This article originally appeared in IMKB Magazine.

The point is both simple and profound: Loyalty is the key to growth for retail banks. And what makes Turkish customers more loyal than anything else is service quality and transaction speed—not rates and fees. This is a key finding from Bain & Company’s recent study of more than 2,000 customers of ten prominent Turkish banks.

To earn loyal customers, banks need to know what customers value. What is more important to them—the ease of mobile banking or a friendly, knowledgeable teller? Banks hoping to generate profitable growth need to know what delights their customers and what annoys them. But first, they need to know where they stand with customers overall, and compared with their competitors. Using the Net Promoter® System (NPS®), banks start by asking a fundamental question: On a scale of zero to 10, how likely are you to recommend this bank to a friend or colleague? Bain research has determined conclusively that promoters, those who answer nine or ten, buy more, stay longer and are more likely to refer other customers. By contrast, detractors, those answering six or below, buy less, and are more likely to defect and discourage potential customers. (Those answering seven or eight are considered “passives.”) To understand how well Turkey’s retail banks are performing in earning customer advocates, we surveyed retail bank customers in 12 Turkish cities. Our study found that customers’ perception of retail banks is generally positive, but important nuances emerged when we delved into two key areas.

First, we looked at how well banks perform in creating advocates among their most valuable customers: high-income customers who earn more than TYL 100,000. We then asked customers about their primary reason for giving a specific score, so that we could identify the services that delight customers and those that annoy them. We found that service quality and transaction speed are more important than rates and fees for turning all types of customers into advocates. At the same time, interest rates and lack of staff attention are the top two reasons for customer dissatisfaction. Such insights are invaluable for banks hoping to pursue sustainable profitable growth.

The branch matters

All ten surveyed banks have positive NPS scores—a higher percentage of promoters than detractors. But more important than absolute scores are individual banks’ scores compared with others in the country. Medium-sized banks and one large bank are leading the pack. One medium-sized bank’s 45% NPS score (calculated by subtracting the percentage of detractors from the percentage of promoters) is highest above the ten-bank average of 33%. Performance varied widely, as one mid-sized bank earned an NPS score that was sharply lower than the others at 8%. One message came through clearly: in Turkey, NPS scores vary greatly from branch to branch. In other words, the performance of an individual branch has a strong influence on customer loyalty. Some banks operate branches with many loyal customers while also operating branches with a high number of detractors. And some banks perform substantially better in Istanbul than outside Istanbul. In an extreme case, one mid-sized, Istanbul-oriented bank achieved a 93% NPS in its Istanbul branches but a 27% NPS outside of Istanbul. One factor may account for much of the difference between high-scoring and low-scoring branches of the same bank: over the last few years, Turkish banks have focused on improving their processes through IT investments and other means. Yet not all branches have managed to fully use those investments in ways that improve customers’ experience through faster, more convenient or more personalized services. Besides focusing on their processes Turkish banks also have been improving their digital and mobile offerings. In fact, Turkey’s banks now deploy some of the world’s most advanced retail banking innovations. A single example: many banks offer SMS credit applications with ten-second approvals and Turkish bank customers have been the first in the world with access to their accounts via Facebook. A recent Bain survey of 150,100 retail bank customers in 14 other countries in the Americas, Europe and Asia highlighted the importance of such digital services. It found that in virtually all countries, online and mobile channels have the propensity to boost customer loyalty. But in Turkey, our findings suggest that banks actually may have over-emphasized advanced technology solutions at the expense of in-person advice and other aspects of banking that benefit from the human touch. Today, most of the promoters in Turkey say they are happy either because of the service they receive in a branch or the staff with whom they interact. The implication: to earn promoters, banks need to consider investing in human capital as much as they’ve invested in IT systems and processes.

Pursuing high-income customers

As in all businesses, some customers are more valuable than others. In retail banking, high-income customers tend to be the most valuable— and the most important to convert to promoters. Affluent customers who are promoters maintain higher levels of deposits and also buy more products at a bank than do affluent detractors. And they tend to recommend their bank to affluent friends. Cross-selling opportunities expand with wealthier segments. High-income customers engage more with their banks and provide more opportunities with upside potential. Our global retail bank loyalty study found that moving affluent customers from being detractors or passives to being promoters is worth roughly five times the economic value of turning mass-market customers into promoters. At a large national US bank, turning just 1% (or 50,000) of detractors into promoters would generate an incremental $250 million in lifetime net present value, Bain estimates. So how do Turkey’s retail banks perform with these high-value segments? In Turkey, as in many other developing markets, banks have developed differentiated modes of targeting and serving the affluent, combining primary banking services with wealth management. Affluent customers generally insist on premium service and tailored, expert advice. They want personal banking relationships, not just the convenience of digital channels. In general, Turkey’s banks have been fairly successful at this challenge of segmenting their service proposition based on the attractiveness of their customers. That may be one of the reasons affluent retail bank customers on average give higher NPS scores than lower income groups. Our survey of Turkish banks found that overall process and personnel-related touch points are the main reasons that-high income customers become promoters. When asked why they are promoters, the largest number of affluent respondents cited high service quality and fast transaction speed. Next on the list: “staff is cheerful” and “trustworthy bank.” Such findings are a start for banks looking for ways to delight affluent customers. What causes these valuable customers to become detractors—what do they say annoys them? Low transaction speeds and high service commissions top the list, followed by inattentive staff and high interest rates. High credit card fees or crowded branches were relatively unimportant factors for these affluent customers.

Making loyalty pay off with better economics

It’s one thing to know what makes customers happy, but successful banks go further: They use those insights to improve financial performance. Retail banks in Turkey and elsewhere have embarked on measuring customer loyalty and using customer feedback to improve their loyalty scores. Yet many banks remain frustrated. In retail banking, most Net Promoter and other loyalty programs have made more gains by reducing detractors, which is relatively easy, than by creating new promoters, which is harder. And while banks may be nicer to customers and get happier responses, some find they’re not selling more of their products, capturing a greater share of wallet or substantially reducing their cost to serve. Part of the problem lies in banks’ egalitarian approach to customers. To monetize loyalty requires that banks focus disproportionately on service and product improvements first for the most valuable customers. Moreover, other elements of the business model come into play. These include effective targeting of segments; developing the right product proposition for each segment; making improvements to the customer experience that can reinforce the bank’s brand promise; and ensuring that sales and distribution processes are structured to promote cross-selling and greater share of wallet. Effecting such changes throughout an organization is an enormous challenge for senior management. To help executives connect loyalty with bank economics, we emphasize a set of critical next steps.

Get ruthlessly efficient in serving low-value customer segments in order to fund differentiation for high-value customers. The first step is to understand the economics of loyalty. At many banks, a full accounting of cost to serve often reveals that the bank spends more to serve its lowest-value customers, those who frequent branches for routine but time-consuming teller transactions. One valuable exercise is to measure cost to serve and NPS for different customer segments. Understanding the loyalty profile for affluent customers can be translated into a net present value calculation that can inform subsequent investments.

Craft offerings and channels to serve high-value segments effectively. Knowing the economics of loyalty, by segment, allows a bank to form a clear idea of what will yield the highest returns on investment. Loyalty leaders today improve offerings for high-value customers and wrap a terrific experience around those products. Features can include knowledgeable relationship managers and expedited service.

Start channel redesign now to serve the mass market profitably—before outside disruptors do. Other segments can be served effectively—and profitably—with “good-enough” products and service through light-branch concepts. As experiences with video teller machines in different markets are showing, customers can benefit from expanded hours. And freed-up funds can be reinvested in more or better relationship managers for the affluent segments.

Move beyond loyalty scores to build a complete loyalty system. A reliable metric that sorts customers into promoters, passives and detractors helps a bank understand how to improve customer experience and address the opportunity. But the real value of the Net Promoter system flows from the analysis of the feedback and actions taken to change employees’ day-to-day behaviors. High-velocity feedback to frontline employees and managers allows banks to regularly track their performance and identify improvements large and small. The closed-loop nature of the system promotes testing and learning on product and process refinements. And employees feel more engaged because they regularly hear what customers think of recent interactions with them, and they see clearly how their individual and team performance contributes to the outcomes of the larger enterprise. Banks hoping to build sustainable growth in Turkey can’t afford to wait to make this transition to a complete loyalty system. It could make the difference between winning the race for customer loyalty and losing out to speedier competitors.

Net Promoter® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc. Karaca Kestelli is a Bain & Company partner based in Istanbul.