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In Financial Services,

You Can Smile Harder and Give Away Gifts, but

Loyalty is Heartfelt


In banking and investing and insurance, many thousands of service-minded people enjoy client loyalty. Yet, most labour under a false basic assumption about why clients are loyal to them or their institution, rather than competitors. Loyalty is heartfelt.


if they continue dealing with you…

The dominant view of loyalty in financial services equates loyalty with simple continuity of service. “If they continue dealing with you, they’re loyal.” This makes sense simplistically. Yet, it lacks a basic understanding of actual loyalty.


This view also supposes that people become loyal to whomever best satisfies their service requirements. “If they can read statements that arrive on time, and find good numbers in them, then you just need to be nice and keep it up.” This makes sense, too. But does loyalty come simply from fulfilling basic expectations and smiling?


Even by conventional wisdom, good investment performance and reliable administration are not quite enough from investment advisors. Indeed, they strive to achieve and maintian professional certifications, to dress for success, and to express value-add perspectives. While this makes sense, too, most of their clients simply assume the diplomas and certifications. To earn their loyalty, people want more.


connectedness the edge

The conventional wisdom lacks edge. That edge: mutual connectedness. Some have it and don’t know how or why. Some credit their office décor, and they might be right. Décor has more draw power in a place with heart, though, where people connect.


True loyalty goes both ways. A client who feels connected goes right past the competitor’s grand opening celebrations to deal with one of their favourite member service representatives at their home branch of their credit union. The Assistant to the Branch Manager at an investment firm’s local office remembers every client and pronounces their names correctly every time. She deals with them as liked, respected members of a gooc cummunity. They would never go anywhere else.


Connectedness transcends financial services professionals’ polished shoes and marble floors. Connectedness trumps tidy, timely admin, also. Connectedness even out-powers return on investment.

In a Gallup Management Journal article, W.J. McEwen and J.H. Fleming write, “Without a strong emotional bond, customer satisfaction is meaningless.” (Customer Satisfaction Doesn’t Count, GMJ, March 13, 2003) So, if one investment advisor’s power suit is less powerful than another’s, it probably doesn’t matter if her clients feel connected to her. Connectedness outpowers free gifts, as well.


beyond incentive programs

Somewhere in North America today, a financial institution is giving away a nifty gift as an incentive for a certain market segment to sign up for a new account or service. For example, a bank is giving away smart phones to young adults who sign up for a new account targeted at young adults. A credit union is giving first-time mortgage borrowers a generous discount on home insurance.


When these incentives become actively competitive, some consumers learn to hold out for better. Gallup: “This might not be profitable. That’s because repeated purchase behaviour has been motivated – or bribed – by a company’s offers of gifts, discounts, or other purchase rewards. These customers aren’t really loyal; they’re just customers who haven’t left yet.” In such promotions, branch managers are generally rewarded on new sign-ups only. Ever wonder how many of those new accounts remain active and profitable?


Some gauge loyalty by frequency or volume of transactions. If these are valid measures, then the loyalty jackpot must include a good measure of profitability. Wouldn’t it be nice if the loyalty grand prize also included mutual liking and trust? If that leads to greater depth-of-relationship or share-of-wallet, then you could make a profit and smile and dispense with trinkets.


let it happen

Enter connectedness. It comes from being real sincerely. It lets clients get real with you, too. In a financial service relationship, that can be rewarding.


Connectedness is not a common concept in financial services. Yet, connectedness is exactly what people seek in all trust-based business relationships. It is a feeling of affinity to likable, trustworthy professionals. Gallup studies link this emotional engagement to lower attrition and higher profits. I see it when investment advisors and credit unions show their true colours in, for example, brand-aligned newsletters and client events.


When you like and trust your client, and your client likes and trusts you, then you have a good basis to solve their problems and earn their loyalty. If you continue to solve their problems and maintain mutual liking and trust, then you can enjoy resilient, mutual loyalty. In time, that proves more valuable than incentive-driven repeat business. It also renders polished shoes and put-on smiles unnecessary.


- Glenn R Harrington, Articulate Consultants Inc.

Glenn R Harrington began working in stock trading on Toronto’s Bay Street in 1987. He joined his first credit union in the same year. He became a licensed Investment Advisor in 1989, then continued in working in financial services before founding Articulate Consultants Inc. in 1996. He has advised clients in the financial services field in relation to loyalty and referral-generation ever since.


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