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Reorganizing to build customer loyalty

A stronger market focus at an execution-oriented bank helps reduce customer attrition 60 percent.


How can a company improve its performance when it is already an industry leader? That was the question facing the incoming CEO of a large US bank. Having inherited an organization in great shape, he wondered how he could strengthen its position and help it to grow.

An analysis of current performance and future trends revealed that the bank’s historic double-digit growth rate could no longer be sustained simply by continuing along the same path. Part of the problem lay with customer loyalty, which was only average for the industry. So the CEO asked McKinsey to help the bank find ways to improve its growth prospects by exceeding customer expectations.


A detailed survey using McKinsey's Organizational Health Index revealed that to maintain growth, the organization would need to "mine the seams" by working as one bank across all businesses, with a clear focus on creating value for customers.

McKinsey helped the client to translate this broad aspiration into specific bankwide targets: reducing customer attrition to less than 10 percent, improving cross-sell rates, and achieving top-quartile customer loyalty in every business. To understand where interventions would have the most impact, the team analyzed performance data stretching back for years.

An important insight emerged from this analysis: some of the traditional strengths in the bank's culture had been overplayed, and now represented weaknesses in terms of its new strategy. For instance, the relentless focus on execution was linked to the mind-set "I own my business unit," which needed to shift to "I own the enterprise" to encourage collaboration across the whole organization.

To improve customer focus, McKinsey worked with the bank to target the factors that influenced customer loyalty most, such as branch queuing times and problem resolution. To promote collaboration, the bank gave priority to actions that required three or more business units to work together, and selected two leaders from different businesses to head each initiative. This ensured that collaboration was not merely the goal of the program but was built into the actual process of change.

The bank mobilized its employees by training a cadre of change leaders to keep motivation high, and invested in building leadership capability through individual learning plans that combined on-the-job coaching and mentoring with short, intensive residential courses.


After three years, customer loyalty had increased by 33 percent, reaching the top quartile for the industry. Customer attrition had fallen by 60 percent, and cross-sell rates had exceeded their targets.

Collaboration had been central throughout the change program, and had enabled the bank to resolve problems that cut across processes and functions. The bank had established a performance culture that enabled it to grow much faster than competitors and to steer a steady course through the banking crisis that followed.

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