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Two-thirds of financial service providers don't know why customers are loyal

October 4, 2018

The majority of financial service providers do not understand what is driving customer loyalty, putting customer relationships and profitability at risk, according to a study conducted by Forrester Consulting on behalf of Collinson, a provider of loyalty and benefits platforms.

The study found that 66 percent of decision-makers at organizations with revenues exceeding $300 million do not understand why their customers are loyal or employ a strategy to strengthen customer relationships.

More than half (55 percent) do not have a loyalty strategy with clearly defined business objectives and goals, and 67 percent do not have a framework in place to measure loyalty in the context of overall business performance.

Additionally, 53 percent fail to collect sufficient data needed to understand who their customers are.

Despite these deficiencies, 62 percent of decision-makers plan to increase their spending on loyalty technology during the next 12 months, the survey found.

"When approached correctly, loyalty can act as a powerful tool for brands to build deeper customer relationships, influence spend behavior, and grow their bottom line," said Phil Seward, Collinson senior vice president of loyalty strategy for the Americas. "But first, organizations must be willing to proactively approach measurement to determine if their strategy is successful and analyze how it could be improved for a better return on investment."

The commissioned study was conducted in April by Forrester Consulting on behalf of Collinson. It included 635 respondents in markets that included North America, U.K., Hong Kong, China, India, UAE, Singapore, Brazil, Australia, France, Japan, Korea, Indonesia, Saudi Arabia, Mexico, South Africa were asked 20 questions. Participants were at manager level or above at organizations with revenues of more than $300 million.