How much does a lost member or customer cost your credit union or bank? And we’re not just talking dollars and cents here. The total expense of a lost member or customer can far exceed simply the monetary.
According to the book Customer Winback: How to Recapture Lost Customers–And Keep Them Loyal, most banks (and by extension credit unions) lose members and customers in an average of 12.5% a year. Balance that with an average acquisition rate of 13.5% and we find that acquiring new customers and members is virtually a wash-out. The book also references a study showing the average cost of acquiring new customers is about five times higher than retaining the ones you already have. Even more troubling, the new customers that are acquired are unlikely to be as profitable as those they replaced.
While it may be difficult to pin an exact figure on the cost of a lost member or customer, we cannot end the equation based solely on them. The lost customer or member may very well have brought additional business to your bank or credit union through friends and family members. It is also possible they could have brought business accounts. When we begin to total the cost of a lost customer or member both in terms of immediate financial loss and potential future financial loss, the implication for banks and credit unions is dire.
The most obvious solution to this challenge is to retain the loyal customers and members that banks and credit unions have. The best way to retain them is to instill in your bank or credit union a culture of trust. Trust is a commodity that takes time, effort and perseverance to build. It is also something that is quickly lost given the wrong set of circumstances.
According to an article in Forbes magazine, building a culture of trust boils down to three things.
1) Meeting or managing the expectations of yourself and others
2) Meeting your and their needs
3) Keeping the promises we all make
The article goes on to state that with any business, losing trust is the equivalent of losing money.
What can banks and credit unions do, specifically, to help ensure a culture of trust exists with consumers? Consider the following ideas.
1) Actively solicit and display member or customer testimonials. This likely means on your website. Make sure that when a consumer has a positive experience with your financial institution, you post to that comment someplace conspicuous.
2) Work to change the public perception of financial institutions as cold and impersonal places. Ensure that your entire brand, from website and social media to community involvement and telephone greeting all convey genuine warmth and personality.
3) Maintain open avenues of communication. Complements are terrific but eventually every financial institution will have a consumer with a complaint. Make sure that telephone numbers, email addresses and social media platforms are all prepared to positively and proactively deal with legitimate consumer issues. Consumers can learn a great deal about your bank or credit union from the way you deal with upset members or customers.
In this hyper competitive financial services marketplace, banks and credit unions simply cannot afford to lose the trust of their members and customers.