In the United Kingdom, as in the U.S., huge year-end bonuses for senior financial services executives remain a source of much controversy. There's obvious merit behind the contention that rewards should be commensurate with performance. But there's also merit behind the argument that "performance" should reflect a company's long-term health and not merely what happens in a given year.
One critical determinant of long-term business health isn't just the number of customers a bank might have but rather the number of engaged customers. Engagement is much more than satisfaction. Engaged customers have a strong and even passionate connection to the banks with which they do business. They view their banks as being essentially irreplaceable.
Gallup research has shown that these engaged, emotionally connected retail bank customers are highly profitable. They maintain higher balances and buy more products. They're less price-sensitive, more responsive to cross-selling, and more resistant to competitive overtures. Engaged customers are what a bank should be seeking. (See graphic "How Engaged Are Your Customers?")
Alas, the current state of banking relationships in the U.K. is marked by a good deal more disengagement than engagement. A Gallup survey of 1,311 U.K. retail banking customers conducted in late 2009 reveals that only 15% of customers are fully engaged with their current bank. At the other extreme, a frighteningly large 38% are actively disengaged, feeling totally disconnected from the banks that supposedly serve their needs and count on their patronage.
This means that almost 4 of every 10 U.K. customers are essentially alienated from their banks, and that's more than twice as many as are fully engaged. Of course, not all U.K. banks perform identically. Some are a good deal better than others when it comes to connecting with their customers. But the U.K.'s overall retail banking customer engagement levels are disconcerting. In fact, a clear majority (69%) contends that "all banks are about the same." That belief represents a major obstacle for any U.K. bank. After all, it's hard to connect emotionally with a commodity. (See graphic "Grim News for U.K. Bankers.")
It all happens in the branch
And yet, despite the difficulties in crafting a differentiated offering in a crowded category where product features can be readily mimicked, some banks have managed to create feelings of engagement among their customers. What are the factors that, despite the seeming odds, have helped some banks build a strong and enduring customer bond?
Even amid the impressive array of sophisticated technology options that banks offer customers for transactions and investments, the single most powerful contributor to an engaged banking relationship remains the customer's branch experience. Though the average U.K. banking customer visits his or her branch infrequently -- fewer than one in five visit at least once a week -- those visits have a potent effect on the overall customer relationship. For example, customers who are extremely satisfied with their most recent branch visit are more than 15 times more likely to be fully engaged with the place where they bank. In clear contrast, customers who are thrilled with their bank's mobile banking capabilities or its website are only two to four times more likely to be highly engaged. (See graphic "The Branch Still Matters Most.")
Can technology enhance a relationship? It absolutely can. But the rubber truly meets the road when a customer steps into a branch. And that's a daunting challenge -- fewer than half (46%) of the customers we spoke with reported being extremely satisfied with their most recent branch visit.
What are the critical components of the branch experience that make it such a powerful determinant of the engagement -- or disengagement -- of the typical U.K. retail banking customer? It's not the décor, the color palette, or the layout, though all of these can certainly help make a customer feel welcomed and at ease. It's the people. Banking customers who say that their interactions with branch personnel made them feel that the bank wants and appreciates their business were almost 16 times more likely to be fully engaged. Those who felt that they were treated with courtesy by people who made their visit easy, pleasant, and productive were 12 to 15 times more likely to join the ranks of the fully engaged.
Power to the people
The traditional four Ps of marketing (product, place, price, and promotion) all play a part in generating customer engagement. But they pale in comparison to the role played by a bank's fifth P, its people.
What makes a branch-level employee go that extra mile? What motivates employees to use their discretionary efforts at each customer encounter, demonstrating genuine appreciation for the customer's time and business and really "living the brand"? It's not just a question of providing a standard script for an employee to recite perfunctorily. Each interaction must be heartfelt and authentic, and customers can tell when it's not.
And so a fundamental requirement for creating engaged customers must be a strong cadre of engaged branch-level associates who are informed, enthused, and empowered brand ambassadors. After all, as we've learned in case after case, employee engagement breeds customer engagement -- just as employee disengagement breeds customer disengagement. It's contagious.
The enduring value of any bank, whether it's in the U.K. or anywhere else, derives directly from its ability to engage customers to the point where they find the bank irreplaceable. Therefore, it's important to remember that this essential -- and profitable -- outcome is not driven primarily by executives in boardrooms but rather by the people at the bank who regularly interact with the customers. Their actions either strengthen or jeopardize customer engagement. The bank's brand -- indeed, its very future -- is in their hands.
Power, prestige, and rewards may deservedly go to the bank CEOs who chart a course in storm-driven seas. But, of equal import, homage is also due to the frontline associates who ensure the future health of the bank -- every day.
Survey Methods
Results are based on telephone surveys completed by 1,311 adults, aged 18 and older, conducted in the fall 2009. For results based on this sample, one can say with 95% confidence that the maximum margin of sampling error is ±3.0 percentage points. Margins of sampling errors vary for individual subsamples. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
