Loyalty in Financial Services - UK - February 2016
“Loyalty is a confusing concept for consumers. There is indecision as to how to best measure loyalty and how it should be rewarded. This causes challenges for providers as it is difficult for them to devise loyalty strategies which will be popular with customers.”
– Deborah Osguthorpe, Head of UK Financial Services Research
This report looks at the following issues:
- Shopping around is a valued activity, but clear and tangible benefits are needed to make consumers switch
- Consumers will embrace online service, but the bonds with brands will weaken
- Consumers are confused about loyalty
Financial services companies have a poor reputation for rewarding their customers’ loyalty in comparison to other industries. This is, in part, linked to the lack of trust between consumers and finance providers as a result of the numerous malpractice and mis-selling scandals over the years.
The nature of certain financial services markets also affects the perception of loyalty in consumer finance. For example, new customer offers and bonuses such as those offered by current account, credit card and savings accounts providers can suggest that firms place a higher value on new customers than retaining loyal ones. At the same time, widespread use of tools such as price comparison websites makes consumers more likely to switch provider rather than show loyalty to a particular brand.
While consumers are showing less loyalty to brands, they still feel that product providers should show loyalty to them. Providers face a challenge in working out how to respond to changing consumer attitudes towards loyalty. Some companies have moved away from new customer benefits and incentives, instead choosing to adopt a more equal and consistent approach among their customer base. Others have sought to develop more profitable and loyal customer relationships by incentivising people to take out multiple products with an existing provider. The increased role of online interaction between consumers and providers, which tends to create less personal and deep-rooted customer relationships, is another growing challenge.
This report looks at the role of loyalty in financial services and consumer attitudes towards it. Mintel’s exclusive consumer research looks at how perceptions of rewarding loyalty differ between various industries, both in and outside of financial services. The report also looks at customer switching activity in various financial markets, before looking at the impact of online services on loyalty and consumer attitudes towards them. Finally, general consumer attitudes towards loyalty in financial services are examined.
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