Ten key loyalty insights affecting financial services

Financial services institutions are not yet turning attitudinal loyalty into engaged customers who buy more products and refer the company to others, according to Carlson Marketing's Carlson Relationship Builder 2007 study on the state of customer relationships in the financial services industry.

In the most recent of the ongoing Relationship Builder research series, Carlson Marketing, Peppers & Rogers Group, and survey partner Zoomerang, put the financial services sector's consumer relationships to the test, and came up with ten relevant insights for marketers in the sector.

Testing relationship strength
The strength of customers' relationships with their primary financial services institution varies widely, the study found. Institutions that are historically known for their customer focus (such as USAA and Vanguard), or for their customer intimacy (such as credit unions and local banks) tended to score well. However, even among these leaders, there is still a significant opportunity for business to benefit through improvement in customer relationships.

According to  Luc Bondar, vice president of loyalty marketing for Carlson Marketing, "For marketing professionals in financial services, building better relationships isn't just a nice precept. It is a key principle to getting, keeping and growing their most scarce and valuable resource: their customers."

Key findings
Some of the study's most significant findings included:

• Courtesy is not obsolete: 16% say customer service staff's courtesy is the most important factor when interacting with their primary financial services institution - more important, in fact, than the time it takes to be served (15%).
   
• Impact on recommendations to friends: Of all the business outcomes examined, changes in relationship strength had the greatest impact upon a respondent's willingness to recommend their primary financial services institution to family and friends. There was a 75% boost among those with a "high" (rather than "low") relationship strength.
   
• Electronic channel gaining favour: The electronic channel is actually liked better by many customers. Email/internet is preferred to face-to-face interactions when obtaining information (39% and 25% respectively), and also when accessing customer service facilities (44% and 31% respectively).
   
• Ethics matter to customers: 43% agree that a financial services institution having the same type of moral values plays a role in determining a customer's primary financial services institution.

Ten insights for marketers
The ten key insights that Carlson has observed and developed from the study can be summarised as follows:

1. Customising your loyalty programme counts;
2. Customers know that they have choices;
3. Customer satisfaction is not a differentiating concern for many;
4. Employees impact customer acquisition;
5. Courtesy is not obsolete;
6. Ethics matter to customers;
7. Customers are moving to the web;
8. The electronic channel is actually liked better by many customers;
9. Email is welcomed by consumers;
10. Relationship strength holds constant across customer clusters.

"The study provides compelling evidence for the financial services industry that creating, maintaining and enhancing relationships is a sound strategy to get, keep and grow customers," concluded Bondar. "Building authentic relationships has been shown to dramatically influence the propensity of a customer to recommend a financial services institution to family and friends, to remain loyal, and to buy more products and services. This research demonstrates the positive influence of a loyalty programme and the enhancement arising from improvements in communication customisation, relevance and frequency."

Download the full report
These ten insights are covered in much greater detail in the Relationship Builder research report itself, along with full findings and analysis. The report has been made available for free download from the Carlson Marketing and 1to1 Media/Peppers & Rogers web site (free registration required), at:
http://www.carlson1to1.com/loyalty/rbfinancial.html

At the core of the research is a model of relationship strength developed by Carlson Marketing and founded on the investigations of Dr Robert Morgan at the University of Alabama, USA. The model places customer relationships in a mediating role between marketing activities that influence relationships and the outcomes that come from changes in relationship strength.