Customer retention is crucial for lenders to maximize lifetime value, especially during economic uncertainty. Increasing customer retention rates by just 5% can boost profits by 25% to 95%. However, many lenders struggle with loyalty, as seen in Q2 2024 when mortgage servicers’ retention rates for refinances dropped to 20%, the second lowest in 17 years. Nonbanks and banks also saw significant declines. This is due to increased competition, changing economic conditions, and a lack of personalization.
Key strategies for improving customer retention
Lenders can improve retention by leveraging data for personalization, maintaining consistent communication, offering loyalty rewards, and utilizing retention triggers.
- Leverage data for personalization.
- Use customer data to offer tailored products and refinancing options based on financial behaviors. Using credit attributes, trended data and alternative credit data (alternative financial services data, cashflow attributes, etc.) can help provide deeper insights of your customers.
- Maintain consistent communication.
- Keep customers informed with regular updates about interest rate changes or new loan products.
- Use a variety of communication channels, including email and in-app messaging, to ensure customers are kept in the loop.
- Ensure your customer service team is always available and responsive, offering clear answers to any financial concerns.
- Offer loyalty rewards.
- Develop programs that reward repeat business and referrals.
- Offer special rates or discounts for returning customers or for those who refer friends and family to your services.
- Increase customer lifetime value (LTV) by offering additional services like financial planning or credit score monitoring.
- Utilize retention triggers.
- Identify key events for engagement with automated retention triggers. For example, a borrower who has a mortgage with a fixed rate may be less likely to consider refinancing unless prompted. Experian’s Retention TriggersSM can notify lenders when refinancing might be beneficial to their customer, offering them personalized incentives or new product options at the right time.
Why Experian’s Retention Triggers?
By integrating Experian’s Retention Triggers, lenders can keep borrowers engaged, increase retention, and boost profitability even in tough economic times.
- Advanced data insights: Gain deeper insights into your customers’ behavior to identify those at risk of leaving and take proactive action.
- Personalized engagement: Automate personalized communications based on customer behaviors, ensuring timely engagement.
- Increased revenue: By offering personalized, timely and relevant offers, you can increase the likelihood of retaining your customers and growing your revenue.
Make customer retention a priority
In today’s challenging economic climate, lenders who focus on personalized experiences, consistent communication, and relevant offers will stand out and retain borrowers. Leverage tools like Experian’s Retention Triggers to proactively engage customers, reduce churn, and foster long-term relationships for increased profitability and success.
