How to Make Customers Love Your Bank

In today's environment, banks and other financial services firms are challenged with finding creative ways to cut costs and build revenue while still maintaining customer loyalty. The end-user experience is quickly becoming a market differentiator. Charles Schwab encourages potential investors to "Talk to Chuck" for a more personal experience, while Discover differentiates their offering by poking fun at the stereotypical customer service representative via the notoriously unhelpful "Peggy."

Whether your firm is more like Peggy or Chuck, the strategies below can help optimize customer service for businesses looking to win back consumer trust and differentiate themselves from competitors.

Respond to social media.

It is essential to meet your customers where they are already socializing. This means moving beyond traditional phone conversations to diversify the channels available to your customers. For example, as banks encourage customers to manage their accounts online, they must also be available to answer questions and provide technical support within the same forum. Live chat is as important to the online customer experience as the teller is in a branch.

Financial institutions tend to be especially cautious when engaging with customers in social media, but ignoring the conversation doesn't make it disappear. Rather, it eliminates the opportunity to gather intelligence and use the conversation to align social media policy and strategies.

When a client voices concerns about diving into social media, I ask them, "If your customer calls to complain, would you want to answer the phone?" Invariably, they respond "Yes." Not responding to social media missives about your brand is identical to not taking your customer's calls.

Maritz Research found 85% of social media consumer outcries are not addressed at all and 51% of those who make complaints expect to be contacted. This clearly indicates responding to social media posts about your brand (whether positive or negative) is an opportunity to engage with customers and optimize your service.

Fortify the back door.

The global economic recession brought new laws, rules and regulations imposed upon the financial services sector that are illuminating banks' disregard for the value of customer service. For example, three of the largest U.S. banks have announced increases in checking fees due to regulatory changes that affected their business models. Unfortunately, new fees are not conducive to customer satisfaction. Customers are conditioned to expect increased service along with an increase in fees. How will charging for checking result in a better experience?

Financial service organizations must transform the way they do business to stay in compliance while remaining competitive on customer service. According to the Credit Union National Association, net membership growth at credit unions during the first quarter of 2012 exceeded the total growth for 2010. Customers frustrated with fee increases and mediocre service have demonstrated their willingness to switch. Banking institutions need to fortify their back door before they are exposed to the public by an increasingly strict regulatory environment.

Focus on existing customers.

Studies have shown that it is six to seven times more costly to acquire a new customer than to retain an existing customer, making it instantly apparent why keeping customers happy can help to drive business results.

Rewards programs are frequently a key component of a business' value proposition, and such programs must begin with optimal customer service. If your customers do not experience good service, no rewards program could convince them to stay with your brand.

According to McKinsey, U.S. companies spend $50 billion a year on loyalty programs, which can generate as much as 20% of a company's profits. However, for these programs to be effective, it is important to identify customers that are most loyal to the brand, and therefore are the most important to retain.

Assign experienced and talented customer care professionals to reward program engagements and train them to ensure the program's success. Further, embrace the ability to access and analyze terabytes of customer data. Put your own data to use – mine your customers' purchasing habits to design a rewards program that fits their needs.

For example, U.K.-based retailer Tesco uses data from its reward card program to tailor 80,000 variations of a letter offer and a magazine it sends to members. Since the program's launch in 2008, they have increased their market share from 13% to 17%, and nearly 75% of its sales now come through the program. The combination of high-level customer care with a targeted program for your existing customers can boost customer retention over the long term.

In marketing to potential consumers, institutions are placing increasingly significant emphasis on customer service, both as a competitive differentiator and as a strategic avenue to win back customer trust. Organizations that employ newly available technologies in accordance with the new financial landscape have tremendous opportunity to lead the market and reap the rewards of optimizing their customers' experiences.

Sandip Sen is CEO of global customer lifecycle management for Aegis, one of the world's largest outsourcing providers.