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In the United Kingdom, as in the U.S., huge year-end bonuses for senior financial services executives remain a source of much controversy. There’s obvious merit behind the contention that rewards should be commensurate with performance. But there’s also merit behind the argument that “performance” should reflect a company’s long-term health and not merely what happens in a given year.
One critical determinant of long-term business health isn’t just the number of customers a bank might have but rather the number of engaged customers. Engagement is much more than satisfaction. Engaged customers have a strong and even passionate connection to the banks with which they do business. They view their banks as being essentially irreplaceable.
Gallup research has shown that these engaged, emotionally connected retail bank customers are highly profitable. They maintain higher balances and buy more products. They’re less price-sensitive, more responsive to cross-selling, and more resistant to competitive overtures. Engaged customers are what a bank should be seeking.
Alas, the current state of banking relationships in the U.K. is marked by a good deal more disengagement than engagement. A Gallup survey of 1,311 U.K. retail banking customers conducted in late 2009 reveals that only 15% of customers are fully engaged with their current bank. At the other extreme, a frighteningly large 38% are actively disengaged, feeling…
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