Investing at ‘Banks’ – A Potential Risk for Investment-Only Institutions?

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.

JDPower_Investment_Webinar_finalv2

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Optimizing the Frequency of Proactive Contact for Full-Service Investors

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.

fsis slid

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.

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Competition for Credit Card ‘Share-of-Spend’

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.

credit card switching chart

The full 2014 J.D. Power Credit Card Satisfaction StudySM, including data from all four fielding waves, releases in August, 2014.

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Does Customer Satisfaction Really Matter?

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.

ROI of Customer Satisfaction_Retail Banking

 

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Your Bank Hasn’t Earned the Right to be on LinkedIn

By Mark Zmarzly, SVP of Financial Services at ACTON Marketing

A few weeks back I decided it was time to write a blog post on “How Banks Can Best Use LinkedIn.” But then Jeffry Pilcher at TheFinancialBrand.com wrote this great post: 12 Steps Financial Marketers Can Take To Get The Most From Their LinkedIn Page.

Like most things at TheFinancialBrand.com, it was very comprehensive and informative. So there went my post. I guess I’ll just write about Grumpy Cat again.

But then I thought, do banks belong on LinkedIn? I don’t mean that from a simplistic point of view, I meant that from a philosophical stance. Have they earned the right to be involved in social selling? The answer is no…not yet.

As I have more and more conversations with bankers, investment peeps, realtors, and others in consultative sales, I’m convinced that bankers don’t understand the power of LinkedIn. I don’t believe they know what it means to have a holistic brand that is consistent online and offline and that is centered on delivering focused, relevant, buyer-centered content and assistance. That’s what social selling is about. That’s what LinkedIn is about!  

Forgive me if my soapbox is too high, but I’ve been involved with the selling and marketing of banking products for eight years – holy crap? Is that right? I’m not that old!!!! – and it seems as if many, many, many bankers out there like to believe that the Internet was never invented. They seem to think of themselves as keepers and disseminators of information. And by this I mean they tell people about their products and hand out brochures.

They say they “get mobile” but most think of these channels as new methods to disseminate info, not as part of a revolutionary shift in the balance of sales power and processes.

If you want to better understand how much the sales process and environment has changed in the last decade, please read To Sell is Human by Daniel Pink. One of Pink’s main points is the value of content curation within the new sales environment.

If you don’t understand curation, you don’t know the true value of LinkedIn.  And if you don’t curate, you’re missing out on an unmet need in today’s financial customer. Quite frankly, most of you are missing this.   

Your bank must embrace the role of curating financial information in the lives of its customers and prospects before you can fully realize the power of LinkedIn. Until then, you will only be able to establish a presence but never a meaningful impact.

I’ll talk more about this in a future post and upcoming webinar. If you have specific questions (or gripes) please connect with me before then.

About Mark Zmarzly:
Mark Zmarzly is SVP of Financial Services at ACTON Marketing, and an accomplished marketing, business development, banking, and creative professional with demonstrated success solving customer acquisition, marketing, and profitability problems. He has worked with financial institutions from 1 branch up to 1,700+ branches in the areas of marketing, copywriting, account management, consulting, teaching, social media, and business development.
You can find his insights on issues facing the financial industry at http://ihelpbanks.com/ and on Twitter @BankMarketing. You can also connect with him on LinkedIn at http://www.linkedin.com/in/markzmarzly.
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Voice of the U.S. Retail Banking Customer

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

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3 Reasons Customers May Break Up With Your Bank & How to Avoid Them

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.

Prevention Tips

  • 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.
[1] 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 ›

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5 Resolutions to Raise Customer Satisfaction

With the holidays behind us and 2012 well underway, I was wondering whether it’s too late for us to add a couple of resolutions to the list that has probably already been broken (Gym visits? Dieting? Smoking? …) In a cross-industry comparison of 2011 satisfaction scores below, I highlighted the research studies which pertain to banking and credit cards. While all 3 studies showed improvement in satisfaction last year, it is painfully obvious that a lot more can and should be done to address the needs and expectations of our customers. Therefore, I propose a list of five changes which, if adopted as part of the New Year, would likely raise customer satisfaction in financial services again this year and help narrow the gap with other service industries that typically outperform banking each year.

Resolutions for financial services:

Greet customers with sincerity and compassion:  Regardless of whether it’s in person or over the phone, customers can sense a disingenuous welcome or hello. We each have the ability to make someone else’s day a little better or to relieve some stress by smiling and saying ‘hello’. Acknowledging a customer upon arrival is the single most impactful behavior to in-person satisfaction in our Retail and Small Business Banking studies, affecting the customer’s subsequent perception of satisfaction in other areas such as wait time and account initiation. Likewise, courtesy for phone agents starts with the greeting and affects overall satisfaction of the call session.

Call customers back before they call you:  When working on a customer question, problem or other issue, we often wait to call a customer back until there is resolution. Unfortunately, in the meantime, customers often grow impatient at the lack of information while waiting and call the bank…sometimes several times. When the bank finally calls the customer with resolution, customers often feel the call was the result of their persistence and not what the bank planned all along. If a problem or question cannot be resolved at the initial point of contact (best practice) or within 24-hours, the customer needs a call informing them of the current status and anticipated timeline for resolution, along with proactive call at regular intervals until the problem is closed out. But this also leads to another resolution… Continue reading ›

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