8. Customer Retention and Marketing Techniques

Question 1

What does attrition mean?

Answer 1

Losing customers

Question 2

What does it mean when we refer to a bank’s ‘Churn rate’?

Answer 2

This is a measure of customer ATTRITION.

I.e. the number of customers who DISCONTINUE a service during a specified time period, DIVIDED BY THE AVERAGE TOTAL NUMBER OF CUSTOMERS over the same time period.

Question 3

How has digital distribution affected banks’ churn rates?

Answer 3

Made it easier for customers to transfer from one service to another, so churn rates are becoming a greater concern.

Question 4

Which of a bank’s employees are responsible for sales?

Answer 4

ALL STAFF MEMBERS WHO COME INTO CONTACT WITH CUSTOMERS, not just sales staff. Contact can be either DIRECT or INDIRECT.

Question 5

What can frontline staff do to limit attrition?

Answer 5

Gather information from conversations with customers, e.g. if customer mentions that they are looking to buy a car soon, they can sell them a loan rather than them going to a competitor

Question 6

People are now much less likely to visit a branch to withdraw cash or open an account in person due to developments in technology. What are the 3 most common reasons for people needing to visit a branch now?

Answer 6

1. Organising a mortgage
2. Organising life insurance
3. Investments

Question 7

Which is more profitable for a bank: acquiring new customers, or selling to existing customers?

Answer 7

Selling to existing customers = less acquisition costs and admin time spent.

Question 8

True or false: sales staff tend to find it easier to sell to existing customers than to new customers

Answer 8

True - cross-selling or upselling

Question 9

What are the main benefits of retaining long-term customers? (5)

Answer 9

1.Less inclined to switch
2. Less inclined to be price-sensitive (b/c they value their relationship with bank)
3. More likely to purchase additional products (potential for future business)
4. May introduce new customers - advocates
5. Track record already held - so easier to process new business

Question 10

What are the 6 main customer retention strategies that a bank can use?

Answer 10

1. Targeting customers for retention
2. Bonding
3. Employee culture
4. Service delivery
5. Building trust
6. Service recovery

Think: BEST BS

Question 11

How can a bank target customers for retention?

Answer 11

Identify which customers the bank wishes to retain to maximise sales and profits, this is done via SEGMENTATION

“Use of segmentation techniques to identify the current and future value of relationships” - Activity 8.1 definition

Question 12

How do banks use bonding as a customer retention strategy? What are the limitations of this? How can banks overcome these limitations?

Answer 12

This is when banks create stronger links with their customers.

This is usually initially done by offering FINANCIAL INCENTIVES, e.g. DISCOUNTS/LOYALTY SCHEMES/REWARD OFFERS/INTEREST-FREE PERIODS.

Doesn’t work in the long term as customers usually have multiple providers and can switch easily as soon as someone else advertises a better offer.

However, banks can attempt to overcome this by offering FREQUENT, TAILORED COMMUNICATIONS e.g. TARGETED MARKETING based on customer data, delivered by MEDIUM THAT BEST SUITS THE CUSTOMER (e.g. if customer uses internet banking, then pop up ads are more likely to be effective than mailshots).

“Use of targeted marketing campaigns and other communications to start to form relationships with customers” - Activity 8.1 definition

Question 13

How can banks use employee culture as a customer retention strategy? (4)

Answer 13

All employees should be CUSTOMER-CENTRIC, TRAINED, TECHNICALLY COMPETENT AND MOTIVATED TO DELIVER HIGH QUALITY CUSTOMER SERVICE

“Use of training to ensure staff are sufficiently customer-centric and motivated to deliver high quality customer service” - Activity 8.1 definition

Question 14

What can employees do to help retain customers?(6)

Answer 14

1. Display good interpersonal skills
2. Keep promises
3. Be willing to help
4. Inspire confidence
5. Treat customers as individuals
6. Ensure physical aspects of products/services give a good impression (e.g. office, uniforms, documents)

THINK: HIP PIC

Question 15

How do banks use service delivery to help to retain customers? (4)

Answer 15

1. Be constantly evolving
2. Use technology to reduce costs
3. Have an awareness of customers’ customer service expectations & have systems in place to measure whether these are being met
4. Make realistic delivery commitments

“Use of a bank’s infrastructure and systems to meet its obligations to customers” - Activity 8.1 definition

Question 16

Building trust is one way that a bank can help to retain customers. What factors should be considered when trying to achieve this? (5)

Answer 16

1. Reliability
2. Credibility
3. Communication
4. Empathy
5. Putting customer interests first

“Use of empathy and other relationship tools to demonstrate a commitment to customers over the medium to long term” - Activity 8.1 definition

Question 17

How can banks use service recovery as a means to help customer retention?

Answer 17

“Use of effective techniques to quickly rectify problems and to restore customer confidence” - Activity 8.1 definition

e.g. strategies of how to restore customer faith in company when things go wrong.

Staff should:
1. encourage customer feedback/complaints
2. be the voice of the customer within the bank
3. apologise/assure the customer that they are being listened to
4. ensure the problem doesn’t affect other customers

Question 18

What is meant by “prospects”?

Answer 18

Term used for potential new customers

Question 19

What does Acquisition mean?

Answer 19

Acquiring new customers

Question 20

What are the 4 key sources of customer acquisition? Which is most desirable? Why (2)?

Answer 20

1. Customer Referrals (existing customers referring) MOST DESIRABLE
2. Internal Referrals (other areas of the bank referring)
3. External Network Introducers
4. Cold Calling (by staff)

Customer referrals most desirable because:
1. the product/service is being endorsed, people are more likely to join with a positive mindset
2. people tend to refer people like themselves , so if customer usually maintains satisfactory accounts the referred is more likely to do the same.

Question 21

Which source of customer acquisition is used mainly when acquiring business from those within corporate banking?

Answer 21

External Network Introducers

Question 22

What tool can a bank use to maintain a network of external introducers?

Answer 22

Social media, post articles to remind them of products & services

Question 23

What are the stages of the Lead Management Process in relation to customer acquisition? (7)

Answer 23

1. LEAD SOURCES
   - where the leads come from, e.g. customer referrals, internal/external referrals, cold calls
   2.LEAD GENERATION
   -after potential source has been identified, strategy for how to convert this into an actual lead
2. LEAD QUALIFICATION
   - make sure lead is actually a customer the bank would want (done within head office before case gets referred to front-line staff, not to waste their time)
3. LEAD DISTRIBUTION
   - allocation lead info to staff within bank, records kept of contact made and stops same person being contacted twice.
4. SALES CYCLE
   - lead shows interest in product, staff member sells this to them. Efficient admin needs to be carried out so sale can be processed.
5. CLOSE
   - sale completed
6. RELATIONSHIP MANAGEMENT
   - Ongoing management to generate additional leads from same person in future, retaining the customer

Question 24

What is the main risk of frontline staff focusing on customer acquisition?

Answer 24

Focusing too much on acquiring new customers could risk valuable existing customers being neglected/lost

Question 25

What is the success rate for banks trying to sell to existing customers (as a percentage)?

Answer 25

60-70%

Question 26

True or false - less than half of companies are able to measure customer lifetime value accurately.

Answer 26

True

Question 27

What is the most successful and ethical sales technique for banks to use when selling to customers. Why?

Answer 27

Needs-based sales.

Customer recognise the bank has sold them the best product for them, not just to make the most profit - this builds relationship of trust and helps to retain the customers.

Question 28

What are the key skills required for assessing customer needs? (5)

Answer 28

1. Listening
2. Non-verbal Communication
3. Empathy
4. Rapport
5. Questioning Skills

Question 29

True or false - assessing customer needs can only be delivered in a face-to-face setting

Answer 29

False, can also be delivered digitally or by phone

Question 30

What are the two main signs that someone is not fully listening?

Answer 30

1. Asking for information that has already been given
2. Recounting information incorrectly

Question 31

Good listening is when someone listens Actively. What are 4 techniques that can be used to show active listening?

Answer 31

1. Saying “yes” / “mm” regularly (but not too much).
2. Summarise what the customer has said at regular intervals.
   - e.g. “Can I just check my understanding”, “as you said…”
3. Echo words & phrases used by the customer (without sounding like a parrot)
4. Ask follow-up questions relating to what has been said

Question 32

Why is non-verbal communication important during face-to-face delivery?

Answer 32

Facial expressions and body language need to match what is being said or the customer will sense there is a problem.

Question 33

True or False - non-verbal communication is not important during delivery over the phone?

Answer 33

False - body language affects how our voice sounds.

Question 34

How can you manage the sound of your voice over the phone? (6)

Answer 34

1. Relaxed open posture
2. Unfolded arms
3. Shoulders back
4. Smile/relaxed facial muscles
5. Slow, calm breathing - to avoid sounding nervous.
6. Stand up - to sound clearer or gain confidence when dealing with difficult people.

Question 35

What is the most effective way of communicating with a customer digitally? Why?

What is the second most effective way of communicating with a customer digitally? Why?

What is the third most effective way of communicating with a customer digitally? Why?

What is the least effective way of communicating with a customer digitally? Why?

Answer 35

Most effective = VIDEO CALL as this is the most personal and similar to face to face. Most visual and human.

Second most effective = AUDIO as visual is lost but voice retains the human element.

Third most effective = SOCIAL Media. This is good for developing an online community but is unable to develop particularly deep relationships.

Least effective = TEXT-BASED COMMUNICATION. This is dehumanising and often leads to confrontation. Okay for transmitting data but not good at building relationships. Overused.

Question 36

Define empathy.

Answer 36

The ability to share another person’s emotions as if they were our own.

Question 37

Define sympathy.

Answer 37

An affinity or harmony, usually feelings or interests between persons.

Question 38

Empathy or Sympathy: which requires you to agree with the other person’s point of view?

Answer 38

Sympathy.

Empathy is putting yourself in someone else’s shoes, regardless of whether you agree with them.

Question 39

Why is using empathy when communicating important? (5)

Answer 39

1. Demonstrates you CARE & UNDERSTAND
2. You LEARN MORE about the speaker’s CARES AND CONCERNS
3. Demonstrates that you are ALLOWING THE SPEAKER TO VENT THEIR EMOTIONS AND FEELINGS
4. Helps to DIFFUSE THE SITUATION
5. Underpins a GOOD RELATIONSHIP

Question 40

What steps can we take to build empathy? (5)

Answer 40

1. Take NEEDS AND CONCERNS SERIOUSLY
2. Place VALUE ON FEELINGS AND ATTITUDES
   - allow people to express feelings openly without judgement
3. RESPECT EXPERIENCES, BELIEFS AND VALUES
   - accepts other people’s values differ from our own
4. RESERVE JUDGEMENT
   - pay attention to what is being said & tone of voice, rather than trying to form links to what is already known and pass judgement.
5. SHOW INTEREST
   - don’t lose concentration

Question 41

What would prevent empathy in communication? (5)

Answer 41

1. COMPARING
2. REHEARSING WHAT TO SAY in response rather than listening
3. DELETING - listening to some things and not others.
4. PREJUDGING
5. PREOCCUPATION/MIND WANDERING

Question 42

Define Rapport.

Answer 42

A relationship in which people are able to understand each other’s feelings very well.

Question 43

Why is building a rapport beneficial when communicating with customers?

Answer 43

People are more likely to trust those who think and speak like them.

Question 44

Matching and Mirroring are two techniques that can be used when communicating. What do these techniques help to achieve?

Answer 44

Help to build a rapport. People usually like people who are like themselves or who they want to be.

Question 45

What methods can be used to build a rapport over the phone? (10)

Answer 45

1. Ask a prospects NAME and use it
   - shows you care enough to remember
2. Maintain POSITIVE BODY LANGUAGE
   - improves tone. Sit up & smile.
3. LISTEN ACTIVELY
   - take notes & repeat back what has been said
4. Ask OPEN-ENDED QUESTIONS
   - how, when, who, why?
   - requires more than a simple response and opens conversation
5. POSITION YOURSELF
   - explain who you are & how you can help
   - know the product/service/industry well
6. PROJECT YOUR VOICE/ARTICULATE
7. BE POSITIVE/SOLUTION ORIENTED
8. SHOW EMPATHY not sympathy
   - “I see what you mean…”
   - creates trust
9. ARTICULATE THE PURPOSE/DESIRED OUTCOME of the call
10. MIRROR, MATCH, PACE, LEAD
    - if they speak slow, so should you.
    - use similar vocab

Question 46

What type of information are closed questions good at collecting?

Answer 46

Factual information

Question 47

What type of information are open questions good at collecting?

Answer 47

Feelings, opinions & less specific information

Question 48

Which types of question should you use when trying to summarise a conversation or close a sale with a customer?

Answer 48

Closed questions

Question 49

Are the following examples of open or closed questions?

“So what you told me was…..?”
“Your total income is….?”
“Would that solve the problem for you?”
“Are you ready to sign the form?”
“If I could arrange that, would you be happy?”

Answer 49

Closed

Question 50

Are the following examples of open or closed questions?

“How much is your monthly income?”
“What would outcome are you hoping to achieve?””
“Why are you looking to switch products?”

Answer 50

Open

Question 51

Which type of question is best for building a rapport? Open or closed?

Answer 51

Open

Question 52

What are three common mistakes made when questioning customers? (3)

Answer 52

1. Impatience - not allowing time to respond
2. Multiple Questions - leads to confusion
3. Long Questions - leads to confusion

Question 53

What are the steps of the Consultative Sales Process in order? (5)

Answer 53

1. Identifying leads
2. Gathering Information about the customer
3. Identifying customer needs
4. Recommending Solutions
5. Obtaining Commitment to Buy

Question 54

When should the Consultative Sales Process be followed - when dealing with regulated sales, or non-regulated sales?

Answer 54

Non-regulated. Regulated sales require a more in-depth process.

Question 55

Bank staff need to gather information from customers during the sales process. What information do they need to gather? (4)

Answer 55

1. Existing and future needs
2. Ability to provide for needs
3. Attitude towards providing for needs
4. Customer objectives

Question 56

How do banks identify leads? (2) Which method is better?

Answer 56

1. PROACTIVE
   - bank conducts annual reviews with customers to find out how they are doing/if circumstances have changed. Can lead to cross sales opportunities.
2. REACTIVE
   - Customers initiate contact to request new product/service

Proactive is better. Lack of contact from the bank can be seen as indifference and allows competitors to secures leads first.

Question 57

Are most retail sales considered high or low involvement? What does this mean?

Answer 57

High involvement. Means more questions need to be asked/more information gathered due to the level of risk involved.

Example = mortgage application process.

Question 58

During the sales process, once a customer’s needs have been identified, what must the bank staff member do with this information?

Answer 58

Link it to the products/services on offer and communicate any potential benefits that could meet the customer’s needs.

This is NOT the same as just telling the customer about the product’s features, it is EXPLAINING HOW THE FEATURE ACTUALLY BENEFITS THE CUSTOMER.

A product feature - 24 month term
A product benefit - Ability to spread the cost over 24 months, this reducing the customer’s monthly outlay.

Question 59

What is a benefit statement?

Answer 59

A tool that sales staff can use to help the customer to understand/appreciate the solution that is being recommended for them.

Question 60

What information should always be included by sales staff when making recommendations? (5)

Answer 60

1. PRODUCT PURPOSE & WHICH NEEDS IT WILL ADDRESS
2. PRODUCT BENEFITS
3. RISKS & LIMITATIONS
4. Any appropriate PRODUCT OPTIONS AVAILABLE
5. SUMMARY - of reasons why the product is being recommended

Question 61

What phrase can sales staff use to ensure a customer-oriented approach when linking a product feature to it’s benefits?

Answer 61

“Which means that…”

Question 62

Which is the most important part of the sales process?

Answer 62

Obtaining commitment to buy/closing

Question 63

A customer’s commitment to buy is determined by… (2)

Answer 63

1. The customer’s REACTION to the proposed solution
   - look out for clues that they are ready to commit e.g. “sounds good to me”, “how do I go ahead?”
2. The customer’s UNDERSTANDING of the proposed solution

Question 64

What should sales staff do once an agreement has been reached? (2)

Answer 64

1. Thank the customer
2. Deal with any administrative tasks needed to finalise the sale

Question 65

What are the main reasons for customers objecting to advice? (5)

Answer 65

1. Lack of understanding
2. Lack of interest
3. Misinformation
4. A need for reassurance
5. Genuine concern

Question 66

Should sales staff tell the customer “not to worry” if they object to the advice given

Answer 66

No, this doesn’t address the concern

Question 67

What should sales staff do if a customer says they’ll “think about it” after advice has been given, rather than making a decision?

Answer 67

Validate their opinions - “it’s an important decision, of course, you must be sure”

then try to clarify what their hidden concern/doubt is through diplomatic questionning

Question 68

What are the three main techniques for handling an objection to advice? (3)

Answer 68

1. Qualify the objection
2. Ask the objection back
3. Agree & counter

Question 69

What does “qualifying” an objection mean? How do you do this?

Answer 69

Finding out whether it is a real or false objection & how important it is.

Clarify what the customer means by paraphrasing the objection back to them “so what you mean is….”

Question 70

If when qualifying an objection it appears that the problem is a lack of understanding, what should sales staff do?

Answer 70

Provide better explanation

Question 71

If when qualifying an objection it appears that the problem is specific and the customer is not willing to move on this, what should sales staff do?

Answer 71

Put obstacles into perspective and stress any compensating factors.

(agree and counter)

Question 72

What do we mean by asking the objection back? Provide an example.

What is the purpose of this/when is it suitable to use this technique?

Answer 72

Asking the customer for elaboration/to define the objection better.

E.g. if customer says “I don’t think your product is as good as someone else’s” ask them what they mean by “good”.

This is used when the objection is vague and you need to determine whether the objection is real or whether it is just an excuse.

Question 73

What do we mean by “agreeing and countering” when handling an objection to advice? Provide an example.

What is the purpose of this/when is it suitable to use this technique?

Answer 73

The “Yes, but…” technique

“Yes, I agree that value for money is important and our product is slightly more expensive than that one initially, but you will find that the day to day running costs & annual maintenance adds up to less in the long run”

Used when an objection is based on fact. You agree their compensation is valid but highlight any compensating factors.

Question 74

Why is after sales care essential? (3)

Answer 74

1. To ensure that the customer is happy with the product or service they have bought.
2. Strengthens the bond with the customer/helps with retention (Shows you care)
3. Can lead to other sales opportunities being identified

Question 75

What is the “over-time” aspect?

What can sales staff do to overcome this?

Answer 75

Customers take a product’s benefits and features for granted over time. They start to notice any limitations of benefits.

Overcome by reviewing a customer’s ongoing perception after sales & review potential new opportunities with the customer.

Question 76

When trying to cross-sell to customer, which of the following should you do?

A) Carry on the interview as normal and ask a few closed questions at the end
B) Develop a rapport and pick up on what the customer has said throughout the interview and link the sale to this.

Answer 76

B