Engagement Is Your Bank's Prime Goal, Not Customer Experience

The terms “customer experience” and “customer engagement” are often used interchangeably. Both are significant contributors to a financial institution’s success, but they are not the same.

“Customer experience” is associated with a moment in time when someone interacts with a brand and reflects the emotional, physical and psychological connection the person feels with the brand because of this interaction. By contrast, “customer engagement” is the ongoing process of building and maintaining a relationship with someone through proactive, continuous and value-driven interactions. Customer engagement is not about a single moment, but the sum of all moments.

“92% of organizations consider having effective customer engagement ‘extremely critical’ or ‘very critical’ to their organization’s success.”

— Harvard Business Review

Customer experience is “one of the primary differentiators” where a brand can exert some control, says a report by Microsoft.

The sum of many positive experiences through ongoing engagement is the holy grail of growing and retaining relationships.

Expectations Play a Role in Customer Experience

Even if your pricing is lower than the competition, your location more convenient, your products “better” and your marketing more impactful, only a good customer experience will make customers want to continue to bank with you over time. A good customer experience is always measured against expectations. Was the customer satisfied, disappointed, angered or delighted? With each interaction, the customer judges whether you met their expectations and needs at the moment.

To make a positive difference, every interaction, across all channels, needs to leave a positive impression. As a result, the entire organization must make the customer the center of their mission. A great customer experience leads to great customer engagement, brand loyalty and advocacy.

Unfortunately, when marketing, product management, operations, branches and customer service operate independently – and are measured by different key performance indicators (KPIs) – delivering a consistent positive customer experience is challenging. This is why monitoring every customer touchpoint and implementing uniform strategies to ensure consistent positive experiences is so important.

The Many Benefits of Customer Engagement

Creating a strong customer experience is imperative in any successful business strategy. However, many industry observers argue that customer engagement is more critical to long-term success for the following reasons:

Customer Loyalty: Engaged customers show a stronger preference for premium products, a lower price sensitivity and more profitable behavior than non-engaged customers, according to Wise Marketer. This helps to explain why customer engagement is not defined in terms of transactions, but includes activities such as endorsements, word-of-mouth promotion, relationship building and active feedback. Gallup also found that loyalty from engaged customers was 25% higher than the average customer.
Brand Advocacy: Not only are engaged customers more likely to stick around, they’re also more likely to actively promote the brand. The same Wise Marketer study found that engaged customers are more likely to recommend a product or service. This word-of-mouth marketing can be very effective and cost-efficient.
Revenue Growth: Gallup research has shown that fully engaged customers represent a 23% premium in terms of share of wallet, profitability, revenue and relationship growth compared with the average customer.
Less Price Sensitivity: Engaged customers tend to be less sensitive to price changes. A study from the Harvard Business Review found that customers who are fully engaged are less price sensitive than those who are actively disengaged.

While focusing on customer engagement can provide these substantial benefits, it’s important to note that delivering a strong customer experience remains a crucial part of creating customer engagement.

What Challenges Impede Customer Engagement?

Attaining a consistent and contextual level of customer engagement requires overcoming considerable obstacles, the largest of which relate to siloed teams and data. These two hurdles are the ones mentioned most often, according to the Harvard Business Review research.

Poor cross-functional collaboration: Organizations often fail to share data and insights widely enough to elevate customer engagement. 44% of executives say a lack of collaboration and siloed efforts are the biggest impediments they have encountered.
Siloed data: Legacy systems and outdated marketing tools inhibit the collection and utilization of the contextual data needed for personalization and customer engagement. Alternatively, while modern cloud technology makes it easier than ever for departments to launch their own applications, the result is often a fragmented landscape of data silos.
Scarcity of talent: Another hindrance to deriving value from customer engagement efforts is a scarcity of proper talent. Nearly one-third (30%) of survey respondents say a lack of in-house customer engagement expertise is a major challenge. Over half (56%) of executives encounter difficulty finding the right personnel to manage customer engagement efforts.

“Too often, organizations put all their efforts into customer service without seeing the bigger picture of customer engagement.”

— Blake Morgan, Industry Analyst

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Ways to Build Stronger Customer Engagement

It can be daunting to create positive customer experiences across all channels and touchpoints when customer data is fragmented into silos within a confusing landscape of independent applications and disparate departments.

However, the right customer engagement strategies can have a massive impact on your business outcomes. These strategies will result in stronger customer engagement in addition to higher customer retention rates – eventually helping you attract more customers.

Digital Transformation: Customers expect smooth, fast and efficient digital capabilities. Banks and credit unions must focus on implementing cutting-edge digital banking services, including engaging mobile banking apps, seamless and integrated payment solutions and digital recommendation engines. This makes it easier for customers to interact with banks and credit unions, thus enhancing the experience and setting the stage for engagement.
Personalization: Use data analysis to personalize services. This can include offering personalized financial advice, tailored product recommendations, and communication that addresses the individual needs and preferences of each customer.
Customer Education: Show empathy for the financial challenges facing most consumers. One way to demonstrate interest in customers’ financial wellness is offering resources and tools they can use. This not only helps customers make more informed decisions, but also helps build trust and engagement.
Multi-channel Delivery: Leverage multiple channels to interact with customers, including social media, email, mobile apps and more. This allows customers to engage with their bank or credit union on their preferred platform, which will enhance engagement.
Reward Programs: Loyalty and reward programs are a common way to enhance customer engagement. Offering incentives for repeat business or referrals is one option.

Both traditional strategies and artificial intelligence tools like ChatGPT can play a significant role in enhancing customer engagement. From answering common queries and providing information, to helping create personalized communication and interactive tools, ChatGPT can be a potential shortcut to success.