Why financial service customers intend to churn

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By: Wise Marketer Staff |

Posted on June 10, 2008

Customer loyalty to the financial services sector has dropped significantly, according to a transatlantic survey by communications firm Thunderhead, which found that two-thirds of customers are considering swapping their insurance or banking providers during 2008.

To be precise, 61% of consumers reported that they are actively considering switching insurance providers during the next 12 months, and 63% said the same about their primary banking institution.

Poor communications
The survey examined the opinions of 500 consumers from the US and UK, as well as the overall quality of communications received from their banks and insurance companies during the past year, and found that only 26% felt their current bank or insurance company had sent them personalised communications that were relevant to their current needs.

Only a small number of the consumers surveyed said they felt any sense of loyalty to their insurance providers or banks (17% and 16% respectively). The remainder of those surveyed said that they were uncertain if they would switch providers during the coming year.

Customer preferences identified
The study also found that the proliferation of mobile phones, PDAs, and social networking web sites is also impacting how customers want to communicate with businesses. Half (50%) of the consumers surveyed said that receiving communications in real time had become "very important" to them.

Three-quarters (76%) said that they would like to have the option to receive communications via e-mail, and 40% said they would prefer having the option to receive relevant and timely information via personalised web portals. Other consumers also indicated that they would like to receive messages and notifications via SMS (text messages), and that they were also interested in having messages and new product offers delivered to popular social networking sites such as MySpace and FaceBook. Surprisingly, only half of those surveyed wanted to continue to receive regular communications from their bank or insurance company via the postal service.

Meeting higher expectations
According to Glen Manchester, CEO for Thunderhead, "Customers have never had higher service expectations, and they have come to expect today's providers to communicate with them across the whole range of devices they use in their daily lives. Gone are the days when financial providers can rely on bank tellers and brokers to build relationships with the customer."

The study concluded that creating personal, relevant, and timely communications for each individual customer, via a number of different channels, has now become critical to building and maintaining strong relationships and retaining valuable customers.

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