Case Study: How A Bank Reduced Churn by 11% by Understanding Clients’ Crucial Concerns

Banks are used to framing themselves as superior experts, but this might actually be hurting them. A UK bank found that becoming more supportive reduced churn and increased market growth.

In this article, you’ll discover:

  • Why providing more banking apps can actually hurt you;
  • Why “dumbing it down” doesn’t make banks less professional but more engaging; and
  • How to encourage agents to talk to customers in a way they appreciate, but that call scripts can rob them of.
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London. 2019. The atmosphere in the boardroom of a commercial bank is tense. Everyone can see the elephant in the room, but no one can quite believe it: the results are in from a new campaign that absolutely everyone had high hopes for. Now, they’re all wondering the same thing: “How could something that was supposed to improve customer retention has made the problem even worse?”

That can’t be right! Have you checked the numbers? Alas, the person presenting the results has. Double, even triple-checked them, in fact. 

Now it was time to face the music; the new campaign, which had led to a further 8% market loss on top of the original one, was an absolute disaster!

But what exactly went wrong? Did the bank insult its customers? Raise prices or interest rates? No. The bank simply tried to show its clients they could trust them! 

Yes, you heard it right! They did something which seemed to make sense, and which many of us would probably have tried as well. But now seeing the impact it had, the boardroom was stunned. So much so that they asked for a second opinion. 

Simon Moore, from Innovationbubble, a behavioral consultancy asked to fix the carnage caused by the initial campaign, will walk you through what went wrong and why many “good on paper” solutions can actually make things worse. You’ll learn why trying to demonstrate superiority and dominance by creating new apps and gadgets might actually put off clients.

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Customers say they don’t trust banks, but they don’t trust themselves. 

Let’s back up and tease out what led to this blunder. 

The agency that the bank initially hired to help decrease B2B customer churn did customer research and came back with the reason why people left. It raised very few eyebrows – customers inherently distrusted financial institutions. Makes sense.

The bank took it at face value and decided to come up with positioning to make people trust them more. They picked out facts and figures about their long-lasting history, the type of big names they had attracted and what a great range of products they offered. 

The bank also thought that, in order to be trusted, they should invent new apps to help customers manage their money more easily. So they did. But these well-intended interventions were doomed to fail and destined to exacerbate the problem.

The bank thought that, in order to be trusted, they should invent new apps to help customers manage their money more easily. But these interventions were destined to exacerbate the problem.

And this, as Moore explains, led to confusion: “It didn’t make sense. The target group had told us they didn’t trust us. We had done some positioning around trust and we lost even more.”

But Moore’s team was about to find out that the reason was quite simple: the problem the campaign addressed was not the real problem. And, to add insult to injury, the subsequent communication around trust unwittingly made the real issue (which was at the bottom of customer churn) even more prominent. 

To look beyond what customers were saying (which apparently didn’t add up), the team of behavioral scientists conducted deep psychological interviews followed by quick unconscious testing.

The interviews with B2B, B2C clients, and prospects helped them to map out all the things that could potentially influence whether they would open an account or not (and what they did and did not want from a bank account). But they also discussed broader subjects - such as money, what it meant to them and how to manage it.  

Based on initial inputs from the interview, the team put together a list of factors that could be influencing decisions. These included pragmatic concerns, such as value and quality, but also emotional things, such as how the product made people feel. 

The next step was to employ EMOTIX©, a bespoke online engine, to figure out how powerful each factor actually was - or, as Simon describes it, an online tool that would enable them to cut through the noise.

He says the first response you usually get from people when you ask why they aren't buying something is the price – “it’s too expensive.” (This could perhaps explain why brands are obsessed with shouting price at customers, a penchant which is quite damaging.)

But, as Moore points out, there are other reasons apart from the price that might cause someone to say something is too expensive. So why do people use that as an excuse? It's hard to argue when the problem is the price (unless you have a talent for haggling and live in Marrakech). 

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EMOTIX, a 5-minute online test, allowed Simon’s team to look beyond what people were saying; to differentiate between things that they thought might be influencing the decision (but were not) and those that actually did have an effect.

This tool allows behavioral experts to see not just how people assess different factors, but how quickly they do so. And that part is crucial. As Moore goes on to explain, the quicker your response is, the more intuitive it usually is. 

They found there was a significant difference between what people said and how they really felt; they claimed not to trust banks, when in fact their nonconscious revealed that they actually didn't trust themselves in managing their money.

 EMOTIX allows companies to see where there is a difference between what people really think and feel (the nonconscious) and what they say they think and feel (the conscious). Source- Innovationbubble
There was a significant difference between what people said and how they really felt; they claimed not to trust banks, when in fact they actually didn't trust themselves in managing their money.

Simon says that most people know two things about their account: when they get paid and when they go into debt; if you asked them what their interest rate is, or how their money gets invested, most couldn’t say. And this causes shame, which can have a significant impact on behavior. People wouldn’t admit they didn’t know how to manage their money; it was easier to go to someone else. 

As Moore points out: “If you are not confident in managing your money, the worst thing I can do as a bank is to give you a lot of new things to do! The bank was making it worse because they thought: we’ll give them all these apps to show them how great we are, so clients can manage their money quickly and easily.

But people thought: “I don’t know how to manage my money anyway, but I’m not telling you that because it’s embarrassing. I’ll just go somewhere else.”

Simon says that most people know when they get paid and when they go into debt; if you asked them what their interest rate is, or how their money gets invested, most couldn’t say.

Now that the team had got to the bottom of things, the next step was to figure out how to address customers’ concerns. The real challenge was to do so in an industry obsessed with the holy trinity of making people feel less intelligent: “professionalism”, appearances and jargon. 

Improve customers’ confidence

How can we make customers feel like the bank is making them more informed and confident? 

If people aren’t confident in what they are doing, giving them more tools to “go digital” only undermines their confidence.

Moore says that being supportive as a bank is what drives engagement, rather than showing off how smart you are for having invested in lots of new technology and apps. That’s because if people aren’t confident in what they are doing, giving them more tools to “go digital” only undermines their confidence.

Innovationbubble’s team decided to change the bottom line of the communication across all touchpoints. But it was not just a shift in framing, it was a completely new and freeing paradigm. 

The main message revolved around the key customers’ need - a bank that doesn’t make them feel stupid

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They essentially assured people, Moore says, that it was OK not to know how to manage finances and that most other people don’t know either. The key sentiment was “It’s very common - you shouldn’t feel bad about it. But this is how we as a bank can help you build that confidence up.” he adds. 

Provide jargon-free & useful advice 

This reassurance was present in all the new materials the bank produced, from online sessions and videos to PDFs they sent to customers. This way they could learn about a specific topic at their own speed and from the comfort of their own home. 

Online tutorials explained the basics of how to think about a bank account - all the things people need to know. Jargon-free cheat sheets about investing offered handy tips about what everything meant and what to bear in mind. 

Although banks are notoriously reluctant to speak in a simple way because they worry that if they dumb it down too much they won’t be respected as experts, Moore points out that, in fact, the opposite was true.

Once they came down to a more basic level, people almost breathed a sigh of relief: “Oh, now I know what you mean! I had no clue before, but I didn’t want to tell you coz I would have felt stupid. I just thought everyone was supposed to know this stuff”. 

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The bank also took a gamble and sent these materials out to all its customers. You might be worried reading that - wouldn’t it rub people who know how to manage their money the wrong way? 

No, because we only pay attention to what is relevant to us to the exclusion of everything else. That’s why you can address different customers with a single message line. 

Moore says that when they followed up on the financially confident group, they found the opposite. Their emotional association with the bank had positively increased. Even though these customers didn’t need the advice, they appreciated the fact that the bank was trying to be helpful. 

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Reverse existing social norms & create unity 

To make sure the same message got across at every single touchpoint, Innovationbubble designed training workshops for customer-facing and digital staff to strengthen their ability to support customers rather than demonstrate the superiority of leadership. 

They showed them how to be sympathetic and to allude to the fact that we (the bank) understand that finances are difficult, that most people don’t understand money, and that's not a problem: “Just because we are into money doesn't mean you (as a customer) should be. But we can help you to manage your money better,” was the main message.

The bank created a different kind of social norm by saying: Don’t worry a lot of other customers like you have had the same issue and have done this and that, and it helped!

This created a different kind of social norm, one which made customers relax, instead of feeling uncomfortable or out of place. 

They also used it to reassure customers this was the right course of action by saying: Don’t worry a lot of other customers like you have had the same issue and have done this and that, and it helped!

Moore confesses they even upped the ante and instructed the staff to admit “I’m like that too.”

Most banks think that is the worst thing to say, but this creates Unity – a principle investigated in depth by Robert Cialdini in his bestselling book Influence – which helps to drive engagement.

This was especially true when this “confession” was followed up by a success story and an extended invitation: “To be honest, I didn’t know much about finance, but I’ve been at the bank for a while now. I’ve learned and I can pass that learning onto you. That’s my job - to let you in on the journey I’ve been on!”

Using Unity can work wonders when trying to decrease churn, even when customers are prone to make emotionally-driven decisions. Like deciding to drop out from a subscription service they think they no longer need. 

The mistake banks often make, Moore says, is that they try to gain customers by showing they are superior to the competition. But by telling customers “We know what we are doing, listen to us,” they actually drive them further away. 

This know-it-all approach is not just bad for customers, but for staff as well; they enjoy being more human and having a normal conversation with someone instead of having to keep their expert face on. That’s why the new approach was appreciated by staff members, who also liked sharing their progress with customers (because who doesn’t like boasting, right?).

An 11% reduction in churn & a 6% increase in market share

The bank rolled the solution out and measured it over the following 16 months. They found that engagement went up and so did market share. The bank decreased churn by 11%, and on top of recovering the losses of the previous campaigns, they increased their market share by 6%. This meant they had started gaining customers from other banks!

There was also a significant reduction (17%) of the burden on customer call centre time, as they received fewer calls because customers were becoming more educated.  

All this came about because they understood what the real problem was and took a chance on communicating it in a way that few competitors dared to.  It meant being the opposite of what most banks think they should be - less complex, less fancy, less “expert”. And it worked. 

Key takeaways: 

  • Don’t underestimate the power of customer research. Behavioral principles are not a panacea. First you need to know what the real problem is. In this case, the bank tried behavioral science, but applied it to the wrong problem - and it made things worse.
  • Don’t assume everything is clear. A customer who has unanswered questions is not a converting customer. Investigate what might not be clear, even if the customer doesn’t ask for clarification (either because they’re unable to online, or embarrassed).
  • Enable your customer-facing & digital staff to support customers. Instead of broadcasting aloof expertise, make sure to inject comments that create unity early on in the conversations. 
  • Investigate social norms around how you communicate your product. Do they support your bottom line and offer reassurance? Or do they cause customers to feel inadequate?

Simon’s bonus tip: 

  • Be careful about new apps and pushing for clients to get more digital. Before launching a new app/digital initiative, keep in mind that giving customers more to engage with can actually make them more stressed! They may want you to do the opposite – simplify things and make them feel like they know what they’re doing, rather than give them more tools for tasks they don’t know how to do to begin with. 

Introduction of an expert
  • Case study by
  • Simon Moore
  • CEO, Innovationbubble