Trust has always been the foundation on which a relationship is built on, and is the key ingredient to bridge that connection between customer and brand promise. With that said, have you ever wondered what you are most loyal to? And if so, which industries do you think do it best? In a recent study conducted by Manifesto Growth Architects, we uncover the reality of what the average consumer is most loyal to, and piece together why that may be. 

So why brand loyalty?

Given the economic turmoil that the UK has experienced in the last few years, we’ve had conversations with professionals in the Financial Services industry, who have noted they’ve seen a decrease in consumer trust. Specifically, consumers have lost confidence in their banks – lowering the amount of cash they have in their current accounts. Evidenced by a report from the Bank of England highlighting banknote circulation close to a historic high in Q3 2022, with 60% of the population holding more cash as a store of value. Compounded with an ever decreasing cost of switching of Current Accounts, this leads to one conclusion: banks of all types (incumbents, challengers, and fintechs) need to reconnect with their customers and recapture the trust that had been lost.

The key to creating a deep relationship with the customer lies within what we call a lived experience. Creating a lived experience that mirrors the brand promise means understanding that there’s value to be unlocked behind every customer interaction. But also understanding that some interactions hold more value than others across the customer life cycle. 

Here’s what we found…

In the survey we conducted, we interviewed 250 individuals and asked them a simple question, rank the following in order of who you are most loyal to: Internet Provider, Gym, Hairdresser, Coffee Shop, Clothing brand, Insurance provider, Bank, Supermarket, or Newspaper/app. 

The results were generally unsurprising, with people placing ‘banks’ as their second most trusted industry. Traditionally we would associate Finance Services with a high degree of trust, with people remaining loyal to their everyday bank due to a longstanding relationship with the brand. This is evidenced by the fact that to this day 20% of Brits still use the same bank that their parents chose for them when they set up their first current account. However, a majority of individuals felt more loyal to their supermarket than their banks. Moreover, when we compared it with a previous study , we found that supermarkets were already leading the rankings with a ‘Loyalty Index’ score of 49%.

This suggests that supermarkets have, for a while, optimised the loyalty drivers in their propositions that address customer needs which consequently builds long lasting relationships. Another interesting insight that could be drawn when comparing the two surveys is the positioning of Financial Service on the loyalty index. In the survey conducted by Business Insider, the Financial Service industry ranked 6th with a Loyalty Index score of 35%, whereas in our more recent survey, Banks ranked 2nd overall. 

To understand why this may be, we also asked participants what were the key factors that influence one’s loyalty.

Our results show that ‘trusting’ a brand and ‘value for money’ are the most important factors to a customer. This aligns with our hypothesis that to build a winning, trusted, consumer-centric proposition, you first need customers to buy into your brand – particularly in times of financial hardship. 

There are many components of trust that give consumers confidence: Intent, Integrity, Capability, and Results. These components add up to deliver a trusted experience, but there’s also the understanding that each component delivers varying levels of value depending on the economy. For example, in a thriving economy, individuals may place more emphasis and seek companies that focus more on Intent (transparency, caring, openness) and Integrity (honesty, fairness, and authenticity). While in times of uncertainty individuals may lean towards Capability (experience, knowledge) and Results (reputation, credibility). Understanding and adapting to this dynamism is critical to the success of delivering a trusted experience to your customers.

Our research suggests that grocery stores are leaders in adapting propositions to cater to these specific trust components, namely: value for money, convenience, and quality of products. These may be things that you can draw parallels with within the Financial Services industry, but the key differentiator here is the ability to adapt propositions to meet the constantly evolving needs of customers. Grocery stores are quick to adapt to changing market prices, sometimes dynamically changing prices multiple times a day! To the average consumer, this certainly instils a sense of getting the most value for your money and that your grocery store is ‘looking out for you’. On the contrary, banks (particularly incumbents) are generally slower to react. Banks certainly don’t evaluate their value proposition on a daily basis. So what inspirations can banks draw from the grocery stores to feed into their own propositions to create a trusting customer-centric proposition?

It’s time to connect the dots

With incumbents having the capital to offer acquisition incentives for example Santander – free £175 when you open a new current account. It’s now more crucial than ever to ensure your proposition builds trust and credibility to keep retention rates as high as possible. 

While the solution may not be as extreme as changing the cash incentives for a current account. Or interest rates on a savings account multiple times a day as seen with their supermarket counterparts, there’s certainly significant upside to staying agile. It’s critical to understand the fundamental differences between supermarkets and banks. Supermarkets work on regular basket size and footfall and as a result build more transactional relationships with the customer.

Banks should seek to maximise value at all stages of the customer life cycle. Cash incentives certainly giving a boost to acquisitions, banks should be careful not to reduce customer lifetime value by giving money away. To build trust differently, banks should seek to remain agile with market conditions across the whole customer journey, and it starts with understanding the customer. Firstly, connecting with the customer to identify needs and prioritising those needs. Second, reevaluating the value exchange to ask the question: does our value proposition address those needs across the whole customer life cycle? Finally, how can we deliver our revised proposition to the customer?

To find out more… read our thinking on“Mind the gap: Have financial services lost the human touch?”