The mortgage industry needs to work harder to retain customer loyalty if the industry is to survive, says a survey from Group 1 Software.
The survey into customer loyalty found that customer defection rates in key consumer industries have increased from 16.9% in 2003 to 19.1% in 2005.
It also reports that consumers are becoming increasingly mobile and that unless companies improve retention strategies, loyalty will continue to waver.
Although at 13.6% the mortgage industry has a lower churn rate than both banking (17.5%) and general insurance (17.5%), the report warns that the industry has more “acute problems”.
Remortgaging, the industrys own version of switching, makes up half all new business sold each year, which means the back-book of existing profitable customers who have been traditionally subsidised low entry rates for first-time buyers has now been almost irrevocably undermined, threatening the very business model of the industry.
Instead of using discounts and price-led strategies to retain customers, companies need to focus on brand values and other forms of delivering value and privilege back to the customer, says Group 1 Software.