Customer Loyalty Case Study in Financial Services

Loyalty Research Center (LRC) performed a customer relationship research program for a financial services company, which will be identified as Company XYZ.  In considering the issues that could affect the relationship, a major component of the program focused on evaluating the different ways in which the customer could contact/transact with the company.  These communication modes included:

• Interactive voice response unit

• Customer service center

• Sales/Brokerage network

• Website

SITUATION

The analysis determined the relative impact of each of these modes on the overall customer relationship, the performance evaluation of each of these modes, the key drivers for each mode and the performance evaluation of various mode attributes.  This information provided the executive team with insight into the communication mode that required the most attention and some diagnostics on how to improve performance.  In addition, each mode had one or more managers that used the research results to guide them in improving the design and service associated with their specific mode.

In addition to this highly detailed analysis, the Loyalty Research Center also examined respondents according to the extent to which they contacted/transacted with the company.  For example, about 18% of the respondents communicated with the company more than twice per month using one or more modes.  An interesting finding was that 23% of the respondents stated they had not had contact with the company during the past 12 months.  This segment turned out to be one of the most vulnerable.

IMPLEMENTATION

The management team agreed that this finding warranted further exploration.  The Loyalty Research Center re-contacted a large number of these respondents to confirm their lack of communication, their relatively low evaluation of the company and to explore the root causes of both.  The Loyalty Research Center also examined and analyzed other customer descriptors available to make it easier to identify these customers internally.  Revenue streams were also attached to enable an economic model to be built around the value of these customers and the investment they warranted.

Through proactive contact, this company was able to improve many of these vulnerable relationships with customers determined to be attractive.  It was easier and less expensive than waiting until the customer decided to actually exit the relationship.

The result of the research led the company to:

• Utilize internal data across communications modes to identify customers that had not contacted the company in the last 12 months;

• Assign a score to customers by the volume of business and used a revenue cut-off determined with the assistance of the Loyalty Research Center to identify those customers that warranted an intervention;

• Build a communications process utilizing Customer Service and the Sales/Brokerage network to communicate with the most valuable of these vulnerable customers

A follow-up research program revealed that a large and significant percentage of customers that had received the targeted communication had a significantly higher evaluation of the company and were far less vulnerable.  The company is now in the process of formalizing this program, modifying it for less valuable customers, and calculating a more refined ROI for the program.

KEY FINDINGS

• Not hearing from a customer can be a symptom of a vulnerable relationship.  Too much research focuses on what customers do instead of what they don’t do.  Organizations need to identify customers that have disconnected.

• Identification is only the first step.  This information should be utilized to migrate all or some of these customers to a stronger relationship.  Business rules help identify where selective investment should be made.

• Improving customer value through regular contact improves the relationship and thus increases customer loyalty.