The loyalty marketing resource COLLOQUY has published a white paper showing that the results gained by banks that have embraced the principle of 'relationship banking' have seen more growth than those that have not.
The 16-page white paper, entitled 'BankTalk: Choosing the Right Tools For Your Relationship Banking Strategy', examines several banks' recent initiatives that have increased customer growth and retention through relationship banking. The paper also suggests a series of "next steps" that will help banks continue the upward trend.
New questions arise
According to editorial director, Rick Ferguson, "While the marketplace may have answered our original question (yes, relationship banking is a trend) the current expansion of banking loyalty strategy raises a host of new questions: Which relationship tactics work best, and why? Can these programmes develop and maintain profitable relationships with customers? How complex is the financial planning required to launch and operate a relationship banking programme? And what iterations of this still-new concept are most compatible with the organisation's goals?"
While banks view relationships in terms of the number of products a customer has with the bank, most consumers view relationships in terms of confidence and trust. "A successful retail banking loyalty initiative," suggests Colloquy director Kelly Hlavinka, "must communicate that the bank has the best interests of its customers at heart."
Colloquy notes the diminishing returns of credit card reward programmes, compared to more comprehensive approaches that encourage customers to consolidate their financial services. After tracking results from several different-but-successful programmes by Citibank, Bank of America, AmSouth, National City, US Bank and others, the white paper suggests several steps that banks can take to maintain their momentum:
- Achieve acquisition and retention goals via a common vehicle
Establish a common promotional currency across multiple products, stimulating new product acquisition and increasing product and service usage. Build community by adding strategic partners to attract new customers and drive retention over the long term.
- Play the rewards game at a lower cost
Find complementary consumer brands to partner in your customer strategy, to share rewards programme costs and create soft benefit content for your programme.
- Tie programme liability to results
Deferred liability created by the value of unredeemed reward points causes angst at all levels of management. programme liability can either build or erode an organisation's profits.
- Pursue the coalition effect
Outside the US, the most successful loyalty model is the multi-merchant coalition programme. The same concept can apply in a retail banking environment - just substitute the fuel retailers, grocers and pharmacies in a traditional coalition model with credit cards, checking accounts and home equity loans, and you get the idea. The banking brand, product managers and consumers all benefit.
The white paper has been made available as a free download from the Colloquy web site (free registration required) - click here.