This lesson focuses on the strategies and metrics for engaging customers and building long-term loyalty in a competitive banking environment .

6.1 The Goal of Customer Engagement
Customer engagement is the emotional connection a customer has with a bank. Engaged customers are more profitable, less likely to churn, and more likely to act as brand advocates. The goal of engagement strategies is to create a “switching barrier” that makes it costly or inconvenient for customers to leave .

6.2 Key Engagement and Loyalty Strategies

  • Loyalty Programmes: Rewarding customers for their banking activity (e.g., points, cashback, tiered benefits).

  • Personalised Service: Addressing customers by name, remembering their preferences, and proactively meeting their needs .

  • Proactive Communication: Reaching out with relevant updates, offers, and advice before a customer asks.

  • Relationship Management: Moving from a transactional model to a relationship-based one where the bank acts as a financial partner .

6.3 Measuring Loyalty
Key performance indicators (KPIs) used to measure engagement and loyalty include:

  • Net Promoter Score (NPS): A measure of customer advocacy.

  • Customer Lifetime Value (CLV): The total profit expected from a customer over their relationship with the bank .

  • Churn Rate: The percentage of customers who leave the bank over a period.

  • Retention Rate: The percentage of customers the bank retains over a period .

 
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