Retail Banks work in complex, changing environments so research needs to be agile to keep pace with new opportunities and risks. One of the great benefits of social insight is its flexibility and responsiveness to sudden changes in research priorities. In this case, a bank poised to reduce interest rates needed to understand the potential risk to its customer base.

What happens when a bank concludes that the interest rate of its flagship savings accounts is not sustainable and a rate cut for customers is unavoidable? When rates fall, customers are more likely to look for alternatives, so the bank has to make a careful calculation between the improvement in its margin and the potential cost of losing customers. The cost of new customer acquisition heavily outweighs the cost of retention. Even the most conservative estimates suggest it costs between 7 and 12 times as much to recruit a new customer than to retain an existing one. It obviously makes good

business sense for banks to keep their customers contented and on-board.  We cannot answer the question with the sentiment scores common in social media reporting. A rate cut for savers is a BAD THING. I think the bank can work that out for itself. In this instance, understanding the underlying attitudes of the customer base and the incremental risk to loyalty is central to quantifying the impact of the operational decision.  This means examining how, when and where customers engage with the rate change, both in terms of what they say and what they do. Our first task was to analyse historic customer… read more »