The Churn Challenge: Four big ideas for banks and credit unions looking to drive down attrition
While banks and credit unions struggle with a steep 15% annual customer attrition rate, new research across 764 marketing campaigns reveals promising solutions. By combining sophisticated data analytics with personalized customer engagement, financial institutions can cut churn by more than a third. The study, examining 5.8 million customer contacts, found that dual-channel marketing and strategic onboarding yield impressive results – with combined email and direct mail campaigns achieving nearly 7% response rates.
Understanding and managing attrition is vital for most businesses’ long-term success — impacting revenue, profitability, and overall growth. But it matters especially in competitive categories like consumer financial services, where differentiation is low and customer acquisition costs are high.
Banks and credit unions lose on average nearly 15% of customers and members each year, according to industry reports and studies. For many it’s a more-than-stubborn challenge. But getting control of your attrition rate is within reach of any financial institution, provided it’s willing to put its data in the service of deeper customer ties.
“Consumers are inundated with communications all day, every day,” Sue Schabert, Vice President of Reporting and Analytics at Marquis told The Financial Brand. “It’s vital that a financial institution taps into as much data and insight as possible to beat others to the punch, to build a meaningful customer relationship.”
To get to the heart of the churn challenge, Marquis — a Plano, Texas-based marketing and compliance solutions provider for financial institutions — examined 764 marketing campaigns that reached 5.8 million contacts for banks and credit unions over the past year. One big takeaway: Using data related to socio-economic profiles and customer behavior can help cut Marquis client average attrition rates by more than one-third of the national attrition average.
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