Customer Retention In Financial Services
One mistake that a lot of businesses make in the financial services sector today is focusing on acquiring new clients and giving little thought to retention. In fact, retaining customers can be your biggest and most significant weapon as a business. With that being said, in this blog post, we are going to take a look at customer retention in the financial services sector in further detail to help you get a better understanding.
What is retention?
Customer retention is a term that is used to describe the actions and activities that organizations and businesses take in order to lower the number of customer defections. The goal of implementing a customer retention program is to enable businesses to keep a hold of as many of their customers as possible. This typically involves using brand loyalty and customer loyalty initiatives, however, there are many different strategies to choose from depending on the nature of your company and your target consumer base.
Do you know how many customers are leaving you or are just dormant?
When focusing on customer retention strategies, one of the most difficult elements is determining whether or not a customer is going to leave your business or whether they are simply dormant. This is something you will need to figure out using data so you can make sure that you target your efforts effectively.
What are the benefits of retention?
There are a number of different benefits that are associated with focusing on customer retention. This includes the following…
- Increase in customer lifetime value
- Your brand will stand out from the crowd
- You are going to earn more word of mouth referrals
- It is cheaper than acquisition
- Loyal customers are more profitable
- Enables new product sales
- Customers will explore your brand
- You will get more feedback from engaged customers
- Loyal customers are more forgiving
- You will have more room to try out new things
When you consider all of the advantages that have been discussed, you can see how focusing on customer retention is the only way to drive true value to your business. Getting a new customer can feel exciting and like an achievement. However, it’s not until you have converted that client into a loyal customer that you will really begin to feel the fruits of your labour.
Importance of retention some food for thought.
i) Business don’t make money in year 1
ii) Profit from customers start in year 2 onwards
Therefore, you need to focus on retaining customers to truly drive profit. If you have a high turnover of clients, you’re not going to make much money.
So there you have it; the importance of customer retention in the financial services sector. As you can see, holding onto customers is arguably even more important than finding new customers in the financial services sector. This is something you need to give a lot of consideration to when it comes to your marketing efforts today.
The roles are reversed this week as the one and only Bob Gentle from the Gravity Digital Agency Power Up Podcast – https://bobgentle.com/podcast/ interviews your host Alex.
Alex tells Bob more about the clients ‘The Lead Engine’ works with his career history; including some of the failures, he’s had.
Find out why Alex set up the podcast and what he’s been trying to do to help the listeners grow their business.
Plus some weird and wonderful personal questions.
People like to do business with people, but we’ve found when it comes to financial advice people also want a specialist too.
We discuss whether you should niche or not, should you hunt with a spear or a net?
How small should your niche be?
Are there any tools to find out if people search for my niche?
Does the niche have to be just the product or a type of person?
Should you define why you’ve niched?
If you are going to niche, should you devote your whole marketing time/budget to it.
Examples of people who have niched down already; Ash Borland (First Time Buyers), Sarah Tucker (Mums) and David Sharpstone (CIS Contractors).
Should the niche become part of your identity?
A real-life example of where a niche broker won on Linkedin compared to other brokers with much more experience.
You are expected to be good at your job and have the experience, is this enough? Will a specialism help you win and complete more business?
Is there a fear of missing out? But are you actually missing out if you don’t niche?
Fewer people search for niche financial service products but there still can be enough for small broker businesses to go after.
Is being local enough of a niche?
Finding organic leads is tough. The competition in today’s digital marketplace means that if there is a lead out there, your competitors are probably already onto it. The chances of you slipping in, grabbing the customer from the clutches of the enemy, and then making a sale are pretty slim.
The Problem With The Lead Generation Market
This unfortunate reality has led to the rise of lead purchasing. Companies, especially in the financial industry, will go out into the marketplace, find someone promising to sell leads, and buy them in bulk, hoping that some of the people they contact will convert.
The problem with this is that many of the leads that they’re selling are junk. They’re not genuine, either because they’re duplicates or because the company selling them is misusing data. Data protection regulations mean that companies need to be extra vigilant about where they source their leads. They can’t grab leads from any old place and adopt a happy-go-lucky type of attitude. That approach will undoubtedly land them in hot water.
Companies, however, don’t always know whether the leads that they’re buying are legit or not. It’s hard to tell. There’s just so much data involved. Rifling through lists of leads and looking for patterns that might indicate foul play isn’t something that humans are particularly adept at doing. It’s time-consuming and involves a lot of energy. Time-constrained firms often don’t have the labour-hours to dedicate to comprehensive searches and lead verification. It’s just too much effort.
This puts companies in a difficult predicament. They need leads to be successful, but they seem to have to choose between going down to the slow organic route or buying leads in bulk and risking falling foul of data protection law. It’s a nightmare.
Alain Desmier, Founder Of Efinity Leads, And The Solution To Cheap Lead Generation
Alain Desmier, the founder of Efinity Leads, realised that there was a race to the bottom in the lead generation market. People in the industry were trying to do the right thing and create honest, bona fide leads for their clients, but they also had to charge more money for it. Business clients would say to lead generation providers, “why are you charging me so much for these leads when I can get the same number from a different service for a fraction of the cost?” Lead generation professionals would respond that they were generating quality leads, but the pull of lower prices often led clients to make the switch anyway.
Alain Desmier wants the best of both worlds. That’s why he’s in the process of setting up Contact State. Instant, cheap lead checking, in his view, is the key to resolving the industry’s problems. Scouring through thousands of potential leads to check for patterns and duplicates isn’t as a task suited to people. But it is something that could be done by an artificial intelligence-powered system.
This is the topic of the present podcast. Can we build artificial intelligence systems that will solve the quality problem in the lead generation market? If we can, then suddenly companies can inexpensively check cheap leads and avoid regulatory pitfalls.