The impact of loyalty programs in private banking in the USA.

In fact, approximately 53% of millennial don't think that their institution is unique compared to other financial institutions (American Bank Association, 2019e).Challenge 10: Millennial are really comfortable with disruption.Approximately 68% of millennial believe that the way we access our money will be entirely different in 5 years (American Bank Association, 2019f).2.9. The analysis of Interview results with thebank customersIn order to analyze what customers think, feel about the loyalty program, one hundred people from in western coast of the USA were interviewed. The questionnaire is in appendix 3. From the questionnaire 79 people out of 100 are millennial with the middle income and 80% are from the West region of the USA (bar graphs 1,2 and 3, appendix 1)The main part of interviewed are millennial, who are from West region of the USA with the middle income.The main characteristic of this generation of people is a deep involvement in digital technology and this is why the questioner is showing that 58% of customers knew about the loyalty program from the online advertising this is a huge impact on the retail banking and they are doing the right thing of focusing on it (bar graph 4, appendix 1).The most of bank millennial customers learn about loyalty programs from online advertisement.There are 80% of the customers that are satisfied with the service that is provided to the customers, which means that the customer care in the retail banking is trying to give to the clients the best service. In order to keep the customers loyal, the bank have to have the relationships and interaction by this way you can keep them and try to help them. As there are a huge range of different loyalty programs there are several of them that are the most popular among millennial customers (bar graph 5, appendix 1). The most of millennial are satisfied with the provided bank service.There are four main programs that were introduced in the interview which are: rewards, discount for mortgages, loyalty status and balance of the account allows to have higher interest rate. The rewards loyalty program has the highest score of 43% it is because customers more focused on the buying the products and getting the points for it (bar graph 6, appendix 1). Almost halfof millennial customers are using loyalty programs of their banks due torewards.The another, important questions what is the advantage of using the loyalty program were almost 40% of customers chose the option to earn points and then spend them. This advantage means that for the American people is it important to receive something back if they are using the service and there is a huge amount of people who just go to the grocery store and then getting the points just for the action that they usually do, but also they are getting some bonuses for it. The 31% percent of customers answered that they are using the loyalty program for the cash rewards bonuses which makes it very popular among American’s (bar graph 7).However, there some disadvantages that customers wanted to mention. The 78% of people agreed that they do not like in the loyalty program that their private information shared with the third party. This means that whenever they buy something their private information is shared so the cybercriminals found the way of how to steel the information they can connect the loyalty card to the credit and get the information they need (bar graph 8, appendix 1). Almost half of interviewed millennial considers the possibility to earn points and spend them as advantage of loyalty programs of banks and the absolute most of millennial customers considers the necessity of sharing the private information with the third parties as disadvantage of the loyalty programs.The question about how the client would rate the loyalty program 57% agreed that it has a very good service which means that the banks care about their client and want for them the best service. The 35% answered as good service, which means that in total 92% out of 100% answered that the service that they are receiving from the banks is corresponding of what banks offering for them (bar graph 9, appendix 1). More than half of millennial customers are very much satisfied with the bank services and almost all of them think that the service that they are receiving from the banks is corresponding of what banks offering for them.When the customers answered to the question are they going to continue using the service of the current bank and there is were almost equal amount of the answers of “yes” and “uninterested position”. The “uninterested position” answer had the 40% because most of the banks has the same loyalty programs so the Millennial are 2 to 3 times more likely than other generations to switch banks (bar graph 10 and 11, appendix 1).Even though we don't want to do it - 64% of us reported that we would rather do anything else - millennial are more willing to change financial institutions than other generations. In fact, more than 80% of millennial would switch banks if offered more or better rewards. The 88% from the questioner agreed that they would recommend the loyalty program of the retail bank to the acquaintances which means that most of the customers are very satisfied with service that they are getting and they consider this program very profitable (bar graph 12, appendix 1). The absolute most of millennial customers will stay loyal for their banks and will recommend their banks loyalty programs to their acquaintances, but only half of them planning to stay the customers of their banks and almost same level showed uninterested position2.10. The analysis Interview results of retail banksThe data were collected from the interview that has been made or the retail banks that are located in the western region of the USA, Appendix 2 has the questions with the results of the banks with the graphs and diagrams. There are 50 banks that are has been asked to answer the questions related to the loyalty programs that they have. The first important aspect that has been asked is which generation is using the loyalty program more and as the result the millennial customers are the most popular users among other generations it is showing 78% among others. The result having such high percentage because millennial are the most frequent users because they have a deep involvement in digital technology. Also, the results from the retails banks showed that 78% of customers that are using the loyalty programs are the people with the middle income, as the customers with the middle income are more interested of getting some extra points and spend them for something more. The people with higher income are not so interested as they have enough money to purchase something without thinking about that they need to earn some points. The customers with the low income do not have so high interest because they save money and they can not spend a lot, as the consequence they will not earn anything if they will not spend some money (bar graphs 1 and 2, appendix 2).The most of banks customers are millennial with the middle income.Another important part of the interview was that which problems the bank is facing with the loyalty program. The result is showing that the main challenge is the competitive market, it happened because there are so many retail banks in the USA that it is creating for them a lot of competition. Moreover, most of the loyalty programs are similar to each other, so the banks offer similar loyalty programs and it is hard for them to be unique in the market, in order to have more clients that are interested. The most popular loyalty program in the retail banks according to the questioner is rewards it is showing that 62% out 100% which making huge impact on the financial performance of the banks, because it means that people use to spend money and earn points for it (bar graphs 3 and 4, appendix 2 ).The biggest challenge of loyalty programs that bank facing is competitive market. The most popular loyalty program is rewards program.The question about the CRM strategy, banks had a choice of which strategy will improve the retention of the customer mostly. The highest score was the answer “all” 82% out 100% decided to choose this option. The answer “all” includes: customer service, trustworthiness, employee competence, ease of doing business. All of these answers are most important tools of the CRM because each segment is essentially important for the customer satisfaction. The core idea is to give the best service for the customer as the loyalty programs implies it, because whenever customer need something they are waiting for the best service of the customer support, that is going to be fast, with the correct information. It is important for the banks to hire qualified people that will make this experience for the customer as the best experience. As the consequence, the question about that CRM strategy. Does it help for the retail banks to attract more customers there was a result of 100% “yes” (bar graph 5, appendix 2). As the CRM includes the main aspects for the loyalty programs as it is fully connected to the relationship with the customers. Moreover, there are a lot of the Customer Relationship Management tools that help to create the analysis of the customer satisfaction, helps you to create several analyses which can improve the relationships with the clients.One of the questions from the interview proved that the market is very competitive for the retail banks in the loyalty programs the answer from the banks showed that 100% agreed regarding this question. The banks chose this answer because there are so many retail banks in the USA that it is creating for them a lot of competition. Moreover, most of the loyalty programs are similar to each other, so the banks offer similar loyalty programs and it is hard for them to be unique in the market, in order to have more clients that are interested. For the retail banks it is very hard to understand how to be differ from the others as there are so many customers that wants different loyalty programs, so that it will be impossible for the bank to implement all needs for the customer. In the section where was the question about the increase of people who wants to use the loyalty program and the 60% of banks answered a medium demand. As the loyalty programs it is not the main aspect of the service in the bank industry there are lot of other products, but the result for the loyalty programs is considered high among other services, so it is making one of the main feature of the bank (bar graph 6, appendix 2).All bank experts answered that NPS and CRM helps to attract more customers and that their loyalty programs are similar to competitorsbut it works The part on the interview that is focused on the financial performance of the retail banks, it showed that 100% banks agreed that the loyalty programs helps to increase the revenue of the bank. As the loyalty program is based mostly on collecting the points it means that the bank will have more and more transactions from the customer which leads to have a better financial performance. Moreover, the loyalty program attracts more people as it us use to find the clients that are interested in such kind of product. It showed form the data of the banks that there is a low rate decrease in customers who wants to abandon the loyalty program, which means that people mostly stay keep loyal to the bank. If there is a low decrease it means that customers like the products of the bank, the service that they offer for them (bar graph 7-9, appendix 2). There are about half of customers who abandon loyalty programs. The result from the questioner showed that the NPS (Net Promoter Score) used in 96% of the retail banks, so it makes quite popular. As it is very important to show for the banks they care about their clients NPS help them to understand what they are doing wrongly. As most of the times NPS helps to see the opinions of the clients what they would like to change if the service of the bank, which negative experience they had, so it help for the bank understand what they have to change and what to improve. As the result question about NPS does it helps or not 96% of the banks answered that it helps for them (bar graph 10-12, appendix 2).Chapter 3 ConclusionThe current study could help to show the impact of bank loyalty programs at the the millennial customers. Thus the banks can make the millennial customers interested in loyalty programs by using online advertisement ways and attraction by the rewards possibilities.The most of west coast region of the USA retail banks uses NPS and CMR tools but the similar as their competitors loyalty programs.Anyways the most of millennial bank customers are satisfied for now with their banks services and will stay loyal for them and even recommend to friends but they are not sure if the stay with their banks even in 3 years.Q: How do the loyalty programs in western coast of USA banks help to increase the attraction of new millennial customers with middle income and to keep them loyal?A:The proper use of modern banking tools which make possible and individual approach with, at the same time, possible less sharing of private information as millennial customers see it as disadvantage of loyalty programs.As the banking industry changes, one generation finds itself at the center of these debates: millennial.When it comes to attracting potential customers in the awareness stage, the fact is, it's difficult to appeal to millennial customers. Here are a few of the challenges:Millennial don't have a high opinion of banks in general;they have different banking needs than other generations; millennial interact with brands differently than other generations; lots of market competition, particularly from megabanks and from non-banks; millennial make financial life decisions on a different timeline than other generations; many millennial are not yet ready to buy houses and start families.Of all generations, millennial are the most likely to use both online and mobile channels, and they use those channels more frequently.The banks of Western Coast of USA have all possible range of loyalty programs but they are still in lack of tools to make these programs the most attractive for millennial.According to the done analyses, more than 60% of millennial want digital budgeting tools from their banks. If your institution can add something like that, it could help sway a millennial decision to work with you. More than 80% of millennial are saving some portion of their income every month so the bank loyalty programs should help millennial to make savings. The loyalty programs help to improve the financial performance of the bank, as customers getting more attractive with the programs. This happens because they want to participate and earn something, for the banks it is making more revenue because people having more transactions and getting more attractive.BibliographyAlsop, Ron (October 13, 2008). The Trophy Kids Grow Up: How the Millennial Generation is Shaking Up the Workplace. Jossey-BassBall, D., Coelho, P.S., &Machas, A. (2004). The Role of Communication and Trust in Explaining Customer Loyalty. An Extension to ECSI Model. European Journal of Marketing. Vol. 38, No. 9/10, pp. 1272-1293.. Berman, B. (2006). Developing an Effective Customer Loyalty Program. California Management Review, Vol. 49, No.1, pp.123-148. Petersen, P.E., Nysveen, H. (2001). 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CRM // URL: https://www.freshworks.com/freshsales-crm/industry/(date of application 07.05.2019)Pipedrive. // URL: www.pipedrive.com(date of application 07.05.2019)Insightly. //URL: www.insightly.com(date of application 07.05.2019)Zoho CRM // URL: www.zoho.com(date of application 07.05.2019)Nimble. // URL: www.nimble.com(date of application 07.05.2019)PipelineDeals.// URL: www.pipelinedeals.comNutshell. // URL: www.nutshell.com(date of application 07.05.2019)Bpm’online. // URL: www.bpmonline.com(date of application 07.05.2019)Adsoup. // URL: www.adsoup.com(date of application 07.05.2019)Microsoft Dynamics CRM. // URL: www.dynamics-crm.ru(date of application 07.05.2019)SalesforceIQ. // URL: https://help.salesforceiq.com(date of application 07.05.2019)Appendix 1Survey resultsCustomersSurvey was made in USA in order to reach bigger target. During the survey that I have made I was able to get results from 100 people. Bar graph 1Bar graph 2Bar graph 3Bar graph 4Bar graph 5Bar graph 6Bar graph 7Bar graph 8Bar graph 9Bar graph 10Bar graph 11Bar graph 12Appendix 2Survey resultsBanksSurvey was made in USA in order to reach bigger target. During the survey I have asked the retail banks that are located in the West region of the USA.Bar graph 1Bar graph 2Bar graph 3Bar graph 4Bar graph 5Bar graph 6Bar graph 7Bar graph 8Bar graph 9Bar graph 10Bar graph 11Bar graph 12Appendix 3The questionnaire for the millennial customersWhat year you were born?What is your annual income from the previous year?From which region of USA you are?How did you know about the loyalty program of your bank?Are you satisfied with the provided loyalty banking products and services?Why are you using the loyalty program at your bank?What is the main advantage of using the loyalty program?What the disadvantage of having the loyalty program?How would you rate your loyalty program that you chose on the scale of 5?Has the loyalty program helped you to stay loyal for your bank?In the next 3 years are you planning to continue to use the services of your current bank?Would you recommend this program to your acquaintances? The questionnaire for the bank expertsWhat generation is using the loyalty programs more?With which annual income customers are more likely to use a loyalty program?What is the main challenge of loyalty program that your bank is facing?What kind of loyalty program is more popular in the bank?What is the main CRM strategy is mostly used to improve the retention of the customer?Does CRM strategy helps to attract more customers?Does the loyalty programs similar to your competitors?How would you rate the competitiveness of loyalty programs among other banks?How would you scale the increase of people who wants to use the loyalty program?Do loyalty programs help to increase the financial performance?How would you rate the decrease in customers who wants to abandon the loyalty program?Does your bank calculate the NPS (Net Promoter Score) for loyalty programs? Does NPS helps to improve the service of the loyalty program?Appendix 4Exhibit 1Table 1 INTERNET BANKING, BY AGE GROUP, 2018      Withinthelast 3 months        %           Agegroup  16-2425-3435-4445-5455-6465-7475-7980+All          Internetbanking799388725847231469                    https://www.statista.com/statistics/266587/percentage-of-internet-users-by-age-groups-in-the-us/Exhibit 216-24 y.o.25-34 y.o.35-44 y.o.45-54 y.o.55-69 y.o.69+ y.o.The age proportions of the social media users in USA (2018)https://www.pewinternet.org/2018/03/01/social-media-use-in-2018/Exhibit 3The strengths of loyalty programs.Exhibit 4The weaknesses of loyalty programs.Exhibit 5https://www.welt-atlas.de/map_of_west_coast_usa_7-246The map of western coast of the USA Exhibit 6GlossaryCustomer Relationship Management (CRM) is a combination of various steps, procedures, strategies and practices which are used to maintain customer interrelation and interaction in order to increase customer loyalty and satisfaction with the company. Online Banking is a way of providing banking resources to a customer through web-based applications through different gadgets. Retail banking is a service provided by the banks to its mass market individual customers.Mortgage is a special loan provided by the bank in order to purchase a house/apartment/flat.Cash-Back is a service provided by the bank on some of them rewards cards when a client earns back a certain percentage for a particular purchase established by the bank.Net Promote Score (NPS) is a measurement tool of how the customer recommends particular company.Millennial generation is the generation of people who were born between 1981-1997. Application Programming Interfaces (API) is a part of server that obtains requests, process it and sends automatic replies. Loyalty programs is a long term-based reward program of the companies which are being used to maintain the customer within their company by providing extra services, benefits and privileges in return of customer loyalty and continuous business with them.Payroll is a process in any company of paying their employees.Electronic wallet is a cloud based system that stores your funds and payment information securely and can be used to process payments. Virtual card is a card that is issued temporarily or permanent in order to complete online payments. Financial management is a way of designing, arranging, controlling and maintaining financial arsenal of the company in order to accomplish organizational goals and targets.