Survey Shows Companies Are Focusing More on New Buyers Instead of
Taking Care of Current Customers
Stamford, CONN., August 8, 2002 — Customer retention must be the
No. 1 priority for financial services’ CRM strategies, but a new
survey by GartnerG2, a division of Gartner, Inc. (NYSE: IT and ITB)
showed that acquiring new customers is often the main goal.
In the first quarter of 2002, GartnerG2 surveyed 117 U.S. retail
marketing departments in the financial services industry (banking,
investment, insurance and credit cards) via the Web to state their
According to the survey, the primary marketing focus for retail
financial services marketing departments was on new customer
acquisition at 43 percent, or cross-selling at 30 percent. Customer
retention was the No. 1 priority among just 9 percent of those
surveyed. GartnerG2 analysts said this is a major mistake among
financial services organizations.
“Customer retention should be the first line of defense
in a financial services provider’s CRM strategy,” said Kim Collins,
director at GartnerG2. “However, most financial services
companies do not even have a clear definition of customer attrition,
less a way to accurately identify and respond to early
warning signs that a customer is likely to exit.”
Many financial services providers often miss
opportunities to drive retention and loyalty because they focus CRM
gaining revenue through cross-selling. However, if a
company’s churn rate is high, cross-selling is not that effective.
GartnerG2 analysts also pointed out that acquiring new
clients costs nearly five times more than retaining an existing one.
average, that’s $280 spent to find a new customer vs. $57
to keep one. If you are losing high-value customers, the costs go up
substantially to acquire a new customer and grow that
relationship to the same level,” Collins said.
Retail financial services companies must put more effort
into monitoring customers, and identify and respond to early warning
signs, such as the removal of key services, such as
direct deposits; changes in channel usage, such as declining branch
increases in foreign ATM transactions; and the steady
diminishment in accounts over a period of time.
“These events might signal a change in financial status
that could put the provider at risk,” Collins said. “Careful
determine what is a retention opportunity versus a risky
GartnerG2 recommends financial services companies develop
a retention strategy to identify risks before a customer leaves.
“For example, use event-triggering and state-based
technologies to recognize important events or changes in customer
that are leading indicators that signal likely
defection,” Collins said. “Provide enhanced services, advice and
better product bundling
to boost loyalty among high-value clients. Communicating
with the customer on their terms based on their contact preferences
about their financial interests will go further than
larger marketing efforts.”
GartnerG2 is a research service from Gartner that helps
business strategists guide and grow their businesses. For more
information on the report and about GartnerG2 services,
please visit www.GartnerG2.com.
Additional analysis on the CRM market will be discussed
at the Gartner CRM Summit September 18-20, 2002 in Chicago. During
Summit, Gartner will present its CRM Excellence Award.
Nominations for this award are being accepted via an online entry
Gartner clients and nonclients who demonstrate excellence
in CRM initiatives and illustrate a specific end-user implementation
CRM. Gartner is currently accepting nominations for this
award through August 23, 2002. More information on Gartner’s CRM
Excellence award and the online entry form are available
About Gartner, Inc.
Gartner, Inc. is a research and advisory firm that helps
more than 10,500 clients understand technology and drive business
growth. Gartner’s businesses consist of Gartner Research,
Gartner Consulting, Gartner Measurement and Gartner Events. Founded
in 1979, Gartner is headquartered in Stamford,
Connecticut, and has 4,000 associates, including 1,200 research
consultants, in more than 90 locations worldwide. Fiscal
2001 revenue totaled $963 million. For more information, visit