While data from JD Power’s Primary Mortgage Origination Study has found that technology offerings (the ability to apply, submit documents, track status online) can raise customer satisfaction, it is important to note that customers still desire a ‘personal touch’ during the origination process.
Satisfaction is highest when customers work with one representative throughout the entire process. However, if a ‘handoff’ is necessary from one lender employee to another, it is critical to ensure that customers consider the transition ‘smooth’. Failure to ensure a smooth transition can significantly impact satisfaction and loyalty metrics, while also resulting in an increase in reported customer problems.
Strapped with a wide range of financial burdens, it is tempting for financial institutions to consider pricing changes in an attempt to improve bottom-line performance. However, any changes must be weighed carefully, and the potential business threats must be clearly understood.
Data from JD Power’s Retail Banking Satisfaction Study finds that Overall satisfaction declines significantly when fee changes are implemented, and more importantly, intended attrition levels are three times higher among customers that experience a fee change, compared to those whose fees remain stable.
Pricing changes can also be costly to banks if not handled effectively, through the allocation of resources required to handle customer complaints related to the change. Nearly one third (32%) of customers that experience a fee change contact their bank with a problem and, on average, problems require 1.9 customer contacts to be resolved. Therefore, for every 100,000 retail banking customers that experience a fee change, bank personnel will receive 60,800 contacts. In comparison, for every 100,000 retail banking customers that do not experience a fee change, bank personnel will receive 19,000 contacts.
Estimating that bank representatives can handle 6.5 customer contacts per hour, and that their labor cost is $40 per hour, fee structure changes may result in an incremental labor cost of $257,231 for banks to absorb.
Although data suggests that fee changes have a lagging effect on customer satisfaction (the full impact isn’t recognized until months after the change was made), intended attrition is impacted immediately, as customers tend to ‘overreact’ to a new charge. Therefore, it is particularly critical for financial institutions to minimize the initial bitterness experienced by customers, as this time period represents the greatest risk of attrition.
Lastly, failing to ensure that all customers are fully aware of a fee change in advance can significantly impact customer satisfaction, loyalty and problem metrics. In order to successfully mitigate this problem, banks need to focus on over-communicating the change to ensure the message is fully received by their customer base
Financial institutions should begin the process of communicating fee changes immediately after the decision has been made. The appropriate messaging and delivery methods must be identified, and investing in quantitative or qualitative market research to aid in decisions should be considered. Lastly, the timeframe of the change must kept top-of-mind. Initial communications should begin months before implementation, and because the risk of customer attrition is highest within the first month after a pricing change, banks should place heavy focus on preparing all types of employees on how to handle any immediate backlash from customers.
Credit card issuers need to ensure that proactive outreach campaigns directed at current customers fit the evolving ‘digital world’. Failure to do so may not yield a positive return on the resource expenditures associated with customer communications.
Data from the 2013 Credit Card Satisfaction Study finds that nearly half (46%) of credit card customers did not read/use the most recent proactive communication they received from their issuer, thereby pointing to a potential ‘waste’ of resources spent by card issuers.
However, study findings show that the method used to deliver communications may have a positive impact on whether customers choose to read/use the information. For example, customers are most likely to read/use information provided electronically (emails and text messages), and are least likely to read/use information delivered by standard mail.
Issuers should consider revisions to their communication strategies, focusing on digital delivery of messages. This may also require issuers to rethink the content of their messaging and focus on delivering information in a more concise manner.
Data from the 2013 U.S. Retail Banking Satisfaction Study finds that satisfaction and loyalty metrics among Affluent customers are lagging those of Non-Affluent customers. In turn, financial institutions are jeopardizing their ability to deepen the share-of-wallet they hold with their most valuable segment of customers.
Contrary to findings within the retail banking segment, data from the 2013 Full Service Investor Study finds that Affluent investors are significantly more satisfied than Non-Affluent Investors (818 vs. 785, respectively), leading to lower levels of intended attrition. Therefore, financial institutions have an opportunity to identify the drivers of Affluent customer satisfaction from the wealth management experience and translate them into the retail banking experience.
For example, Affluent customers are considerably more satisfied with the Fees and Product Offerings associated with their investment relationship, as opposed to the Fees and Product Offerings associated with their retail banking relationship. Successful communication, often driven by the presence of an account manager, helps raise pricing-related satisfaction within the wealth management industry. Additionally, financial institutions may want to consider revisions to their lineup of retail banking products/services to better align with the specific needs of Affluent customers, which tend to be more complex.
Data from J.D. Power’s 2013 Primary Mortgage Origination (PMO) Study identifies growing consumer demand for a more digital origination experience. Providing customers with an online option to submit supporting documents, verify receipt of their application, check status of their application and electronically sign documents can have a significant impact on satisfaction.
Quicken Loans, the top performer in the 2013 PMO study, has been among the quickest to provide a digital experience for their customers, which has helped drive their industry-best satisfaction score.
Problem prevention should be a focus area for all credit card issuers. Analysis of data from the 2013 Credit Card Satisfaction Study finds that when customers experience a problem, overall satisfaction and customer retention metrics decline significantly.
Preventing the occurrence of problems may also help reduce operational costs. For every 1-percentage-point reduction in problem incidence, issuers may be able to save nearly $230,000 for every 1 million cardholders.
Issuers should consider the implementation of a problem tracking or problem management systems. Problem tracking provides continual analysis of problem-related customer contacts, potentially helping issuers identify and prioritize processes that can minimize the occurrence of problems. Problem management may include multiple inputs, such as problem contact data, survey data and employee feedback, and is designed to guide issuers on the development of systems to both prevent problems from occurring, and to maximize the effectiveness of resolving problems that do occur.
Data from J.D. Power’s retail banking study finds that 34% of Big Bank customers are within the Generation Y age segment, which is significantly higher than the percentage of Generation Y customers at Regional/Midsize/Community Banks.
And while the Generation Y segment is currently less-affluent than other segments, they do present potential bottom-line growth as their income levels increase and they enter the market for mortgages, education plans for children, loans, etc.
The ability of Big Banks to provide functional ‘digital banking technology’ (website, mobile, advanced ATMs) is attractive to tech-savvy younger customers, and smaller institutions need to be competitive in this space in order to ‘steal’ younger customers from Big Banks.
There was an article in American Banker last week titled “Big Ideas for Banks in 2014”, and one of the topics focused on the importance of retaining talented employees at bank branches. The article mentioned that high levels of employee turnover can hurt the ‘relationship’ between customers and the bank, which in turn can impact the bank’s ability to retain accounts.
This theme was also very evident in JD Power’s 2013 Small Business Banking Study (released in October 2013). Analysis of study data found that 43% of small business customers had their account manager changed during the past 12 months, and of those, 13% report that their account manager changed two or more times.The impact on satisfaction is significant, as shown in the chart below.
More importantly, turnover of small business account managers can also have a significant impact on financial performance. Study data clearly shows that small business customers who experience account manager turnover report lower levels of intended loyalty and share of wallet held with the institution. Turnover of account managers also drives an increase in reported problems, which can also be costly for financial institutions through the allocation of valuable resources and labor time associated with problem resolution.
But while an ideal scenario is for financial institutions to keep account manager assignments stable over time, in reality, changes will occur for a variety of reasons. In those cases, there are some best practices that financial institutions can follow that may mitigate the negative impact of account manager changes:
First, it is important that institutions act quickly when account management changes. Customers who are affected by a change should be notified as soon as possible and introduced to their new account manager. Delaying the notification can ultimately have a negative impact on customers’ overall banking experience, especially customers who attempt to contact their account manager and learn they are no longer there.
Second, it is critical that newly assigned account managers reach out to their customers and schedule a time to meet with them. During this meeting, it is important for the new account manager to establish an understanding of the customer’s needs and expectations (e.g., how often customers want to meet, what communication method customers prefer).
Third, new account managers must ensure they are providing the most appropriate solutions based on the customer’s business needs. They must be responsive to customer contacts, responding on the same day of the contact, if possible, and proactively reaching out to customers at least once every three months.
Although credit card satisfaction continues to improve, a large percentage of customers indicate they do not fully understand their card’s terms, benefits and rewards program, according to our J.D. Power 2013 U.S. Credit Card Satisfaction StudySM released today.
Satisfaction in each factor has increased, as have ratings for Brand Image. However, it is important to note that opportunities for further improvements remain. Recommendations for additional focus areas for credit card issuers include:
Deepening customer awareness and understanding of terms, benefits, and rewards, potentially through proactive communication campaigns. Issuers should use consistent messages via all available channels to deepen understanding and awareness of offerings.
Continuing to invest in functionality of self-service interaction channels. Given the continued shift toward digital interaction channels, customers areconsistently looking for advancements in technology. Therefore, websites need to be maintained and upgraded as necessary to ensure easy navigation and availability of clear and concise information. Mobile apps are becoming more widely used; thus, the focus on improving functionality will become increasingly important going forward. Finally, clear processes for handling customer questions/requests submitted via email or online chat must be developed. Issuers must provide the same level of service courtesy and knowledge that is delivered through personal channels, such as the branch and call center.
Maintaining focus on delivering a high level of service during every interaction, given the importance of call center. Although customer contact via this channel is infrequent, every interaction carries a larger weight in overall satisfaction compared to the other interaction methods. Issuers must implement a customer experience framework that addresses customers’ needs and expectations by focusing on employee recruitment, training, coaching, and recognition in order to achieve the desired experience levels.
Preventing problems, as well as eliminating barriers for resolution. Analysis of problem data and determination of problem root causes may help banks adjust policies and procedures.
The 2013 Credit Card Satisfaction Study includes responses from more than 14,000 credit card customers and was fielded from May through June 2013
Retail banking customers in Canada have high expectations when it comes to using technology to conduct their banking business. Banks may not be meeting these expectations, especially in mobile, which may be driving the lower ratings for innovation provided by customers. According to our J.D. Power & Associates 2013 Canadian Retail Banking Customer Satisfaction StudySM, in 2013, 58 percent of customers perceive their bank as being technologically innovative, down from 66 percent in 2012.
While mobile penetration is not catching on as fast in Canada, compared with the United States (8% vs. 18%, respectively) banks could help raise mobile banking penetration and customer satisfaction by improving their mobile offerings. Providing a mobile banking option is critical in migrating routine transactions, especially deposits, out of the branch, helping to reduce bank costs while providing convenience for customers.
According to our study, during the past 12 months, mobile banking customers in Canada have used mobile to conduct a banking transaction 33 times, on average, compared with 51 times in the United States. Transactions may include making a deposit, transferring money from one account to another, finding a location, checking an account balance or paying a bill, depending upon the services offered by the bank.