As displayed in the chart below, a critical first step towards acquiring new customers and/or deepening product penetration is to improve brand awareness. In basic terms, a customer cannot open an account with a given bank if they don’t know the bank exists, or if the bank isn’t top-of-mind during the initial phases of the purchase funnel.
Data from the 2014 J.D. Power Retail Banking Satisfaction Study finds that this can be challenging for many institutions, particularly those characterized as Midsize Banks (those with $2 billion-$33 billion in deposits). For example, Bank L is a Midsize Bank headquartered in the Chicagoland area and has approximately 60 branches across three of Chicago’s primary counties (Cook, Lake and Will counties).
However, study data indicates that Bank L is currently struggling with brand awareness in its home market despite their strong network of branches within the Chicago area. Specifically, when shown a list of banks and asked to identify which they were aware of, only 31% of residents in the Chicago area selected Bank L.
In this case, improving brand awareness must be a key focus of any growth strategy for Bank L. Considerations should include, but not be limited to:
- Implementing a creative and effective overall marketing campaign: This can include marketing/advertising messaging delivered via multiple avenues (TV, radio, newspaper, direct mail). Additionally, secondary research finds that many banks are utilizing new and creative marketing ideas designed to not only improve awareness, but also help differentiate the brand from its peers. In many cases, these messages promote the idea of ‘community involvement’.
- Creating and maintaining a digital presence: When seeking to improve brand awareness, particularly amongst younger demographic segments, it is critical to maintain a digital presence to help attract potential customers. Social media sites such as Facebook and Twitter must be maintained and used to effectively promote the brand, the brand’s values and any pertinent promotions currently being offered. Additionally, banks must make effective use of their own website to effectively promote their values and promotional offerings.
- Measuring/tracking brand awareness and brand image metrics: Collecting and analyzing data can help institutions measure the effectiveness of campaigns designed to increase awareness. Additionally, measuring and tracking metrics related to brand image/perception (ie. ‘innovative vs. conventional’, ‘proactive vs. reactive’, etc.) can help direct the messaging content to deliver in marketing/advertising campaigns.
Within the retail banking industry, account initiation is often viewed as a key ‘moment-of-truth’. In many cases, the opening of an account/product/service is the first interaction between customer and a bank. Other times, account initiation represents an opportunity for banks to engage tenured customers in a discussion about their evolving financial needs.
As part of the 2015 Retail Banking Satisfaction Study, J.D. Power measures customer satisfaction with the opening of banking accounts, products and services. Specifically with regards to accounts that were opened in a branch, study data finds that customers are most dissatisfied with the experience opening checking and HELOC products. Conversely, new account satisfaction is highest among customers opening personal loans and CD’s.
There are different variables driving the high and low satisfaction scores for these products. For example:
-HELOC dissatisfaction is driven by complexity of the process, as customers opening these products are significantly more likely to say the process was ‘more complicated than expected’.
-The level of engagement between bank and customer is lowest for customers opening a checking account, which often leads to lower levels of product awareness/understanding. In turn, the lack of awareness drives lower satisfaction scores.
-Opposite of the experience reported by customers opening a checking account, those opening a personal loan/line of credit indicate that the branch representative was very thorough in assessing needs and was more likely to provide useful information during the interaction.
Understanding which aspects of account initiation are most troublesome for their unique customer base can help a bank implement necessary changes. In some cases, focus should be placed on simplifying processes. Other times, providing additional training/education to staff can help them more accurately assess customer needs and provide additional value during the interaction.
Data from J.D. Power’s U.S. Retail Banking Satisfaction Study finds that younger investors have greater willingness to open investment accounts/products at their primary retail banking institution.
For example, among Affluent Investors, 37% of those in the Generation Y age cohort hold a mutual fund/annuity with their primary retail bank. Conversely, only 9% of Affluent Investors in the Pre-Boomer age cohort hold a mutual fund/annuity with their primary retail bank.
On one hand, this could be good news for ‘banking’ institutions looking to increase their share of investable assets held. On the other hand, traditional ‘investment-only’ institutions may be at risk of losing valuable asset share moving forward.
Full-service investment firms looking to maximize the ROI of proactive outreach to their clients should be aware that the ‘demand’ for proactive outreach varies considerably by demographic segment. In other words, developing proactive outreach programs should not be viewed with a ‘one-size-fits-at-all’ approach.
The graphic below, which is based on data from the 2014 J.D. Power Full-Service Investor Study, looks at investors that are ‘highly satisfied’ with the Account Offerings available at their firm. While highly satisfied ‘Affluent’ investors report an average of 9.9 contacts from their advisor, and 7.2 contacts from their firm, high satisfaction among investors in the ‘Mass Market’ and ‘Mass Affluent’ segments can be maintained with less frequent outreach.
Understanding the differing levels of service that drive investor satisfaction may help firms create communication strategies that meet client needs, while also managing the costs associated with proactive outreach. It is also important to note that investors across different demographic segments have different preferences with regards to the channel used for communication, and the types of information that should be provided to them proactively.
Data from three fielding waves of the 2014 J.D. Power Credit Card Satisfaction StudySM finds that the percentage of credit card customers ‘switching’ their primary card has increased significantly over the past year. More specifically, there is a significant increase in the percentage of customers opening a new credit card account (46% vs. 41% in 2013).
The increase is driven by ‘revolvers’ (customers that typically pay less than their total monthly balance), who cite ‘rewards’ and ‘lower interest rates’ as their primary reasons for switching.
With the competition for capturing ‘share-of-spend’ increasing, it is important for credit card issuers to improve the customer experience in an effort to improve loyalty. One key focus area is ‘rewards’, which have become a key driver of both acquisition and spending habits. In response, issuers must provide attractive offerings, market them effectively and ensure that their customers are aligned into the appropriate programs and card products. Additionally, the creation and marketing of successful rewards programs may also improve acquisition metrics by enticing competitor customers to switch their primary card.
The full 2014 J.D. Power Credit Card Satisfaction StudySM, including data from all four fielding waves, releases in August, 2014.
While all businesses would likely consider customer satisfaction a ‘nice to have’, many question whether investments towards improving the customer experience will actually result in a positive impact on the bottom-line. Across multiple industries, analysis of consumer data collected by J.D. Power shows a clear relationship between high customer satisfaction and improved financial indicators.
Specifically within the retail banking industry, highly satisfied customers tend to hold a greater share-of-wallet with the institution and also report significantly higher scores related to loyalty and advocacy.
Next week, we’ll be releasing our 2012 U.S. Retail Banking Satisfaction Study (SM).
This study will explore why its a must for banks to understand their customers’ needs on both individual and regional levels, and identify what actions they should take in order to meet their customers’ expectations.
Get an insider’s look!
Join us for the 2012 U.S. Retail Banking Satisfaction Study post-publish webcast on Tuesday, April 24th at 2:00pm EST to learn:
- How the industry did overall
- Which banks performed best-in-class across the 11 geographical regions
Attendees will also gain insights into key findings from the study that address:
- Approaches to managing costs without sacrificing customer satisfaction, loyalty or retention
- Understanding drivers of attrition and why keeping, or losing customers is not just about fees
- Improving revenues and satisfaction with a value proposition that is understood and meaningful to your customers
For more information regarding the J.D. Power and Associates 2012 U.S. Retail Banking Satisfaction Study, please contact Holly Zagresky at Holly_Zagresky@jdpa.com
This special 5-part “how to” blog series will detail the fundamentals of branch account sales and service delivery including:
- Needs Assessment
- Ensure products meet customer needs
#2 Needs Assessment
Completely understanding customer needs and recommending products that fully meet those needs!
- Increases customer satisfaction and the likelihood to purchase more products in the future
- Directly impacts product penetration at that first meeting
- Ensures stronger alignment with and better customer understanding of products’ overall value, pricing and features
- Penetration for credit cards and savings accounts—those most likely to be sold at the initial point of sale—is significantly higher when customers perceive their needs have been “completely” identified, however, only 52% of customers indicate having needs understood and appropriate recommendations made
Source: J.D. Power and Associates 2011 Retail Bank New Account Study. ©2011 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.
How: Ask the Right Questions to Find the Need and Build Value
Ask Open Ended Questions
- An open ended question is the chance to clarify the customer’s needs
- Includes general customer inquiry questions
- Keeps the conversation going because it forces an explanation
- Can’t be answered with a yes or a no
- As the level of trust is increases, the answer will get longer
- Sample open ended questions should include: What brought you into the bank today? Where are you currently banking now? What do you like best about your current bank? What do you like least about your current bank?
Be a Great Listener
- In a sales conversation, be careful not to start talking too soon
- Ask the questions people want to answer (listen and plan for the next question)
- Be a good listener, not a bad talker
- The customer should do most of the talking
- Be an active listener and take notes. It shows the customer you not only heard what they said, but also care about their needs enough to scribe them.
Features Tell & Benefits Sell Service
- Features are important and should be explained clearly. Brochures list features, but don’t simply read from the brochure all account features that exist. Explain the ones that are most important to the customer and speak to them in your own words.
- The customer will not buy bank services because of the features alone like min balance to open account or fees.
- Translate account features into benefits, specifically ones that are most important to them.
- Use figures and perform demonstrations to help translate abstract claims (features) into concrete understandable service points (benefits). For example, demonstrate online banking or calculate for the customer an actual cost savings benefit using real rates.
This is post #2 of a special 5-part “how to” blog series on the fundamentals of branch account sales and service delivery. If you missed it, click here to read post #1 on Greeting Customers.
Just like with couples, the relationship between retail banking customers and their financial institution is complex. As with any relationship, a healthy connection between two parties is one that develops over time and is typically based on mutual respect, trust, honesty and support.
Most of us know that it takes effort for healthy relationships to work! Whether we like it or not however, breakups do happen and in the case of bank customers, they get over them quickly and move on to another bank relationship.
The following are a few valuable insights about why retail bank customers may break up with you and how you can implement a few change initiatives to maintain a healthy connection with your customers….to avoid the bank break up.
Reason #1: Callous Communication – Problems become a customer’s biggest problem
Problem prevention needs to be a high priority for all financial institutions, given the incidence of problems (22% of customers¹ indicate experiencing a problem) and the significant impact that problem incidence has on overall customer satisfaction.
- Ensure customers understand fee structures, deal honestly with them and explain the fees right up front – it improves awareness of fees and minimizes complaints.
- Engage new customers during account initiation to identify their needs and sell them the products that meet those needs …..it lowers the incidence of future problems if they are happy from the start.
- Empower bank representatives (branch and call center) with the necessary authority, and provide proper training that will allow them to address any customer misunderstandings at the first point of contact. It will eliminate confusion for future problems.
 J.D. Power and Associates 2011 Retail Banking Satisfaction Study
Reason #2 – Unmet Needs – You’re not giving them enough of what they want Continue reading ›