CONQUERING THE RETENTION CHALLENGE

There is much talk today about retaining customers. However, many organizations haven’t got a good grasp of why customers are leaving. How then will they be able to prevent it from happening? In order to address the problem of attrition it is necessary to evaluate your own environment and processes to determine the best strategy. One common mistake many banks, credit unions and other organizations make is to copy the strategy of others without much thought of whether this strategy even works. A prime example is the wide-net or the one-size-fits-all approach of throwing big incentives at customers to entice them to join a particular financial institution. Then what? Many of these customers leave after the promotion is over to join the next bank that is making an attractive offer. As a consumer and a past bank and credit union employee, I have watched this happen time and time again. It’s no wonder customer attrition is highest within the first six months after joining. Bank Marketing Association indicates that banks lose up to 40% of new-to-the-bank customers before their first anniversary. What’s even worse is the fact that most banking relationships take four to eight months to become profitable. Hence, why not invest more in retaining the current profitable customer, rather than over investing in "un-focused" customer acquisition tactics. Retaining customers requires a through analysis of your current customer’s needs, perception and satisfaction level.