Thursday, March 22, 2018

BANKING TIPS: Customer loyalty in banking industry

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa

In last week’s article about factors influencing customer loyalty in the banking industry, I discussed why I believe that banks are in the service industry and not in the finance industry hence they should compete in terms of the quality of their services rather than financially.

Also, I have said that, for any bank to be successful, it is vital to maintain a high rate of customer loyalty but it has become a challenge to do that due to stiff competition in banking industry.

Thus, banks need to come up with unique strategies to attract and retain their customers. So how can this be achieved? I stated that banks can retain their customers and make them loyal by understanding the factors influence their loyalty.

There are three factors that influence customer loyalty in the banking industry and last week I talked about the first factor: quality of service.

I explained that quality of service plays a crucial role in influencing customer loyalty, hence banks need to ensure they deliver exceptional service to their customers all the time. That’s where we ended.

Now let us continue from where we ended last week. In this week’s article, I will discuss the remaining two factors that influence customer loyalty in the banking industry:

Brand image – For a customer, a perceived brand is the evidence of a good quality of products and services so the brand image is extremely important in deciding moment for most customers whether to bank with you or not. Banks should strive to improve their image in the society they operatein through such activities as participating in various corporate social responsibility (CSR) projects.

Customers want to associate themselves with a good brand hence brand image can impact the decision of the customer to continue to bank with you or not (i.e. be loyal to your organisation or not).

The process of creating a brand should be the responsibility of each unit of the bank as each one has a role to play to ensure the image of the bank is as influential as it can be.

Customer satisfaction –Customer satisfaction is one of the most important issues concerning banks so it is crucial for banks to provide diversified products and services that will meet the needs and expectations of different segments of their customers. The banks need to understand that the employees play a crucial role in ensuring customers are satisfied so it is important for the banks to invest in its staff and make sure they are treated well, and they are happy with their responsibilities. As we know, “happy employees equal to happy customers”, so to achieve thorough customer satisfaction, first a good working condition and competitive benefits are needed to have satisfied employees who, in return, will work extremely hard to meet the expectations of their customers. Loyal employees are happier and engage more in their work which will lead them to render excellent customer services, hence satisfying the customers and make them loyal.

I will wind up by reiterating to the banks that retaining your existing customers is more important than ever before due to the decline in market growth rate and increase in competition. In the past two weeks, we have seen that the quality of service is key in influencing customer loyalty as well as flexibility of the banks in dealing with financial needs of customers.

Also, we have seen that banks must deliver quality service to ensure survival in today’s competitive environment in the banking industry.

Furthermore, banks should “take care” of their staff to achieve thorough satisfaction of their customers which will turn them loyal.

We have seen that satisfying the customers is considered as one of the most important factors leading to competitiveness and success.