The advent of predictive analytics has come as a boon for all businesses across industries. More so for the ones in the banking, financial services, and insurance (BFSI) sector.
When it comes to predicting customer behavior during specific events, banks and financial institutions need to be on their toes.
Most of them have relevant customer data and they just need to study the patterns to predict behavior. To quote Carly Fiorina, ex CEO of Hewlett-Packard— “The goal is to turn data into information, and information into insight.”
That pretty much sums up what predictive analytics is all about. Interestingly, the foundation of predictive analytics was laid in the BFSI sector.
As per an archival report, Lloyd company used predictive analytics way back in 1689 to underwrite insurance for sea voyages.
The British banking and insurance behemoth used data sets of previous journeys to evaluate risk and predict liability patterns.
Over the years, banks, financial institutions, and insurance companies used predictive analytics for various different purposes. One of them is for retaining as many customers as possible.
In this blog post we will discuss why customer retention is crucial for BFSI organizations and how predictive analytics can help in retaining a large chunk of customers.
If you are in the banking and finance sector, this blog can be extremely insightful for you. So, let’s dive right into it.
Why Customer Retention is Important for BFSI Organizations?
In today’s age, when customers literally are spoilt for choice and many of them don’t hesitate to switch over to a competitor if they experience a bit of inconvenience, it’s extremely important for banks, financial institutions, and insurance companies to retain as many customers as possible. Here are some reasons why customer retention is important for BFSI organizations.
1. More Cost-effective Than Customer Acquisition
Depending on which study you choose to believe in, acquiring a new customer is five to seven times more expensive than retaining an existing one. To put things into perspective, if a bank has to spend, let’s say a hundred dollars to retain an existing customer, it has to spend anywhere between five hundred and seven hundred dollars to attract a new customer!
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2. Increased Customer Lifetime Value
When banks and financial institutions manage to retain a substantial number of customers over a period, then they benefit from increased lifetime value. The customers who stick with the banks and financial institutions bring them more business and enhance their bottomline. So, it’s a no-brainer to guess why customer retention is far more cost effective
3. To Build Trust
Let’s suppose there are two banks of identical size. Both have almost same assets under management (AUM), employee strength, number of customers, and everything in between. However, one manages to retain more customers than the other. On the other hand, the latter manages to attract more compared to the former. Which one would you trust more? The bank that has more loyal customers, of course.
4. More Referrals
Isn’t customer retention an unfair advantage from a marketing and advertising perspective? Well, here is how it’s; on one hand banks and financial institutions that retain more customers don’t have to spend as much as their counterparts who intend to serve the same number of customers over a year-on-year basis. On the other hand, some loyal customers indeed refer the banks to their family and friends, which is practically free advertisement for the lenders! That’s a double-win situation.
How Predictive Analytics in Contact Center Software Can Help BFSI Organizations Improve Customer Retention?
We have already discussed that some extremely successful BFSI organizations used predictive analytics long back. But today, all of them can use it and they must. One of the best ways to do so is through a sophisticated contact center software solution, which can enable them to monitor customer interactions in real-time. Let’s take a look at how predictive analytics can help BFSI organizations enhance customer retention.
1. Early Identification of At-Risk Customers
Predictive analytics in contact center software can analyze certain telltale patterns such as reduced engagements, interactions, frequent complaints, negative sentiments, and all the factors in between, which can drive customers to switch. When banks and financial institutions can identify all customers who show a higher chance of leaving, they can take corrective actions and enhance retention.
2. Predicting Customer Needs
Would it be surprising to know that predictive analytics can come in handy to predict customers’ needs? Banks and financial institutions can leverage predictive insights to forecast what their customers need in the future. It could be an investment plan, a loan, an insurance policy, and more such financial products. The more accurate the forecasts, the higher the chances of customer retention.
3. Monitor Customers’ Sentiment in Real-Time
Predictive analytics in contact center software can help banks and financial institutions monitor live calls and analyze customers’ sentiments in real-time. If contact center agents find something amiss, they can seek suggestions from managers or supervisors immediately and salvage the situation.
4. More Tailored Responses
When it comes to tailoring responses for highly discerning customers, predictive analytics in contact center software can prove to be extremely useful. It can help contact center agents analyze customers’ preferences, past behavior, transaction history, and more such relevant details and personalize interactions as per the available information.
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Taking Everything Into Consideration,
Isn’t it interesting to know that the BFSI sector has pioneered predictive analytics? The organizations in the industry need to predict customers’ sentiments and behavior on a regular basis.
Some decades back, using predictive analytics wasn’t as simple as it’s today. Banks, financial institutions, and insurance companies can do so just by investing in the right technology tools such as contact center software solutions.
If you are in the BFSI sector you must make sure that you handpick the right contact center software for your organization. By doing that, you will have a competitive edge and can manage to retain a majority of your customers for a long time.
