Keep customers from flying the coop: customer retention tactics in bad times are the same as the ones in good times--only the basics need to be applied more intensively. Here is a refresher on the seven approaches that bring the best results.

• Author: Miller, Nick
• Position: Cover story

DURING THE LAST YEAR-OF-THE-TROUBLES IN BANKING, customers have racked up a lot of flight-to-safety frequent flee-er miles--miles driven between banks as some customers fled large institutions to go to smaller ones, while others fled the smaller ones to go to large institutions.

What was your bank's attrition number? Eight percent? Twelve percent? Twenty percent? What percentage of your consumer customers and small-business customers fled out the back door during the last 12 months?

There's a little light at the end of tunnel. While we're all holding our breaths about the impact of commercial real estate loans on banks of all sizes and looking for the "new normal," frequent flee-er miles have declined. With the worst news apparently behind us, now is the time to rethink the marketing role in customer retention: It's more than new products, better prices, new collateral material and direct mail. The costs are lower and the returns are higher from retaining and penetrating existing customers than they are to acquire new ones.

Who's who

The first step in an effective customer retention program is to determine which customers the bank wants to retain. This involves a two-fold process of evaluation and segmentation.

Evaluation: There's an outside look and an inside look. Take an outside look at your bank by answering the following questions: Who are your customers? How do those customers perceive your bank? How do they perceive other banks? Is your bank gaining or losing share of deposits, small-business loans and so forth? How do your customers perceive the economy?

Then, take a look at your bank from the inside by answering these questions: What results are you getting from your marketing spend? How are you performing against your key performance indicators? What are your bank's goals and strategies? How are your marketing strategies and investments contributing to the achievement of those goals?

Segmentation: Many banks, particularly the smaller regional and community ones, don't develop or work from segmentation maps. Whether your bank does or not, it's useful to:

* Define clearly for the bank and for the individuals serving customers what are the bank's "ideal" customers.

* Isolate the aspects of their relationships with your bank or other financial services providers that will prompt them to stay with you versus shift more of their business elsewhere.

* Personalize the ideal customers by giving them names and identities. Make them real so...