For banks, customer experience is a more powerful customer loyalty driver than price- value perception, according to a new report from Forrester Research.
The report, authored by Forrester analyst Maxie Schmidt-Subramanian, said that customer experience accounts for the majority of loyalty among bank consumers. Price-value perception plays just a small additional part in driving loyalty, she wrote.
"Years of Forrester data across multiple industries confirms the strong relationship between the quality of a firm’s customer experience and the loyalty of its customers," reads a portion of the report. "But even we were surprised to see how much more important customer experience is than price-value perceptions when it comes to driving loyalty."
Schmidt-Subranian said banks need to take several factors into consideration in this regard. Firstly, she wrote that price becomes irrelevant if a product or service doesn't meet a customer's needs.
Also, Schmidt-Subramian notes that creating enjoyable interactions for customers also often outweighs pricing considerations. For example, she writes, one reason customers chose credit unions over banks is because of their helpfulness and trustworthiness. "For example, a small business owner who needs to deposit cash or checks at odd hours might first identify the subset of banks that offers ATMs close to work," she writes. "In that case, a bank without nearby ATMs won’t be considered, even if the bank offers free checking."
However, she acknowledged, pricing does impact customer experience, and banks that pursue overly aggressive pricing or those that nickel-and-dime customers can create a lasting negative impact on customer experience. Schmidt-Subramian advises banks that to win over customers, they need to build trust in the transparency and fairness of their rates and fees.