Choosing the right tools for your relationship banking strategy

Abstract

PurposeThis paper aims to examine the banking industry's expanding use of loyalty marketing programs to build profitable relationships with customers. Banks' relationship‐building strategies fall into two categories: full‐blown multi‐product loyalty programs and narrower programs that expand customer rewards in one or two key product areas.Design/methodology/approachInnovative loyalty programs launched by various banks are used as examples to show how individual banks are customizing their relationship‐building strategies within the two broad categories. Those categories are broad multi‐product loyalty programs and narrower initiatives focused on key products.FindingsThe authors believe their deeper look into relationship banking reveals that, far from a magic bullet approach, banks are customizing their relationship‐building strategies to create value propositions as unique as the institutions and customers they serve. When banks use loyalty programs to engender trust and build confidence in the brand, the customer relationship will develop organically, and so will profits.Practical implicationsThere is no core list of best practices for relationship banking. By examining innovative programs and being willing to customize their strategies, banks can build enduring customer relationships that lead to growth.Originality/valueThis paper takes a look at relationship banking trends, with suggestions on how banks can incorporate these trends into successful, customized programs.