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Banking customer retention at risk - as expectations rise

Back in 2005 when we conducted our first customer experience baseline study amongst customers of New Zealand retail banks, there was strong evidence that many banks operate with a significantly compromised customer retention strategy.

The study estimated that the problems customers experience when banking, and the way many banks handle customer complaints, could be placing between 8% and 12% of their annual profits at risk.

In subsequent updates to the study over the years we have observed two disturbing paradoxes:

It appears that although most banks are attending to service quality improvements, customer expectations are increasing.  And, when customers go to their banks for help, the problems are often not resolved to the customerís satisfaction.

Today, when customers experience problems with their bank, they find it easier to move their banking to a bank that can serve them better.  This presents banks with an interesting choice of strategies to maintain customer numbers:

I guess the old adage is true - businesses often spend 50 times as much trying to get a new customer than they spend trying to keep an existing one.

Not a strategy we can all afford these days.


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About the author: Paul Linnell

Paul LinnellPaul Linnell is a service improvement champion, working internationally with senior managers and their teams to help them achieve business success, reduce risk and build customer loyalty and advocacy by improving service to customers.  Paul specialises in the design and deployment of customer experience measurement, service quality improvement, complaints handling and preventive analysis programmes.  For most of his career he has worked in Europe and North America and for the past 10 years Paul has been based in New Zealand, continuing to serve clients globally.

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