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13 Jan
2015

Deepa Bhargava

Search Consultant
 

This post originally appeared on Deluxe by Todd Weiss

 

Before you think it, I’ll just say it – account switching has been done to death. The banking industry has examined consumer account-switching behaviors from just about every angle. We’ve poked, we’ve prodded, we’ve scrutinized – we’ve done virtually everything imaginable to understand why a consumer might quit one bank and go to another.

 

The ultimate answer is ridiculously simple: Consumers switch banks because they’re unhappy with the one they’ve got.

 

Why they’re unhappy, well that’s the bigger question, isn’t it? It’s not an academic one, either. Account switchers represent not only a loss of business for one bank, but gains for others. Everyone wants to be on the positive side of that equation. You can make yourself crazy studying the countless surveys, reports and analyses of account-switching behaviors.

 

Earlier this year, however, Oliver Wyman released a report that I find particularly valuable. Its results are based on the responses of actual account switchers; Wyman surveyed 1,743 consumers, 868 of whom had recently changed accounts. Surveys of consumers who have not recently switched can provide you with insight into what might make them do so in the future. Wyman’s report, however, helps us understand actual drivers of account switching behavior.

 

Surveyors asked respondents to cite the top reasons they first began to consider switching banks. Interestingly, just 20 percent said a life event inspired them to consider changing banks. The other 80 percent were evenly split between being motivated by a negative experience with their current bank and a positive response to an advertisement, offer or promotion from another bank.

 

Wyman also asked switchers what factors most influenced their ultimate choice of bank. The answers may surprise you. The majority – 44 percent – said the opinions of family, friends and colleagues influenced their decision. Thirty-two percent cited information they’d found on their own. And, while marketing might have initially triggered their interest in switching, just 23 percent said it influenced their final choice.

 

Faced with this concrete data on what drives consumers to switch accounts, there are two key take-aways.

 

In managing relationships to retain current account holders, you must:

   -    Minimize the negative experiences. Customer service must be outstanding and memorable. Fees must be offset by actual and perceived value. As an example offering a fraud prevention service is a great way to justify a move from free checking to paid checking.
   -    Focus cross-selling efforts on products that are relevant to account holders at every stage of their lives.
   -    Use marketing to wow current account holders as effectively as prospective ones. You need a strong onboarding plan to bring on these new account holders from day one and reward them for being a customer so they won’t even think about leaving.
   -    Close the loop with analytics to better understand your customers and determine if the customer may be unhappy or more likely to attrite.

 

In your pursuit of potential account-switchers, you must:

   -    Ease the account switching process for new account holders. I’ve written about this in the past, here is some additional reading on this topic.
   -    Effectively communicate why your customer service and products are superior.
   -    Deliver marketing that clearly defines your value proposition, and is relevant, engaging and convincing.
   -    Keep customer communications going throughout the entire relationship, not just during the onboarding process.

 

While each consumer is an individual and will respond differently to different motivations, some behavioral drivers are universal.

Ultimately, when consumer dissatisfaction reaches a tipping point – for whatever reason – account holders will look for a bank they feel more positively about. It’s up to financial institutions to prevent current account holders from taking that fall, and giving prospective customers an appealing place to land if they’ve already made the decision to switch.

Source: http://goo.gl/0qkV9w

Before you think it, I’ll just say it – account switching has been done to death. The banking industry has examined consumer account-switching behaviors from just about every angle. We’ve poked, we’ve prodded, we’ve scrutinized – we’ve done virtually everything imaginable to understand why a consumer might quit one bank and go to another.

The ultimate answer is ridiculously simple: Consumers switch banks because they’re unhappy with the one they’ve got.

Why they’re unhappy, well that’s the bigger question, isn’t it? It’s not an academic one, either. Account switchers represent not only a loss of business for one bank, but gains for others. Everyone wants to be on the positive side of that equation. You can make yourself crazy studying the countless surveys, reports and analyses of account-switching behaviors.

Earlier this year, however, Oliver Wyman released a report that I find particularly valuable. Its results are based on the responses of actual account switchers; Wyman surveyed 1,743 consumers, 868 of whom had recently changed accounts. Surveys of consumers who have not recently switched can provide you with insight into what might make them do so in the future. Wyman’s report, however, helps us understand actual drivers of account switching behavior.

Surveyors asked respondents to cite the top reasons they first began to consider switching banks. Interestingly, just 20 percent said a life event inspired them to consider changing banks. The other 80 percent were evenly split between being motivated by a negative experience with their current bank and a positive response to an advertisement, offer or promotion from another bank.

Wyman also asked switchers what factors most influenced their ultimate choice of bank. The answers may surprise you. The majority – 44 percent – said the opinions of family, friends and colleagues influenced their decision. Thirty-two percent cited information they’d found on their own. And, while marketing might have initially triggered their interest in switching, just 23 percent said it influenced their final choice.

Faced with this concrete data on what drives consumers to switch accounts, there are two key take-aways.

In managing relationships to retain current account holders, you must:

  • Minimize the negative experiences. Customer service must be outstanding and memorable. Fees must be offset by actual and perceived value. As an example offering a fraud prevention service is a great way to justify a move from free checking to paid checking.
  • Focus cross-selling efforts on products that are relevant to account holders at every stage of their lives.
  • Use marketing to wow current account holders as effectively as prospective ones. You need a strong onboarding plan to bring on these new account holders from day one and reward them for being a customer so they won’t even think about leaving.
  • Close the loop with analytics to better understand your customers and determine if the customer may be unhappy or more likely to attrite.

In your pursuit of potential account-switchers, you must:

  • Ease the account switching process for new account holders. I’ve written about this in the past, here is some additional reading on this topic.
  • Effectively communicate why your customer service and products are superior.
  • Deliver marketing that clearly defines your value proposition, and is relevant, engaging and convincing.
  • Keep customer communications going throughout the entire relationship, not just during the onboarding process.

While each consumer is an individual and will respond differently to different motivations, some behavioral drivers are universal.

Ultimately, when consumer dissatisfaction reaches a tipping point – for whatever reason – account holders will look for a bank they feel more positively about. It’s up to financial institutions to prevent current account holders from taking that fall, and giving prospective customers an appealing place to land if they’ve already made the decision to switch.

- See more at: http://fi.deluxe.com/community-blog/deluxe-blogs/onboard-engage/really-drives-account-switching-behaviors/#sthash.DEeuM1gD.dpuf

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