8.2 Attracting and retaining customers

Question 1

Features of a product needed to attract and retain customers:

Answer 1

• Satisfies customer needs
• Product designed to suit circumstances
• Sold at fair price
• Customer is fully informed
• Delivered via suitable channel

Question 2

What is a way to assess the quality of customer service?

Answer 2

Measuring the number of complaints received

Question 3

What does the FOS say in regard to high complaints to them?

Answer 3

The difficult economic situation has made people more aware of their rights and more confident about complaining but criticises banks for not improving the way in which they handle complaints

Question 4

Why do personal current account customers complain?

Answer 4

• Electronic transfers and cheques take too long to clear
• Online banking server being down
• Overdrafts are expensive

Question 5

Why do savings account customers complain?

Answer 5

• Low interest rate

- Bonus interest sometimes withdrawn without their being informed

Question 6

Why do investment, pension and annuity customers complain?

Answer 6

• Complex nature of product
• Do not understand returns
• Fees are too high

Question 7

Why do loan product customers complain?

Answer 7

• Harder to get loans

- High arrangement fees

Question 8

Why do insurance cover customers complain?

Answer 8

Insurers go to great lengths to avoid paying claims

Question 9

Example of a loss leader

Answer 9

A service offering advice on financial management

Question 10

Details of HSBC’s ‘MyMoney’ account:

Answer 10

• Aimed at people between ages 7-28
• Customer can open a MySavings account with a minimum deposit of £10
• When customer reaches 11, they are given a current account called ‘MyAccount’ which they use for spending money
• After age of 11, and subject to parents’ permission, they are given a debit card and PIN

Question 11

How did Nationwide counter criticisms of providers not reminding customers when bonus period is about to elapse?

Answer 11

‘SavingsWatch’ - customers who sign up are notified by email or SMS if interest rate being paid on savings changes

Question 12

What is the result of The Co-operative Bank being saved with the help of institutional investors that are not mutuals?

Answer 12

• The Co-operative Group now only owns 30% of the bank’s shares and has lost overall control
• People are scared bank will lose its ethical culture but bank asserts that co-operative principles have been written into its constitution so will not change