Magazine article Independent Banker

Mirror, Mirror on the Wall

Magazine article Independent Banker

Mirror, Mirror on the Wall

Article excerpt

Are your customers loyal after all?

Wouldn't it be great if there was a magic mirror that could tell you everything you needed to know about your customers? One that could tell you which customers will transfer their accounts to other institutions, why they are leaving, what you can do to keep them and, most importantly, which ones are loyal?

Unfortunately, unlike the evil wicked witch in the classic Disney fairytale "Snow White and the Seven Dwarfs," bankers don't have a magic mirror. There are, however, ways to encourage greater customer loyalty, toward which banks should spend significant time, energy and capital.

Of course, customer retention is an important part of your overall marketing strategy, but just remember that the customer is in the driver's seat, not your bank. Creating customer loyalty starts first with recognizing that customers have options-it's ultimately their choice to bank with your institution. They have control.

Recognizing this empowers your bank to work hard on keeping customers satisfied and most of all loyal. For instance, customers may use your bank's ATM network because it's close to their job, but that doesn't necessarily make them loyal. You may also gain customers by offering services similar to other institutions at a reduced rate, but will you keep those customers over the long term if they are later offered a better rate by another institution?

The good news is most loyal customers are not focused solely on fees. In fact, good customers are willing to pay a higher premium for services they value. Think of your own personal experiences. I'm sure you patronize certain businesses that offer exceptional service or provide an emotional comfort. Your bank should strive to do the same thing.

So what does it take to create customer loyalty? Here are a few suggestions to help you on your way:

* Find out who your customers are. …

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