Customer Communications and Loyalty

Financial Services 1Challenge:
For one Financial Services organization, past research conducted by Loyalty Research Center (LRC) revealed important clues as to which of several available customer communications channel options impacted loyalty the most. If customers could be convinced to use this channel over others and could say they had a good experience, then customer loyalty to the organization was likely to be high as well.

This was great information and they immediately embarked on initiatives to assure high performance. What they didn’t realize initially, however, was that relatively few of their customers used any channel very much. There was relatively little communication from customers and, as many as 1 of every 4 customers had not contacted the company at all during the past 12 months.Further investigation revealed that customers having no contact were also the most vulnerable — least satisfied and open to competition dispelling the belief that no news is good news when it comes to hearing from customers.

The Management Team wanted to learn more about this vulnerable group of customers – “What financial impact do vulnerable customers have on the bottom line? Should all vulnerable customers be saved? What type of interventions can be initiated to build loyal relationships where none exist today? Can potentially vulnerable customers be identified early on and migrated to more loyal patterns of interaction and buying behavior before becoming vulnerable?”

Solution:
A “deeper dive” to find out more about vulnerable customers was required before any of these questions could be addressed…information to help quantify the financial value of each account as well as what it would take to turn around poor perceptions of performance into more favorable ones.Much of what was needed to assess value was already available in the customer database – age, income, type and number of accounts, revenue, investment preferences, and the like.

As for the rest, LRC re-contacted vulnerable customers to confirm their lack of communication, gain more specifics about poor performance areas, delve further for possible root causes for their dissatisfaction and identify information gaps. Economic modeling was performed to better understand present behaviors and predict future account value as well as determine minimum investment levels that would justify taking action.

Knowing the financial value of each vulnerable customer and specifics about current perceptions of the relationship health made it possible for the organization to identify the desirable customers; – those of relatively high value warranting reasonable levels of investment in the relationship.

It was around these ‘desirable’ customers that individualized proactive contact campaigns were designed and tested to open up the lines of communication, gain increased understanding of account needs, and start building deeper relationships. Information was shared across accounts and, where similar performance issues existed, teams were formed to identify corporate wide solutions which were applied on an account by account basis.

Results:
Follow-up measurement revealed that a large and significant percentage of customers who were part of the targeted communications program gave a significantly higher evaluation of the company and were far less vulnerable.This reinforced throughout the organization the importance of proactively communicating with customers. The long held belief that no news is good news was put to rest and customer contact employees were made accountable for proactive communications.

With gained insight from the economic models, LRC constructed a customer scoring system based on revenue, current investment in the relationship, and future investment thresholds to identify where communication interventions are warranted.Acknowledging the role that communication plays in account health; an intense, proactive communications process – utilizing Customer Service and the Sales/Brokerage network – was put into place and applied to high value accounts where records showed no communication within the past 12 months. The process was based on the initial trial version tested earlier and could be ratcheted up or down based on value potential.

Eventually, this included a migration of each customer to existing customer communications channel usage, but only if it did not jeopardize the account. Proactively gathering feedback from customers as well as regular monitoring of channel usage assured that communication continued to support strong relationship building.

For more information about our work in the Financial Services industry, please click here.

Posted in Case Studies, Financial Services, Industries, Insights, Thought Perspectives.