Why Is Customer Engagement Declining?

As customers increasingly switch to digital channels and reduce visits to the branch, customer engagement is also declining—a situation that could ultimately result in revenue loss, according to a recent report from Gallup, the global performance-management consultant.

Twenty-three percent of banking customers say that they are using online channels more frequently, while 50 percent of customers are visiting a branch less often, the report notes.

On one hand, these trends could result in significant cost savings. On the other hand, less-engaged customers often are a drag on the bank’s bottom line. For example, banks with highly engaged customers often experience a big financial reward: they remain customers longer, bring in more annual revenue, have more products and provide greater wallet share, Gallup says.

Branches, Gallup says, tend to be a greater driver of engagement—far more than either online or mobile channels.

The report says that of customers who maintained their branch usage from 2011 to 2014, 35 percent were fully engaged. But, of customers who migrated from branch to mobile during the same period, only 21 percent were engaged.

Banks not only have to worry about keeping their customers engaged, but also about providing flawless service on each of the proliferating channels.

Gallup offers the following suggestions to keep customers engaged:

  • Match customers to the right channel. Matching customers to their ideal channel has been found to improve engagement.
  •  Determine which channels are engaging than others. Banks need to monitor all channels to determine if any are underperforming in customers eyes—and then fix the problem.
  •  Find ways to improve the customers’ financial well-being. When customers strongly agree that their bank looks out for their financial well-being, 84 percent are fully engaged, while none are actively disengaged.

“Ever-increasing customer expectations can make it difficult for banks to deliver perfect, engaging experiences across every channel. But with commitment and targeted action throughout the organization, bank leaders can meet challenging customer expectations and reap the benefits of having fully engaged customers,” say the report.

Click here to read the full report.