The Current Trend Of Customer Behavior

Published Date: 02 Nov 2017

Delivered on time – Perfect product delivered to right customer by caring people in wrong time will also be considered and expressed as negative word of mouth. So, delivering product just in time (in the best possible time) with its two predecessors can result and affect bottom line.

Effective problem resolution process – there is no 100% perfect products, product without any defection. Moreover, mistakes are meant to be corrected, learned and not repeated again. Companies strive to minimize any mistakes related to the product and services, but when the mistakes incur, effective problem solution takes a place and must be solved in, with best possible solution and within shortest time of period. Mistakes and problems are not big issues, although their effective resolution is more crucial than anything else and customer do remind if the company react quickly to resolve any problems related to bought product or services.

What types of tools are appropriate for boost up CS in banking sector?

Most recognized tools which are used for boost up customer satisfaction level can be categorized as: Internal tolls such as: Customer surveys, Call centre, Direct customer feedback, Focus group, Free lunch with the customers, CRM (Customer Relationship Manager), CR (Customer Relationship), Observation (mechanical observation and physiological), Experimentation, Mystery Shopping, Complain Book and etc.

External tools are; Questionnaires, Depth interviews, Face to face interview and many others.

Mostly used tool for measurements level of customer satisfaction in banking sector is Mystery Shopping method analysis (highly trained people who imitate real customers purchase’s behavior) and Questionnaires (list of important questions of delivering banking services) usually asked from the mere end users-clients.

Current trend of customer behavior

How to make your customer to stay with you?

Customers are taking greater control of their banking relationships. They are shifting from one to another bank, changing their purchase behavior and requesting more improvements. It is needed to make fundamental changes in basic bank’s activities regarding business of customers. In era of open globalization, customers must feel freedom in making a choice and by making purchases they want. Giving more power to customers may feel uncomfortable, but in the long run banks that do so will position themselves for success in the future.

Customers are taking and having more control

According to the "Global Consumer Banking Survey 2012" customer’s confidence in banking and confidence to stay with the bank fall up to 40%, but only 22% getting more confidence. This is not only case with the US banks, but also with much more mature banks even in EU countries. For instance in Italy 72% in 2012, from 48% in 2011 and Spain 76% in 2012, from 58% in 2011. In emerging market picture is a bit different for example in India, 72% of customers are feeling more confident. Due to leading fundamental global customer behavior it is generally conclusion that customer’s confidentiality fall from day to day.

Customers are more likely to use other banks

Scare of resources is main factor why customers are becoming less loyal of banks they use. Generally number of loyal customers has decreasing negative trend; this is case almost in any mature banking countries. According to the survey overall proportion of customers who are planning to change banks has increased from 7% to 12% since 2011. 50% of them are vey price sensitive and ready to change the bank they used previously. Each day there are less customers who are using only one bank and who are loyal only to one bank, mostly they seek alternative bank which offer better solution, something cheaper and considered as better option.

Customer advocacy is gaining power

Word of mouth is very powerful customer’s tool that they mutually exchange among each other in order to benefit from their experience. They seem like advisor to one another. According to the surveys around 71% of advice they look from their friends. Next, around 65% of making final purchase and decision, customer usually does through the compression of offered opinions. Another very important source is also online communities which is booming trend. Social media impact is on last position with 44%.

Customers want to play an active role in tailoring their products and services

Generally, according to the survey, only 44% of customers say that their banks adapt the products and services which can meet their needs and wishes. Another very important figure shows that around 70% of customers are willing to provide and share with their banks personal information which is helpful to achieve their needs and interests. Customers always expect to get something innovative and something new in return for exchange of provided information and honest feedback to their banks.

There is a question which stated: Why (I as customer) should I buy a product which is not suitable for me, which does not meet my basic and fundamental requirements. ?

Customers want and believe in better value and improved product service

It is not strange in banking sector to hear that customers want as much better services as it possible with the lowest possible prices. They are familiar with the presence of close competitors and globalization, they now have power to act and make changes, so they request more and more. Before decade customers did not see any alternatives, but in this volatile globalized time, they have an opportunity even to bargain and make better deal with their banks and beside that according to the surveys they request changes in pricing system (22%). IT time make different changes in Banking, so customers use this as advantages to make easy transaction and from their sofa make money (transaction). In order to get more potential customer and to make current loyal customers, banks have to strengthen online and mobile banking and as much as possible do updates everyday to make easy u banking. Customers want to be a fundamental part of any bank’s strategy, they are aware that they play an important role in banking globally. Even bank’s procedures and mere applications must be very flexible and very approachable to attract the customers. Call Centers are something new and not any more an innovative services to the customers, nowadays they have a special request so that Call Centers work 24/7 during the whole period of year. Customers push their banks to the limit in order to provide any known channels to make easy banking. Finally, they request very complex transaction to be done just in one click if it is possible, because they have a power to request so.

Banks have to understand that shifting in power is something normal

Banks are competing with one another with their products and services they are offering to the customers, banks are aware of customers power to make purchases in another (competitor’s bank) so they develop new product to attract new comers. Competition is based and developed on different bank’s strategy; one can compete on different customer’s needs, another one with high tech technology, and third one with accessibility and so on. Banks usually have their own target group, so they fully focus on that group to make it loyal as much as they can. For the bank to be competitive it is advisable to have a full range of products that customers look for, otherwise they will leave the bank and probably shift to next one which offer more. For retail business, key factor is personalization of product and services, flexibility in understanding their needs and wants. Also in retail division, if bank can offer more different products and services, so the chances are much higher that customer will stay with the bank. Lower cost and lower pricing system is also advisable tool to attract customers of this segment.

There is no simple solution, but as we look across the industry we see nine key implications:

Give customers more flexibility - Make pricing and service promises transparent

Adequate pricing system for ban means generating profit and achieving planned target, on the other hand pricing is critical for keeping customer satisfaction on reasonable level as well. Customers do believe to bank and usually they do not pay attention on their spending, so transparency must take a place. It is crucial and vital matter to do right and transparent pricing system to your customers, if you only once make them dot to believe you; they will for sure left you and never again come back. Transparent pricing system is also good thing for the shareholders, upon right pricing system bank allows them to make control and transparent review. It is very important to make any information regarding the changes in prices or fees system in advance and do it in best manner, customer do not like hidden messages or lower letter, so be transparent and by doing so you will make your customer better and loyal customers.

Offer segmented levels of customer service

Bank act as shops, more product offered more and higher probability that customer will use (buy) such products and services. Banks have internal segments and according to them make marketing strategy, budgets, and make more space to shift customer from lower level of segmentation (cheaper) to the higher level (more expensive).by offering segments , some customer feel more confident and more loyal to the bank.

Move from multi-channel to Omni-channel distribution

For the customers more important is convenience in do banking business with one bank rather than offered channels in that bank. Banks have to combine more different segments into one fully integrated system, advantages of physical branches and in-person interactions with the information-rich digital channels, it is called Omni channel. Omni-channel distribution leverages customer data gathered from offices and home or host branches, website visits (in case of purchases), CRM systems, Relationship managers program, social media, Call Centers and from all other possible resources from which can be gather information about the customer’s behavior. Today, banks instead of common and regular segments, offer personal and private bank to their customers, which is more attractive and better solution for the customers.

Elements of Omni-channels available today in banking sector

Help customers to shape their experience - Encourage customer self-service

Banks offer financial advices and information how to use their investments in best possible projects. Customer must feel safe, part of the family; part of the brick of bank’s wall, so banks usually advocate, help, support and give best historical proved opinion how to use money in best manner to their customers. Information are so crucial and important to the customer, as bank represent its own information regarding the achievements, annual reports , so they also should do the same to help their customer and to encourage them to use bank’s advices on how to use those useful information to plan and spend their wealth in wise and nest way.

Shift marketing from "push" to "pull"

Depend of the strategy of the bank, but mostly banks did not yet understand importance of word of mouth. Instead of push strategy, it is more applicable pull strategies in which can benefit more quickly and more effectively. Push marketing is dead strategy and do not generate extra profit or loyal customer, however, more attractive and more effective tool is pull strategy which can bring new potential customers. If the banks have satisfied customers, they can be as ambassadors and representations of the banks and they are those who can represent bank’s image in best possible way and convince other potential friends to bank at same institution. For instance BBI bank uses its customer to be representative in Newsletters and by doing so promote self-confidence to other potential customers.

Develop flexible loyalty programs

If the banks enroll into bigger bank, next step is to promote and transform basic (normal) customer into loyal segmented brand image customer. Customer appreciate mostly financial rewards and gifts, they usually accept other gifts like weekend on beach, travel cost to third countries, but due to their capabilities and financial difficulties they are more open to accept financial (money) reward. These rewards are costly off course, but they are so powerful and representative image of the bank which can influence other customers, potential customer or even target other bank’s customers. Each product in global banking has its own rewarding system to the loyal customers.

Shape business models around customer needs

Budget is something that should be achievable with current available resources, but banks have to make their budget to be meet according to the sales and disbursement of the budgeted values according to the real customer’s needs. Do one will buy a product (loan) in the interest rate is the highest among all banks. That product can be best created ever on the market, however if that product is not according to the real and reasonable interest of client’s need it will be rejected immediately from the market. Opening new branches, installing new ATM machines, lunching latest and best online banking software, should be designed and combined with the references of the client itself. It is trend today that banks encourage to use online channels that provide easy business activities.

Prioritize investment on critical customer interactions

Customers do identify a number of bank and according to their particular requirements and interests, choose and pick up the one which provide the best critical activities. If the bank do not interact with its client, so how will be informed about customer’s needs and wants, key element of loyalty program to honesty look into real possible spending of customers and accordingly offer reasonable prices. These steps must be frankly introduced and informed by both sides. Prioritized investments fro side of customers will bring and build loyal customer who is willing to spend more and test new products.

Use innovative technology to deliver the retail bank of the future

The use of cutting-edge technology is something that can link institutions with the client on long run. Omni channels offer a set of products and services that use IT cutting edge technology that provide to the customers all benefits, advantages and offer to prioritize all products on personal level. For instance, today customers can order online VISA Prepaid card with certain and special effects of printing image on card, name of the girl, even to congratulate birthday to the friend. Some banks offer card to their loyal customer made by diamonds and gold (SBER Bank).

Stimulants and appraisal system

As it showed above importance of customer satisfaction, companies are aware of that, thus they do motivate and make stronger those pillars which are making customer satisfaction even more stable and stronger. Those pillars are humans, employees of the company. This relationship is in mutual independent state, if employees of bank are satisfy, they are willing to work in best manner, they are willing to work more, happy, faster, honest and automatically such satisfaction will be reflected on the customers. Generally, satisfy employees means satisfy customers.

Through the stimulants and appraisals tools companies can easily achieve strategic goals and achieve more effective performance of its employees. Companies need continuous improvement and growth, for that they need a tool which will bring them on future stage. Satisfy employee correct mistakes, learn fast and do better. Companies invest into them and mark them as very important part of the company. In traditional approach we can talk about appraisal system for the employees such as (additional amount of money on wages), stimulants (promotions), training, seminars and many others. About customer satisfaction we can discuss only if we already completed and achieved employee satisfaction.

However, in modern approach we can talk about three very powerful methods and appraisals systems:

Performance Appraisal

Effective Commitment

Intrinsic Motivation

Performance Appraisal

Performance appraisal is one of the most important theories of human resources management and is one of the subjects which have been studied and investigated in the psychology of work extremely (Kuvaas, 2006; 504). Strategic goal consist of performance appraisal, it is crucial that has been included in this strategy. There are set up goals, targets, limits and planned values that have to be met, after they are completed periodically (mostly of period of one month), employees will be rewarded for extra and additional value they have created. This type of appraisal is in direct relationship with the work performance. This type of appraisal method measure individual or group performances and accordingly rewards key performance indexes (KPI). In general, if the targeted values are met, performance appraisal took a place.

Effective Commitment

Porto et al (1978) have defined organizational commitment as a partial degree of an individual's identification with the organization and his participation and involvement in the organization. Effective commitment organizations try to stabilize and make stronger. Committed employee is more valuable asset that the one who does the work because he is rewarded to do so. Effective commitment can be understand as emotional and psychical dependence of employee upon the organization. This is important, because if the employee is committed to the company, he feels as strong part of the company (after achieving effective commitment) and feels that he is strongly involve into the company’s business activities so he is motivated to do the best for the company. According to the surveys employees who feel as part of the company or member, they perform more and score successful results. Effective commitment can be linked with the faith, values positive attitude, and strong faithfulness of the organization. Thus, with strong commitment employees stoned themselves into the organization structure.

Intrinsic Motivation

The highest level of motivation is intrinsic motivation. Intrinsic motivation is the motivation for performing of an activity for the individual himself. Intrinsic motivation refers to a specific motivation that usually comes from inside an individual, this motivation is nor as a result of any external or internal rewards, such as performance motivation or effective commitment. An intrinsically motivated person is the one who will work so hard because it is enjoyable and he or she enjoys doing so. Intrinsic motivation is something like internal individual pleasure, person (employee) feel very satisfied motivated when find out solution on current problem. There is no any physical or any other nature of appraisal, stimulants or reward that can cause such motivation, it is simply because of individual’s internal state of pleasure.

Retention

Retention itself has a task providing value to customer continuously and more effectively than the competition and to retain highly satisfied customers. For the retention to be completed successfully, must be fulfilled three core elements; quality, continuity and quantity of delivered value of product and services. Customer will not stay any longer, unless they have a reason to do so. If the organization (bank) follows their needs and wants, customers will recognize that and appreciate by buying more and new products and services. The final result will be increase in number in data base of banking system which is one of the planned targets in any organization.

Furthermore, it is more expensive to win new customers than to keep existing one. Companies are fully aware of it, so they struggle to keep existing customers, make them satisfied, keep close touch with them, develop new relationship, and through the existing customer make an impact on potential customers and so on.

Studies have shown that small reduction in customer defections produce significant increase in profit. This statement clearly has shown that customers are sensitive when mistakes incurred and company’s task is to resolve them as soon as possible, customers appreciate when gap are resolve in their best interest. Quite numbers of tools are available today in market (as outsource) for reduction of defection in banking sector. Thus, there are tools such as; Customer Relationship Manager, Interactive Voice Response, Call Centers, Help desk, and many more.

Four elements of the Retention

Loyal customers buy more products – this allows company to introduce new product and services, increase market share and achieve targets, operational as well as strategic plan.

Second, loyal customer are less price sensitive and pay less attention to the competitor’s product and services. Higher pricing system is not a problem for this type of customers; as long as they are satisfy with the whole organization. They have seen themselves as higher class of customer.

Next, servicing existing customer who is familiar with firm's offerings and processes is cheaper-new updates, versions of new products, now become easier to implement and to be sold.

Lastly, loyal customers spread positive word-of-mouth and refer other customers. According to the analysis, positive word of mouth will be disbursed among 2-3 new potential customers, on the other hand in case of negative word of mouth; 9-12 customers will be informed very quickly.

Customer centric method – future of Banking

Banks must create a positive consumer experience, at the point of sale and post-sale period. Complete bank’s chain from the moment of sale through the moment of post purchase period to the last end moment of repayment (ex. loan), customers must feel confidentiality and reliability.

A customer-centric approach can add value to a company by enabling it to differentiate itself from competitors who do not offer the same experience. Customer must be in the center of any strategy, interest and planned target. They have to be most valuable asset in any company beside the motivated employees. Banks have to tailor the product and services according to the customer’s needs and wants only, not according to their own opinions.