I came across a quote on Twitter recently that really resonated with me. “The best way to gain a customer is to not lose one you already have.”
Let that sink in for just a minute. “The best way to gain a customer is to not lose one you already have.”
Financial institutions (and most other businesses for that matter) often spend countless hours and a lot of money courting new customers, but very little time and money keeping the customers they already have.
My internet company is notorious for doing this. They lure new customers with massive discounts on bundled products for the first year or six months of the relationship. Then they jack up the price to almost double – sometimes more – when that contract expires. In our market, they frequently lose those customers to the next big deal from another internet provider.
Credit card companies (and possibly your credit union or bank) offer rate discounts and no fees on balance transfers long enough to capture new business. Once they lock in the member or customer, they do little or nothing to nurture that relationship.
Why do they spend so much energy on new business when they have a gold mine sitting in their own database?
Consider these statistics:
- 65% of a company’s business comes from existing customers
- A five percent increase in customer retention can increase profits by 25% to 95%
- The cost to acquire a new member or customer is at least 5% more than keeping a current one
- 68% of U.S. consumers who cease doing business with a company because they feel they are indifferent to that company
These are significant. Your credit union or bank must spend more money on existing members or customers and less on new customers.
Here are some tips:
- Use all the technology you can to market to your existing member or customer base, including e-mail marketing, social media, organic search, paid search, retargeting and mobile marketing.
- Analyze your database of existing consumers and use that information wisely. Target them as finitely as possible to get the best results. If you don’t have access to a system or program that enables you to do this, get one. Reliable data and the ability to use it strategically can make of break your retention efforts.
- Make member or customer retention a part of your strategic plan. Develop marketing and service goals specific to retention.
- Conduct a marketing audit to determine how well you actually market to current members or customers. Make mystery shops a part of your audit to determine gaps between what marketing promises and what level of service frontline staff deliver.
- Journey map your member or customer experience and train staff to it so all frontline employees are on the same page about what to say and how to treat current members or customers.
Your financial institution needs new members or customers to grow, but not at the expense of the ones you already have. Keep in touch with them. Establish relationships with them. Provide solutions. Your bottom line depends on it.