The customer‐led bank: converting customers from defectors into fans

Abstract

Purpose

To show that retail bank executives across the world are awakening to a realization that long‐term growth and profitability hinge on their ability to attract and retain loyal customers.

Design/methodology/approach

In Bain's experience, the best tool for gauging the benefit of fostering customer advocacy is the “Net Promoter™ Score” (NPS), a measurement developed by Satmetrix Systems, a Silicon Valley‐based software and services firm that specializes in customer experience management.

Findings

US banks earn an average net promoter score of just 6 percent – far below those of leaders in the personal computer, property and casualty insurance and car rental industries. The NPS of German retail banks is just 13 percent, on average; meanwhile UK banks rate a dismal minus 6 percent.

Research limitations/implications

A recent global benchmarking study by Bain & Company reveals that bankers recognize they have a problem. In the study, bankers rated the building of strong customer relationships as one of their most important keys to success. Yet they acknowledged that they were not doing a good job of rising to that challenge.

Practical implications

The Bain study found that banks acknowledged six imperatives as crucial to winning over new customers, deepening relationships with existing account holders and reinforcing all customers' perception that they receive superior value:

Originality/value

Strategic managers in banking and other industries must manage to six imperatives: design products and services that offer a truly captivating value proposition and generate genuine consumer enthusiasm; understand their target customer segments in detail and communicate with laser like precision; systematic nurture of new‐customer relationships; manage the customer experience, not just the account; dare to be different; and concentrate on measurements that enable anticipation of customer behavior.

Citation

Wisskirchen, C., Vater, D., Wright, T., De Backer, P. and Detrick, C. (2006), "The customer‐led bank: converting customers from defectors into fans", Strategy & Leadership, Vol. 34 No. 2, pp. 10-20. https://doi.org/10.1108/10878570610652590