaints management
    • Cross-sell leads management
    • Product activation
    • Usage stimulation
    • Preapproved products
    • IVR Messaging Offers
    • Leveraging sponsorships
    • Leveraging affinity marketing
    • High value relationship programs
    • Low value relationship programs
    • Local area marketing
    • 3rd Party and Sales consultant commissions
    • Driving customers to highest ROI channel mix
    • Product bundling
    • Product Upsell
    • Silent attrition management
    • Collections process
    • Move and Follow
    • Differentiated levels of service
    • Optimising product mix

Exiting: Customer thinking of leaving

Customers that are Exiting are those customers that have started the process of moving their business to another company or are in the process of considering that move. The first step in creating bank customer retention strategies for Exiting customers is to identify which customers are in each camp.

For customers in the process of moving their business you will need to understand the product drop cycle, i.e. the order in which customers drop your products before leaving. With this information you can create effective customer retention strategies to target those customers.

One of the key programs that can be implemented in this phase is Save Teams.

Exited: Customers who have left

Generically, strategies that are aimed at recapturing customers that have left the organisation are called Winback strategies. This is the most expensive and lowest ROI place to try to implement your bank customer retention strategies. Mentally, customers have already moved to another organisation and it takes a large inducement to bring them back.

If you do choose execute Customer Winback strategies, then you will need to carefully manage the level of incentive that your staff can offer to customers. For instance, you will need rules to tailor the incentive level to each specific customer in order to ensure that the level of inducement is not larger than the future business generated by that customer.

I've created an Excel based Customer Lifetime Value Estimator. Download it Here

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