According to BillingTree’s 2016 Financial Services Operations and Technology Survey, member and customer retention is one of the top factors respondents cited as critical to growth and profitability for financial services organizations in 2016.
Member/customer retention is typically a critical factor in a business plan because the easiest way to grow your member/customer base is not to lose them. Research by the Harvard Business Review found that an increase in member/customer retention by just 5 percent can lead to an increase in profit by 25 to 95 percent. Further research has shown that the average business loses around 20 percent of its members/customers annually simply by failing to focus on retention. The cost of this is significant, but few businesses truly understand the implications.
Imagine two similar businesses side-by-side. One retains 90 percent of its members/customers while the other retains 80 percent. If both businesses add new members/customers at the rate of 20 percent per year, the first will have a 10 percent net growth in members/customers per year, while the other will have none. Over seven years the first firm will virtually double their member/customer base while the second will have no real growth. With everything else being equal, that 10 percent advantage in member/customer retention will result in a doubling of members/customers every seven years without doing anything else.
Based on this, it is obvious that a member/customer retention program should be a credit union’s first focus. Here are three ideas that will help retain current clients.
Focus on exceeding member/customer expectations
According to Theodore Leavitt of the Harvard School of Business, customers (members) enter a business relationship with a set of expectations. Meeting and exceeding customer expectations is the best way to increase retention. Clients appreciate the extra attention when you go above and beyond what is expected.
Exceeding member/customer expectations involves delivering a service that goes the extra mile. Knowing the members/customers on a personal basis builds loyalty; members/customers enjoy businesses who know them. While telling your team to spend a little more time with members/customers might seem unproductive, numerous behavioral psychology studies have shown that everybody views their service experience as more positive when they do not feel rushed or ignored.
Time-to-service is also important. As we noted in another blog post, making your members/customers wait for service can have a very detrimental effect on overall satisfaction and can hasten attrition. Implementing programs and technologies that reduce waiting time will impact the relationship positively.
Offer a consistent member/customer experience
Consistency in the member/customer experience is important to delivering the service level that will build member/customer loyalty. Offering a consistent member/customer experience must come from a planned and thought-out strategy that involves all departments and functions. All departments should have shared goals in delivering the member/customer experience that builds both the brand expectations and the relationship with the member/customer.
The best companies recognize that members/customers interact with different parts of the organization and across multiple touch points; salespeople, billing and support. With a member/customer experience procedure spelled out, the employees can deliver consistency. Regular measurement and review of the process is also a necessary step to deliver member/customer satisfaction.
Deliver quality, proactive service
Proactive customer service involves anticipating problems before they occur and proactively offering solutions. Companies with high retention rates have systems in place to identify potential problems the member/customer could experience as well as methods for helping the clients avoid those problems.
One of the best ways to provide member/customer service is to help the member/customer reduce effort in transactions with your business. According to research from Dixon, Toman and DeLisi, the true driver of member/customer retention and loyalty is the ease of getting a problem solved. Financial transactions can involve many steps that need to be taken as well as missteps that must be avoided. By helping the member/customer identify those steps and avoid the missteps, a stronger relationship is built with the client. This can involve the member/customer at the point of sale as well as contact with customer service later. Again, a thought-out process that is regularly measured and reviewed is important.
In summation, retention programs reduce member/customer attrition which ultimately boosts revenue. By developing a well-thought-out retention plan and then ensuring its consistent application by all departments, your business can build stronger relationships and can create a better experience for members or customers.
For more than a decade, BillingTree has been committed to understanding the marketplace and growing payments with technology, to help clients grow their business. Contact us today to learn more about myPayrazr IVR and our other Payrazr Partner IVR offerings.