Countries covered: United Kingdom
Historically, financial services providers have enjoyed a truly enviable reputation in terms of their customer retention levels. Indeed, in the past, once an organisation had recruited a customer they could reasonably expect that it would be the start of a long and fruitful relationship, with the vast majority of consumers content to remain devoutly loyal to their chosen supplier. This was largely a consequence of the high level of customer inertia that has traditionally characterised the financial services industry, allied with strict regulatory controls which severely restricted competition in each sector of the financial services market.
The last few years, however, have witnessed a period of dramatic and far reaching change within the financial services industry. Deregulation, the advent of new technology, a sharp intensification in competitive pressures and a shift in the balance of bargaining power away from the supplier and towards the consumer, have all combined to produce a significant increase in the incidence of customer disloyalty. This has resulted in the established financial services players having to focus increasingly upon the issue of customer retention in an effort to stem the flow of customers leaving their organisations.
Indeed, in an effort to combat the growing number of customer defections financial services providers have tried to develop a deeper understanding of their customers and attempted to identify the key reasons why so many have been tempted to switch to alternative suppliers. The ability to maintain existing customer relationships has therefore become increasingly important as financial services organisations have battled to maintain profitability levels in the face of an increasingly competitive marketplace. Accordingly, the development and implementation of effective customer retention strategies has become a vital task for all financial services companies.
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