The King of customer loyalty, Amazon’s CEO, Jeff Bezos, doesn’t pretend to have the ultimate answer but he has some fascinating views on how customers behave. And since many bank customers cite Amazon service as something the banks should be emulating, his opinions should be of direct interest.
In his 2016 Letter to Shareholders he said: “There are many ways to center a business… But, in my view, obsessive customer focus is by far the most protective of Day 1 vitality.” (You will have to read the document in full to find out what he means by ‘Day 1 vitality’*).
He carries on: “Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.”
“Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight. A customer-obsessed culture best creates the conditions where all of that can happen.”
Customer Retention and Its Importance in Today’s Digital World
The white paper details and discusses the emergence of next generation technology-enabled market entrants and how they have driven ever-evolving customer expectations. The paper points out that this has resulted in heightened competition within the banking industry which has consequently led to high customer churn for both incumbents and new entrants.
The preferred strategy to stem this churn and retain customer relationships is to leverage digital technology to improve the customer experience and strengthen their relationship with the bank. The whitepaper, developed by IBS Intelligence and Temenos, analyses the dynamics and drivers of customer retention and looks at the various strategies currently in play within the European banking industry. The objective of this whitepaper is to give the reader a fresh perspective on the criticality of customer retention and how digital technology can help in developing an effective strategy.
Customer Retention Practices Within the Banking Sector in Europe
The European-banking sector is a diverse mix of large traditional banks, mid-sized and small local ones as well as the new generation Digital-Only banks. The broad customer retention strategies observed across all bank segments focus on five key aspects, which are discussed in the whitepaper in detail. It is essential to understand the trends relative to the three banking segments.
Another piece of advice Bezos gives, from the same document, should be carefully examined by the banks: “Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.”
The vast majority of banks would have no argument with that last statement – and it is only by embracing technology and planning for the digital future that banks will discover customer agility – and retention!
*This is the first of Three Blogs on Customer Retention based on a whitepaper, developed by IBS Intelligence and Temenos, which analyses the dynamics and drivers of customer retention and looks at the various strategies currently in play within the European banking industry.