It’s been a tough few weeks for the British high street.
Retail stalwart House of Fraser announced it is closing its doors at several locations across the country, while Poundworld entered administration.
It’s not just retailers abandoning the high street.
Recent research from consumer group Which? revealed banks and building societies closed an average of 60 branches per month between 2015 and 2016.
This news begs the question – how important are branches to a bank’s efforts to secure customer loyalty?
From a customer perspective, it doesn’t matter whether you are banking via an app or going in branch. What matters is the experience customers receive when they choose to engage.
Many banks are offering financial reward to loyal credit card customers but how can they take things one step further to make their customer feel like they are at the heart of operations? The challenge for banks is that today’s customers are a picky bunch.
They expect nothing less than an easy, fast banking experience that is tailored to their specific needs. And when it comes to branches, the experience fails to meet customer expectations.
We recently conducted research with Ipsos Mori to delve further into this issue of consumer attitudes towards brands.
We found that only 7 per cent of UK consumers felt the customer experience with their bank had exceeded their expectations over the past year.
This has a huge impact on consumers when it comes to choosing who they do business with.
Almost two-thirds, or 64 per cent, of UK consumers say they have avoided a brand, whether telco, online retail, banking or hospitality, because of a bad experience in the past year.
This is even higher among millennials, at 70 per cent.
With so much competition today, and an increasingly diverse customer base, simply meeting expectations isn’t enough.
Customers will remain loyal to those brands that go over and above to solve issues quickly and painlessly.
Where do banks go next?
Many brands today are looking beyond a product or service and creating immersive, in-store experiences which develop a supposedly meaningful or deeper connection with customers. This is often coined as ‘retail theatre’.
Luxury fashion brands and beauty retailers lead the way with this, enticing customers to stay in their shops for as long as possible with interactive digital displays and sensory environments.
While the average banking customer wouldn’t need or want such experience in a bank – you are there to cash a cheque quickly and get on your way – personalisation matters.
Our research found that an average of 44 per cent of UK respondents expected more personalised experiences in banking, insurance and telco, versus 29 per cent in retail and hotels.
The demand is clearly there for banks to up their standards in terms of enticing customers and forging deeper connections – perhaps this is why Swedish bank Handelsbanken consistently tops the list for UK customer satisfaction.
Banks could look to take a leaf out of the hospitality sector’s book.
We found that the retail and hotel industries most consistently meet customer expectations due to their strong focus on making loyal customers feel rewarded with perks and special offers.
Many banks are offering financial reward to loyal credit card customers, for example, but how can they take things one step further to make their customer feel like they are at the heart of operations?
Customers will always need a banking service, but when one of the biggest sources of competition is digital-only banks, the branch should be considered an opportunity to stand out.
But the experience is the key. By focusing more attention on improving the branch experience, banks can create a valuable opportunity to create more loyal customers.
Rachel Lane is senior solutions principal of Medallia
