Younger Generation of Customers are Less Loyal to Banks

Banks Must Shift Gears to Attract and Retain Gen X and Gen Y

ST. LOUIS, July 22 /PRNewswire/ -- Banks' most loyal customers are their
oldest customers, while Gens Y and X are the retail banking customers of the
future. They're also the least loyal and hardest to please, according to a
recent Maritz(R) Poll. The results revealed more than half of Gen Y (61
percent) and Gen X (53 percent) respondents have considered changing or
actually have changed their primary banking institutions in the past two
years, compared with 20 percent of Silent Generation and 37 percent of Baby
Boomer customers.
"For the most part, the current customer experience model at banks caters
to the Silent Generation and Boomers, who more frequently bank in-person at
branches. But, younger generation customers are much more mobile and rely
more heavily on online interactions," says Thad Peterson, division vice
president, sector strategy and solutions for Maritz' financial services
sector.
"The banks' most unstable relationships exist with younger customers,
because younger people often haven't settled into a stable financial pattern
yet," explains Peterson. "Banks looking to build long-term relationships with
Gen Y and Gen X customers need to think about three basic steps:
#1) Attracting Gen Y and Gen X as customers in the first place --
Locational convenience has always been the primary tool for attracting new
banking customers. That's no different with Gen X and Y, but the definition
of locational convenience is changing. Now it includes online and mobile and
they expect anytime anywhere banking. Banks need a strategy to attract and
retain prospective customers who rarely step into a banking office.
#2) Identifying and offering products and services that give young people
roots at the bank -- like providing incentives for online bill paying services
and debit rewards programs.
#3) Treating them the way they want to be treated. Ensure that the
customer experience is appropriate for Gen X and Gen Y, and consistent at all
major bank touch points."
In general, the survey results show that younger people can be more
impatient, less tolerant and just plain harder to please than their Baby
Boomer and Silent Generation cohorts. The survey, which looked at customer
satisfaction and loyalty among retail banks, found that younger customers also
are more likely than older customers to find fault or have problems with their
primary banking institutions:
-- 37 percent of Gen Y and 36 percent of Gen X believe they would get
better customer service at a different bank, compared with only 24 percent of
Boomer and 16 percent of Silent Generation respondents.
-- 22 percent of Gen Y and 21 percent of Gen X reported being upset in the
past year about high fees, whereas only 14 percent of Boomer and six percent
of the Silent Generation respondents reported the same.
-- 18 percent of Gen Y and 17 percent of Gen X reported being upset about
a lack of ATM locations, compared with only 11 percent of Boomer and three
percent of Silent Generation respondents.
So How Do You Woo the Gen X and Gen Y Customer?
It is no longer uncommon practice for businesses to reach out via social
media in an attempt to attract these younger customers. Even companies like
American Express and Bank of America are using social media networks like
Facebook to try to connect with Gen Ys. Peterson advises companies against
relying too heavily on social media as a way to initially reach younger
customers.
"Using Facebook to attract new customers is like standing in a corner
passing out business cards at a cocktail party," says Peterson. "If you don't
have a genuine relationship with them, all you are going to accomplish is to
diminish the value of your brand to that individual."
If social media isn't the way to the "promised land" of Gen X and Y's
loyalty, then what is? Peterson has some suggestions:
-- Be the source for their first primary debit card - Gen X and Y comprise
the debit card generation.
-- Highly incent them to migrate to online banking with a significant
reward for paying bills online.
-- Make sure front-line employees are treating Gen X and Y the way they
want to be treated and can solve problems on the spot -- a key to securing
lifelong patrons.
-- Stay in tune with how younger customers want to connect -- online
banking, bill pay and mobile banking are three customer touchpoints that must
be state-of-the-art and part of every bank's overall customer experience.
Peterson notes that Washington Mutual is one institution that successfully
caters to the needs of younger customers. WaMu no longer requires a signature
to open a checking account. The bank simply uses the first signed check as
the authorization signature -- incenting new customers to do business with the
bank by simplifying the process and eliminating a trip to the bank. It
appeals to the Gen X and Y customer desire to just "get it done," says
Peterson.
"Banks need to listen to the younger generations," says Peterson. "It's
critical for them to stay ahead of the curve and build good relations with
younger customers. After all, they're the future of the bank."
About Maritz(R) Poll
Maritz(R) Poll is a copyrighted poll conducted since 1988 by Maritz
Research. Maritz Poll comprises regular surveys on topics related to the
automotive, financial services, hospitality, retail, technology, and
telecommunications sectors as well as workplace issues. This poll was
conducted in February 2008. The 1008 respondents were split evenly between
males and females and randomly drawn from a national e-mail panel. Sampling
error for the overall poll is +/-3 percent. Results of the poll may be used in
print or broadcast media, provided credit is given to the Maritz Poll and/or
Maritz Research.
About Maritz
St. Louis-based Maritz is a sales and marketing services company, which
helps companies achieve their full potential through understanding, enabling
and motivating employees, channel partners and customers. Maritz provides
market and customer research, communications, learning solutions, incentive
initiatives, meetings and event management, rewards and recognition, travel
management services and customer loyalty programs.
For more information, please contact:
Jennifer Larsen, Maritz
jennifer.larsen@maritz.com
636-827-1523

SOURCE Maritz

Jennifer Larsen of Maritz, +1-636-827-1523, jennifer.larsen@maritz.com