How to keep your small business customers from switching banks
The economy continues to improve, but that doesn't mean that life is easy for small businesses. Only about a third of all small business owners expect their own financial conditions to improve in the next year, according to a recent Barlow Research report. For most small business owners, the next year is likely to be another year of scrimping and saving and struggling to succeed. And that means they're going to be looking for any place they can to cut corners and boost their profit margins.
Most small businesses are happy with their primary banks. But a growing number of small businesses are considering switching banks. According to Barlow Research, 17% of small businesses are either planning to change banks in the next year, or they're not sure if they're going to stay at their current bank. That's up from 13% in 2008. And another 10% of small businesses already have added a second bank in the past year, a trend holding steady in recent years. Adding a new bank is often a way to test the waters before moving over to a new institution completely. A small business that's opened an account or gotten a loan at a new bank may be at risk for moving over all its business to that competitor.
So what can you, as a trusted community bank, do to hold on to your small business customers? How do you ensure that your customers don't fall into that 27% that are at risk, in one way or another, of switching to a competitor? The reasons small businesses switch banks are pretty consistent, and addressing those concerns could be the difference between maintaining those relationships and watching them walk out the door. Here are three things to focus on to keep your small business customers happy:
1.Customer service. General customer service is the number one reason small businesses give for changing banks. In today's world, the standards for customer service are almost impossibly high. Your small business clients are used to buying things on Amazon with one click. They're used to the frictionless user experience of their Apple products. They're used to getting what they want, when they want it. Moving more of your offerings online is one way to keep your customers happy-particularly your younger customers. Today's small business owner is incredibly busy. They're probably glued to their smartphones 24-7. The more you can help them take care of their banking business in a way that's convenient and fast, the happier they'll be.
2.Fees. The second most common reason small businesses decide to switch banks is high fees. It's understandable-with most small business owners worried about their financial future, it's no wonder they're looking to cut costs anywhere they can. You don't want to be that overpriced item that's sticking out on their balance sheet. Of course, you have to protect your own bottom line as well. That's why it's so crucial that you take advantage of any opportunity to use technology to streamline your own operations, so that you can pass on those cost savings to your customers.
3.Options. The top two reasons small businesses add a new bank are access to additional products and the credit and lending options. Don't let your customers start building a relationship with another bank-make sure that you can offer the options they want and need, particularly when it comes to loan products. An online lending platform can make it easy for small businesses to navigate a wider range of options and find the best loan product to suit their needs. Younger business owners in particular turn to the web to educate themselves about new products. Your online lending platform can jump-start their research in a convenient, accessible way - while freeing up loan officers to answer more complex questions personally.
Don't let your customers' eyes start wandering. Keep them happy and keep those relationships strong by offering them the options and the convenience they need so that they can stay focused on what's most important: making their own businesses succeed. Check out our recent webinar recording, 4 Banking Trends Heating Up This Summer to learn about other ways to retain and attract happy customers.