Three Ways Customer Measurement Programs Haven’t Kept Pace With Customers

(Sue Hines is head of customer engagement with Informa Research Services, New York. Sue has more than 30 years’ experience in consulting and brand measurement. Founded in 1983, Informa Research Services is a provider of customer/member engagement and loyalty studies, competitive product rate and fee intelligence and delivery channel experience measurements to the financial services industry. The company’s website is

Few industries have undergone as many dramatic shifts as banking has over the past decade.

An explosion of mobile capabilities, a worldwide financial crisis that shook consumer confidence and a still-developing regulatory response have changed the way customers interact with their banks. That’s made it more important than ever for banks to understand the mindset of its customer and what it takes to retain their business, acquire additional assets and attract new business.

Yet, customer measurement and evaluation tools haven’t kept pace with consumers themselves. Here are three key ways bank executives could be misreading their current customers.

Focus on Loyalty Alone
There’s always been a mystique around customer loyalty. Indeed, loyalty is important, but it is just one metric for evaluating relationships. Banks with a measurement program built on loyalty probably have a sense of customers they can retain, ones that are more likely to reaffirm their relationship with a bank.

But being loyal doesn’t necessarily equate to business growth. You can keep a customer for years, but that same customer may never increase the business she does with your bank. Most loyalty measurements and promoter scoring don’t seek to find out what motivates a customer to stay, so many banks can’t craft a strategy to energize that customer to increase business and deepen the relationship.

Another caveat: loyalty might be a metric that shows growth problems rather than opportunities. Customers who are loyal can also be customers who are averse to risk and less likely to do more business in the future. In too many flat measurements, loyalty is actually apathy.

Forgetting the Power of Transactions
The relationship between deposits and payments is paramount. One quarter of consumers now use a credit card as their primary form of payment, according to data from Informa Research Service’s SEA Score, which measures member and customer engagement.

Many customer-measurement programs look at a small slice of the relationship; if your customers are using other issuers’ credit cards, how is that impacting you? Without tracking the whole relationship around a transaction, bank executives are at a disadvantage.

Understanding Millennials
Many customer-measurement systems, such as a promoter score, were developed decades ago–before a lot of new bank customers were old enough to get an allowance. These tools focus on retaining customers, but that could be a fool’s errand. Millennials are less likely to stay with a bank, and loyalty looks a lot different to them than it did to their parents.

Last year, 18 percent of Millennial customers switched their banks, according to data from Accenture. That was almost twice the rate of people aged 35 to 54, and more than six times the rate of customers over age 55.

The data you collect from a longtime older customer who won’t switch likely helps in potentially attracting another customer in that same demographic. But that data are useless in targeting someone from another age group. If Millennials, for instance, are quick to leave a bank and have no sense of loyalty, any measurement you use has to look instead at the opportunities to attract Millennial customers you don’t yet have, instead of worrying about what programs to put in place to keep the ones you have. Only measurement practices developed with Millennials in mind can accomplish this.

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