By Karen Mapstone of Eclipse Marketing

Concerns about global financial instability and the troubles of banks in France and the UK have shaken consumer confidence throughout the financial services industry.

In difficult times, CRM strategies assume an even greater importance. Effective marketing and CRM techniques can go a long way towards counteracting negative consumer perceptions, and providing customers with the services they want and need.

This means treating customers as individuals, making them feel valued and delivering a better all-round customer experience which will inspire loyalty, reduce churn and help rebuild confidence.

Lagging behind
Unfortunately, financial services is not a sector traditionally linked with the enlightened use of the latest in marketing techniques. Compared with other industries in which we operate as database marketing experts – food and automotive, in particular – the financial services sector is very much lagging behind the marketing times.

Some financial services firms still appear not to have realised that industrial scale marketing simply does not deliver the goods any more, the market is too competitive and consumers too discerning. Many still focus on traditional mass market channels, rolling out outdated blanket mailings and campaigns.

Lack of data certainly isn’t an excuse for lack of targeting. Financial services providers have an advantage many other industry sectors must envy – a wealth of information about their customers.

Customer-centric
A much more targeted approach is demanded, including using advanced predictive analytics to match product and price to customer, and smart CRM strategies to get closer to customers and build lasting relationships with them.

The sort of integrated CRM strategies we advocate to our clients provide customer-centric solutions that really deliver. Predictive modelling, for example, can be employed very successfully in sectors like banking and insurance, where substantial amounts of transactional data is held, giving fresh insights into customer behaviour.

At the same time, providers must constantly take account of the highly regulated environment in which they operate, so the highest duty of care must be maintained to protect the customer from overzealous selling techniques and ensure the security of data at all times.

Turning to churn
No wonder churn within the sector is such an issue. According to the BMC Churn Index – an independent report published early last year by BMC Software, in which more than a thousand UK consumers were surveyed – UK consumers switch an average of two suppliers a year, costing British businesses more than £5billion.

Insurance providers were at the top of the list for churn, followed by utility and mobile phone companies. Banks fared little better. The same research showed that, though only 10% of people actually switched banks in the last six months, this was because it is too complicated to change, rather than because they were satisfied with the service. In fact, over half the people (51%) surveyed made negative recommendations about their bank.

Why are British consumers so prone to switching? It boils down to poor customer service. Failure to provide a personalised service and make the customer feel valued, greater focus on gaining new customers rather than cherishing existing ones, and poor problem-handling are some of the main reasons highlighted in the survey.

Wake up!
If the last year’s Churn Index delivered a much-needed wake up call, this year’s financial turmoil has turned up the amplification to a howl.

Unless financial services companies address the issues, disillusioned consumers, fed up with the mismatch between the services they expect and what they actually experience, will continue to switch at ever increasing rates. Better CRM strategies within the financial services sector have a vital role to play in improving the customer experience and bucking this trend.

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