The Wall Street Journal article last Friday 11/4 was titled, “Starbucks Profit Surges on Loyal Sales.” A telling paragraph said, “Like the rest of the industry, Starbucks has been battling rising coffee costs and a struggling economy, but it has shown more resilience than many of its competitors, as consumers remain loyal to the brand despite its regular, modest menu-price increases”. Wow, wouldn’t we all like to be in that position? Coffee is a commodity and yet Starbucks maintains a loyal following and still feels they can raise prices! So with so many people viewing their bank or credit union as a commodity, how do you create customers or members that automatically think of you when a financial need comes up and decide not to shop around? In this post, we’ll talk about how you can build true loyalty without bribing your customers or members.
Many financial institutions have had success with loyalty features such as relationship pricing, personal bankers and special events for certain tiers of customers. There are also many loyalty programs banks and credit unions can purchase to reward customer or member points for using their services. Starbucks customers earn rewards such as free drinks when they open a Starbucks account and it’s worked to build customer loyalty. But we don’t think what works for Starbucks necessarily is a good fit for a bank or credit union.
Are people loyal to your brand or just your loyalty program?
The question that needs to be answered about these types of loyalty programs is “Are people loyal to your brand or just your loyalty program?” People change jobs, homes, churches and even spouses faster than ever before. Why would people hesitate to change something as incidental as which debit card they use? Even if a customer has multiple accounts with you, it doesn’t mean they have a personal connection with any of your staff. When it’s time to address the “big financial needs” they might just shop around.
The solution: satisfy people’s emotional drivers
Bankers have to provide their customers or members something very substantial for them to feel “this is my bank” or “this is my credit union”. The member must perceive high, ongoing value to keep you at the top of their mind. Will points and a merchandise catalog make your disengaged customers who don’t come into the branch see you as a trusted financial partner? We don’t think so. But research shows people will become loyal advocates of their bank or credit union when you build a relationship of trust and meet their emotional drivers. Starbucks should be commended for what they’ve done to build customer loyalty but in financial services, people perceive high, ongoing value and become advocates when you:
- Develop a relationship with them that enables you to anticipate their unexpressed financial needs, not just respond when they bring something up.
- Understand their financial goals, dreams and aspirations.
- Provide advice and education they can see improves their financial well-being.
- Demonstrate you value their business through personal contact by phone or hand-written notes.
Don’t keep beating your head against the wall trying to win loyalty from disengaged customers who just give you their transactional business. Don’t think you can win customer or member loyalty by bribing with points. To find out how to create a structured banking relationship management process in your bank or credit union that enables your staff to build solid member or customer relationships and develop long term business organically, call us at 858-674-5500.
Agree or disagree? Do let us know what you think by scrolling down and commenting below.
The Research on How to Create Loyal Advocates
The bulleted items above are emotional drivers of loyalty taken directly from groundbreaking research conducted by IBM Global Business Services on what makes customers and members advocates. Get your complimentary copy of our white paper to learn what the research recommends to create advocates and to implement a banking relationship management culture that builds deeper relationships and trust with customers or members.
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