Banking on advocacy: how the rise of utility and experience is reshaping loyalty

Customer loyalty is perceived to be falling, but were bank customers ever really loyal? It’s true that pre-digital customer lifetime value (CLV) for banks and financial services could have been measured by the length of a person’s lifespan rather than the lifetime of a commercial relationship. Value could have even exceeded a single customer’s lifetime: children and grandchildren who had accounts opened for them would often stay as well.

However, loyalty was largely passive: the length of the relationship didn’t indicate genuine brand affection. Underpinning that loyalty was a complex interplay between security in the familiar, the complexity and hassle of switching and an individual’s financial literacy. Advocacy was by default and limited. It relied on the same circumstances that discouraged switching. It applied to a relatively narrow circle of influence.

Today, loyalty must be actively earned through relevance, trust and customer-focused journeys. The good news is that the reward for financial service companies who get it right is active advocacy that can reach more people than ever.

“A few might mourn the loss of the ‘one bank for life’ world, but the dramatic shift led by digitisation has created greater opportunity to win more customers, earn loyalty and build strategies that drive active advocacy,” says Andrew Davies, Strategic Partner at krow. “When customers get the full service or utility that they’ve been promised, and more, there is often genuine delight, and that creates strong advocates willing to share widely.”

“Lower switching costs have a benefit for banks too,” says Kirstin Wilson, Client Partnerships Director at krow. “While dissatisfied customers find it easier to leave, the same mechanism makes it far easier for advocates to draw new customers in. With enough vocal advocates, brands can take advantage of the bandwagon effect and help coalesce consumers into a vibrant community around a brand, like Octopus or GiffGaff, and create a social pressure to lock them in.”

Monzo has cracked the code: 67% of their new 2.4 million customers gained in the past year came from word of mouth.^[5]
Advocacy is crucial, because it delivers social proof of a brand’s efficacy and plugs them directly into the trust economy.

We know from Edelman’s Trust Barometer that only 61% of consumers trust banks, while 76% trust technology companies.^[6] As banks increasingly become technology businesses, that trust gap can be closed with the help of advocates.

And the influence of advocates goes beyond their personal network. Before committing to a financial product, 84% of consumers needed to know that others have had a good brand experience.^[7] So before they even have a personal encounter with your brand, their perceptions and expectations are being shaped by platforms like Trustpilot and Reddit, as well as ‘finfluencers’ such as Martin Lewis and the FinTok community.

An advocacy-first strategy opens up the abundant opportunities to build and nurture an active fan base that will go in and fight for your brand in these spaces.

The advantage of the neobanks and tech-led brands is that they have built both their business and brand in tandem, making sure that the whole business is working under the same strategic vision – whether the brand aims to delight customers with pleasant surprises during their customer journey, or get their customers from A to B in as little time and fuss as possible. Customers are blank slates; once the brand has proven its worth, activating the advocates is easier.

The challenge for established brands is that they have to prove themselves to customers who have seen behind the curtain. Changing their perception takes strong leadership to overcome indifference, cross-purposes and resistance to any strategic business shift. However, the goal of creating advocacy by winning over existing customers can be a strong common purpose that works across internal teams.

To build customer advocacy, financial service companies must first advocate for the customer. Here, marketing departments and agencies can use their skills, expertise and consumer insights to guide development across other teams. Many tech firms pride themselves on breaking down the silos between operations, product and marketing, as well as other areas of the business, to create a unified strategy.

Whether they’re the result of digital or product innovation, customer journeys need to be shaped by teams who understand how to turn positive experiences into lasting loyalty. There are solid business reasons for doing so, as research from Temkin Group shows; improving customer experience can generate $816m in additional revenue over three years for a $1bn-revenue bank.^[9]

Humans seek to belong to groups and tribes. Creating a community isn’t just a case of setting up a forum for customers to talk online; it’s a space that needs to be nurtured and listened to. The start is understanding the common purpose that unites the community. For example, active customers are united around Octopus because they want to save energy and support sustainability.

Communities need a stake, too. They must have a sense of ownership and be actively engaged in decision-making and co-creation. Younger generations increasingly ask what they get in return for their community participation: an attitude that can be summed up as ‘if I’m going to stay, I want a say’.

Monzo sought to make customers feel like part of the dev team by sharing their road map for public discussion,^[13] and continues to engage with their community to develop new products and improve functionality. It’s estimated that 45% of Monzo’s users have participated in the community forum.^[14]

Active involvement brings the brand closer to customers, creating a greater emotional stake in the success of the brand. Advocates become primed to engage outside the brand’s community and authentically promote it in places where brand marketing would struggle.

It’s tempting to design advocacy without the brand strategy, but when they dovetail together there’s a greater resonance in customers’ minds that amplifies the effect. Just consider when you were last driven to advocate for a brand:

• What prompted you to stand up for the brand?
• Was it clear what the brand stood for and how you should advocate for it?

Businesses must be clear about what kind of advocacy they want to inspire from the outset, so that change can be designed around delivering it. Do you want customers to judge the brand against efficiency (how fast they can do it) or experience (how they feel when doing it)? If you don’t decide, the market will decide for you.

“The rise of utility as a driver for customer loyalty and advocacy has turned the whole customer experience into a potent marketing tool,” says Kirstin Wilson, Client Partnerships Director at krow. “Adapting to this means greater collaboration that keeps the customer at the centre, with product and technical development, behavioural insights, marketing strategy and more all working in tandem. It all starts with a vision for what advocacy should look like.”

While technology can make many banking processes invisible, keeping the customer at the heart of everything is critical, regardless of which strategy a business employs. Marketers can bring their customer insight and creativity earlier in the innovation process to understand and help shape the next iteration of the customer journey.

When communicating a utility strategy, there’s a danger that comms and marketing become functional. However, by keeping the customer at the heart of everything, even utility-focused messaging can connect in emotionally meaningful ways: after all, utility is a means to an end. Understanding and reflecting on customer goals will make that utility relevant.

With loyalty and advocacy no longer guaranteed, the overriding strategy across all touchpoints, digital and human, is to design moments that make customers want to tell someone about it. To do that, businesses need a clear strategy:

• What are we promising our customers?
• How are we proving we’ve delivered it?
• What role do we want our employees to play in the customer journey?
• What role do we want our customers to play in our journey?
• Where are the moments of magic or friction in our customer journey?
• And critically, do our customers know what we stand for, and how can they advocate for us?

Big brands building advocacy through campaigns alone is a thing of the past. Now, the whole organisation is part of that campaign. When the business is aligned to the needs and experiences of its customers, it inspires more than retention. It inspires active loyalty. And in that world, traditional models of customer lifetime value and tired assumptions about passive loyalty give way to more dynamic, experience-centred drivers of growth.