What Does “Customer Loyalty” Really Mean for a Financial Institution?

loyalty_effect

Almost twenty years after Frederick Reichheld wrote “The Loyalty Effect,” we all understand that customer loyalty leads to…

  • Increased retention rates.
  • More referrals.
  • More spending per customer and less price-sensitivity.
  • Decreased costs for servicing customers.
  • Increased profits over time. (In fact, by increasing retention rates by just 5%, profits could increase by 25 to 95%, and golly, that statistic really packs a punch.)

But for a bank or credit union, what does “loyalty” really mean?

Simply put, a loyal customer will continue to choose to bank with you - day after day, month after month, year after year. Despite the fact that she receives a plethora of daily marketing messages from other financial institutions, A LOYAL CUSTOMER WILL CONTINUE TO CHOOSE YOU OVER ALL THE OTHERS. Why?

What makes your customer continue to choose you?

Here’s where things get a little emotional. Your customer continues to choose you (your offerings and products) because…

A. She feels tied to your bank or CU, and it would be difficult to make a change? Maybe.
B. She feels like no other bank or CU could provide what you provide? Maybe.
C. She feels like you know her, help her, and appreciate her? YES!

We’ll even go one step further- that loyal customer feels like you like her. You listen. You care. You do nice things to help her save and earn money. And in return, she likes you, and she trusts you. This is sounding more and more like a friendship, don’t you think? Well, it should because, like friendship, customer loyalty is a warm, reciprocal, interdependent relationship that goes on and on.

You might be thinking, “Gosh, that sounds like a lot of effort on the part of the bank or credit union.”

Loyalty is a two-way street, and yes, your financial institution has to be vigilant about nurturing its relationships with customers. You have to be loyal to inspire loyalty. But here’s good news - there are ways to use technology to your advantage!

Larky’s web and mobile loyalty platform automates personalized, contextual messages to your customers on behalf of your bank. They receive discounts from beloved local and national merchants via location-based smartphone alerts.

What does that even mean?

That means your customer will get a message from you at exactly the right time and place – like when she is standing outside her favorite coffee shop, the Huggamug Café, feeling sluggish and craving a vanilla latte with an extra shot. Then wham-o! A message pops up on her phone that says, “Hi, your bank is thinking about you. Here’s a discount for 25% off at the Huggamug. Drink up!”

In turn, your customer will joyfully consume a super-caffeinated beverage while feelings of appreciation for her bank course through her veins. Your message and that discount saved her from a listless afternoon, and she knows just how you feel about her. In fact, when she thinks about you, Sally Field’s voice will ring in her head saying, “You like me. Gosh, you really like me.”

You might also enjoy reading, How Financial Institution Leaders Can Build Business Loyalty.  

Larky is a mobile loyalty platform that amazes and works to keep members happy and loyal.  To learn more, visit Larky.com or email us at hello@larky.com.  

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Posted on September 12, 2014 by AndrewB - No Comments

Topics: Financial Institutions, Loyalty