It’s no secret that the Banking and Financial Services Industry (BFSI) has been under fire in recent years. From poor customer service to high fees, there are plenty of reasons why customers are disgruntled with BFSI companies, including but not limited to customer engagement.
However, it’s not all doom and gloom for the industry. There are many things that BFSI companies can do to improve their relationship with customers. But too often, these companies make avoidable mistakes that only serve to further alienate their customers.
In this blog, we’ll take a look at five of the most common mistakes BFSI companies make with regard to customer engagement, and how you can avoid them in your own business. By making small changes to the way you interact with your customers, you can start to win back their trust – and their business. So let’s get started!
#1 Lack of Personalization
Failing to personalize their services and communication to their customers’ needs, preferences, and behavior. Improving customer engagement and customer retention is essential for any successful business. According to a study by the Harvard Business School, increasing customer retention rates by just 5% can lead to a 25% to 95% increase in profits.
Companies should strive to personalize their customer experiences so that they are tailored specifically to each customer’s needs, preferences, and behaviors. Doing so results in increased customer loyalty and long-term retention of the customer base.
A study by Accenture found that 91% of consumers are more likely to shop with brands that provide relevant offers and recommendations. By focusing on personalization, businesses can help ensure a long-lasting customer relationship.
The consequences of not personalizing customer communication in BFSI (Banking, Financial Services, and Insurance) companies can be severe. A PwC study revealed that 41% of consumers switched companies due to poor personalization and lack of trust. Customer loyalty and retention will decline significantly without providing customers with personalized services and communication tailored to their needs and preferences. Customers want to feel recognized and appreciated, which is difficult to do when they’re receiving generic messages that don’t take into account their characteristics.
How does American Express use personalization for great customer engagement?
American Express has been a pioneer in personalizing client engagement with data analytics and AI. American Express personalizes its consumer engagement in the following ways:
- Customized Incentives: American Express uses data analytics to examine each customer’s purchasing habits and preferences in order to provide tailored rewards and discounts.
- Personalized Communication: American Express employs data analytics and artificial intelligence to provide its clients with personalized communication. For instance, it makes use of emails, mobile app notifications, and other lines of communication to let clients know about account activity, make offers, and send out reminders at the appropriate times.
- Personalized Services: Services that are tailored to the needs of the customer include personalized vacation suggestions based on their tastes, personalized financial planning counsel, and personalized customer service, among others. Personalizing services allow American Express to also upsell some of their products and services when they find that their customers are engaged sufficiently with their current products.
- Innovative Tools: American Express provides cutting-edge technologies, such as its “Amex Offers” function, which tailors discounts and offers to clients based on their purchasing habits and interests.
- Social Media Engagement: Utilizing its robust social media presence, American Express engages with clients and provides help. For instance, it provides clients with individualized aid and support via social media platforms like Twitter and also provides them with bespoke resources depending on their interests and requirements.
#2 Poor Customer Experience
Providing a sub-par customer experience by not addressing customers’ concerns promptly and effectively.
Poor customer experience can be detrimental to any business. It’s essential that customer concerns are addressed promptly and effectively in order to maintain a positive relationship between the business and its customers. If a customer is unsatisfied or feels ignored, it’s likely they will take their business elsewhere.
An efficient system for addressing customer issues helps maintain current customer relationships and improves potential prospects for the company in the long term. Establishing trust with every interaction builds a strong, loyal customer base that is more likely to recommend your services and products from the business to their friends and family. Therefore, it’s important for companies to believe in their customers and take action on their behalf if concerns arise to ensure complete satisfaction.
Bad customer experience can lead to decreased customer loyalty, negative word-of-mouth, loss of revenue, increased costs, and potential legal and regulatory consequences for BFSI companies. It is essential for BFSI companies to prioritize the customer experience and foster trust and loyalty.
The case of Navy Federal Credit Union’s exceptional customer experience:
Customers frequently give Navy Federal Credit Union high marks for offering a great customer experience. Here are some instances of how Navy Federal Credit Union engages its clients by focusing on their customer experience:
- Individualized Service: Through its contact centers, online chat, and mobile app, Navy Federal Credit Union provides personalized service to its members. They offer individualized assistance and guidance to its members on a range of financial goods, such as loans, credit cards, and mortgages.
- Easy-to-use Digital Tools: Navy Federal Credit Union has invested in creating user-friendly digital platforms and tools that enable their members to easily manage their accounts, apply for loans, and carry out other financial operations. Thanks to the user-friendly mobile app and website, members may get all the information they require in one location.
- Complaint Resolution: Customer loyalty and trust have been increased as a result of Navy Federal Credit Union’s quick and efficient complaint response process. They have a devoted group of customer service experts who are skilled at handling grievances and finding prompt, effective solutions.
- Member-centric Culture: Navy Federal Credit Union cultivates a member-centric culture that puts the needs and desires of the members first. They constantly solicit member feedback, which they then use to enhance their goods and services. To assist members in making educated financial decisions, they also provide financial education resources and workshops.
- Goods with Innovation: Navy Federal Credit Union offers products and services with innovation, such as a hybrid checking account with high-interest rates and cashback prizes. These products are created to cater to the particular requirements of its members and enhance their banking experience.
#3 Inadequate Communication
Customer engagement also fails when you don’t keep customers informed about their products, services, or any changes in policies or procedures. Poor communication with customers is not only unprofessional, but it can also damage any business. Customers should always be informed of their purchase or service, any changes in policies or procedures, and any new products or services they may be interested in. It is essential to provide clear and timely information, as customers have the right to know when changes occur and what this means for them.
Companies that are transparent and regular with their communications help ensure customer satisfaction and loyalty, which leads to long-term success. Establishing an efficient communication system will help businesses create trust and keep customers adequately informed so there is no confusion or disruption in service.
BFSI companies that do not target users on the communication channel of their choice or use multi-channel communication may miss out on opportunities to engage with customers, leading to decreased customer satisfaction and increased churn. It’s essential for BFSI companies to provide a personalized, multi-channel experience that meets customers’ expectations.
The diversity of Wells Fargo’s communication strategy that aids in high customer engagement:
Wells Fargo engages its clients using a variety of communication tactics, such as:
- Hyper-Personalization: To make communications with customers more relevant, Wells Fargo leverages data and analytics. This involves offering tailored financial advice via digital channels and personalizing marketing messages based on consumer data.
- Multi-channel Communication: Wells Fargo gives its customers the option of contacting the bank by phone, email, social media, or chat. Thanks to this, customers can select the communication method that suits them the most.
- Timely Communication: Wells Fargo delivers clients timely and pertinent information, including account alerts and fraud warnings, to keep them informed. This promotes client involvement and knowledge of their accounts.
- Interactive Communication: Wells Fargo employs interactive material, such as movies and quizzes, to engage customers in dialogue. This keeps clients interested in the business while educating them about financial issues.
- Community Engagement: Wells Fargo actively connects with its customers on social media and has a significant social media presence. This involves promptly and professionally responding to consumer questions and feedback.
#4 Security and Privacy Concerns
Not taking sufficient measures to ensure the safety and privacy of customer data may lead to distrust and loss of customers. In today’s digital world, customers’ security and privacy should be a top priority for any business. Failing to maintain rigorous measures for the safety and protection of customer data can lead to devastating consequences. Not only can it result in legal sanctions, but it can also cause customers to lose trust in the business and look elsewhere for services.
Regardless of industry or size, businesses must comply with cyber security laws, protect customer data, and develop an internal set of measures that provide robust protections throughout the organization. Taking proactive steps toward data security builds customer confidence and ensures that corporate assets remain safe from malware.
BFSI companies must adhere to laws & regulations for financial data security, such as GLBA, SOX, PCI DSS, and FCRA, in the USA; and IT Act 2000, RBI Guidelines on Cyber Security, Payment, and Settlement Systems Act 2007, and SEBI Guidelines on Cyber Security in India. These laws help ensure customers’ data privacy and security are protected. Non-compliance to these laws can result in legal consequences and damage to reputation/customer trust.
How HDFC Bank stays vigilant with customer data to earn their trust:
One of the top private sector banks in India, HDFC Bank, has put in place a number of safeguards to ensure the security and privacy of customer information. A few instances of how HDFC Bank’s data security procedures affect its client interaction are shown below:
- Secure Online Banking: HDFC Bank provides a platform for secure online banking that enables users to log in and conduct transactions from any location at any time. The bank protects consumer data and guards against illegal access by utilizing cutting-edge encryption technologies. The experience is further enhanced by two-factor authentication and fraud detection.
- Data Privacy Policies: To prevent unauthorized access to and use of client data, HDFC Bank has put strong data privacy rules and processes in place. Additionally, the bank gives clients transparency and control over their data, which can promote engagement and confidence.
- Regular Security Audits: HDFC Bank conducts regular security audits to ensure that its data protection measures are up-to-date and effective. It also employs third-party auditors to verify its security systems.
- Customer Education: HDFC Bank educates its customers about the importance of data protection and provides guidelines on how to keep their accounts secure. It also encourages its customers to report any suspicious activity immediately.
#5 Ignoring Feedback
Failing to act on customer feedback and suggestions results in customer dissatisfaction and a lack of trust in the company.
Not soliciting or valuing customer feedback will send the message that their ideas and feedback do not matter and that their customers are not respected. Furthermore, companies that disregard customer feedback miss out on valuable insights into how customers view their brand and the opportunities available to attract new customers and retain current ones.
Listening, valuing, and acting on customer feedback is essential for any successful business. With this information, businesses can create products and services that meet customer needs and create a trustworthy relationship between them and their customers. This type of attentive approach usually results in higher quality services/products, happier customers, and more referrals. Ignoring consumer feedback can result in lost opportunities, lower customer engagement, unfavorable word-of-mouth, and decreased loyalty. BFSI businesses must actively seek out consumer input, respond to it, and use it to spur ongoing improvement and more client involvement if they are to prevent these negative effects.
The impact of proactively seeking feedback on Capital One’s customer engagement:
Capital One employs various techniques to proactively heed user feedback and enhance customer engagement. Here are a few examples:
- Surveys: To get input from customers about their experiences using the company’s goods and services, Capital One frequently sends out surveys to such customers. The business uses this input to pinpoint development areas and direct the creation of new products and services.
- Social Media: Capital One regularly monitors social media platforms for consumer input and promptly and helpfully replies to client questions and complaints. The business uses social media platforms to interact with clients and tell them about new goods and services.
- User Testing: Before launching new goods and services, Capital One carries out user testing to obtain feedback. Before the product or service is made available to the general public, user testing aids the business in identifying and resolving any problems or pain points.
- Data Analytics: Capital One tracks client behavior and preferences using data analytics to spot chances for hyper-personalization. This enables the business to customize its goods and services to fit every customer’s special requirements and preferences.
If you fail to wow your customers and drive conversions, it’s likely because you’re making one or more of these five customer service mistakes. Lacking personalization, poor customer experience, inadequate communication, ignoring feedback, and failing to address security and privacy concerns are surefire ways to lose customers. Ensure you’re not guilty of any of these customer service crimes by using WebEngage’s tools to improve your customers’ experience. Book a demo with us today to see how we can help take your business to the next level.