As appeared in The Financial Brand on August 2, 2012. The Financial Brand, written and published by Jeffry Pilcher, is an online publication focusing on issues and advice that affect bank and credit union brands.
Canadian consumers aren’t happy with retail banks. Irritated by fees and concerned about reliability of banks, satisfaction scores are sagging.
Overall customer satisfaction with banks in Canada has declined this year, due largely to irritations caused by fees, according to the J.D. Power & Associates “2012 Canadian Retail Banking Customer Satisfaction Study” released today.
The primary cause of these souring statistics? An increase in changes to fee structures. 27% of customers said they were subjected to fee changes, compared with only 17% in 2011. Overall satisfaction with fees has dropped 4.1% since last year.
Satisfaction Scores Drag Loyalty and Advocacy Down Too
Any decline in satisfaction scores directly impacts loyalty and advocacy metrics, both of which have dropped year over year across Canadian banks. Compared with 2011, advocacy (the percentage of customers who say they will “definitely” recommend their bank to family and friends) had declined by five percentage points, while customer loyalty (the percentage of customers who say they will “definitely” reuse their bank in the future) declined by four percentage points. Continue Reading›
According to our 2012 U.S. Primary Mortgage Servicer Satisfaction Study released today, Phone Contact accounts for only 15% of the overall Satisfaction Index. However, when a customer has a phone contact with their mortgage servicer, this experience increases in importance and accounts for 57%, becoming the most important factor in determining the customer’s overall satisfaction.
Improvement in this area is critical for banks, and the following best practices will help you to create a more positive customer experience:
Emphasize the “who” vs. the “what”
In many cases, customers who call their servicer are facing major financial challenges that require understanding and empathy. When reps do not demonstrate concern and courtesy, they jeopardize the effectiveness of any knowledge they convey.
Understand what resolution customers seek and set appropriate expectations
Mortgage servicers should take the time to understand customers’ goals before explaining the steps to achieving them and establishing a realistic time frame for resolution.
Strive for first-call resolution
Even when problems are not resolved, avoiding the need for additional customer contacts improves their experience. For more complex issues, set clear expectations and proactively contact customers with updates so they will not need to follow up.
Focus on addressing the most common issues, with first-call resolution as a goal
Designing a simple process to address the most common issues reduces the time needed to achieve resolution. It also demonstrates a level of competency that improves customer confidence in the solutions being provided. Plus, it helps employee morale!
For more insights and best practices, join us for the 2012 Primary Mortgage Servicer Satisfaction Study webcast!
Complementary Webcast Details:
Date: Thursday, July 26 – 2:00 PM EST
For more information regarding this study, please contact: Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com
Data Source: The chart included in this post is from J.D. Power and Associates 2012 U.S. Primary Mortgage Servicer Satisfaction Study.
Our 2012 U.S. Retail Banking Satisfaction Study finds there are three likely outcomes that banks must contend with during the next few years, and all have direct implications regarding the customer experience.
1. Attrition will rise, loyalty will decline
The good news? There have been marked improvements in the measurement of customer retention, loyalty, and advocacy. The bad news? There’s been a notable rise in customer churn. The J.D. Power and Associates study found an increase of two percentage points in the number of customers who say they “probably will” or “definitely will” switch banks in the next 12 months. The trending increases in less-than-loyal customers had abated somewhat in 2011, but today is 4-percentage-points worse than 2009.
What can banks anticipate from this wavering consumer loyalty? Increased switching and attrition, obviously. But consumer utilization of banking products will also drop. The study found that a higher number of customers are reluctant or unwilling to reuse their bank’s products and services in the future, nor are they comfortable recommending their bank to family and friends. This erosion in confidence will also have a notable impact on future organic growth, whether based on share-of-wallet from existing relationships or new acquisitions. After all, fewer fans of your brand means fewer evangelists advocating for your brand. Continue Reading>
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
- What are the top drivers of customer satisfaction with the call center channel for 2012?
- What do customers really care about when it comes to their interaction with call centers?
- Why is who you know more important than what you know when it comes to providing an outstanding customer experience?
- What are the three dynamics that will change, and are changing, the role of the call center forever?
Dive into these topics with Mark Miller, J.D. Power’s resident contact center expert.
DOWNLOAD this complementary presentation.
By Michael Beird and Karen Licker. Original post appeared in BAI Banking Strategies on March 16, 2012
It’s no secret that retail banks across the country face an enormous revenue challenge. In the summer of 2010, regulatory changes to Regulation E went into effect, significantly reducing the revenue banks could earn with their overdraft programs. The second punch came with the passage of the Durbin Amendment in October 2011, which capped interchange fees on debit cards issued by banks larger than $10 billion.
Ordinarily, such legislation goes largely unnoticed by the majority of consumers, but the combined revenue impacts from both of these changes in less than a year put grave pressure on the sustained profitability of America’s biggest financial institutions. In response, some of these banks, most notably Bank of America Corp., briefly experimented with an ill-fated debit card fee, which helped inspire many angry customers to move their relationships over to credit unions and community banks during last November’s “Bank Transfer Day.”
Recent research by J.D. Power and Associates shows that customer defection is continuing a three-year rise. Both large and regional banks are taking the biggest hits, with defection rates increasing from 7.7 % in 2010 to 9.8% this year, likely heavily influenced by the negative press big banks continued to receive in the media as well as enticements from smaller institutions to transfer accounts (see chart, “Customer Defection on the Rise”). Even so, banks such as Bank of America continue to experiment with new fees in order to bolster their depressed retail banking revenues.
Banks need to understand that industry fees, absent of associated real or perceived value, have a direct impact on both retention and acquisition. However, there are three strategies that banks large and small can take to keep their customers from switching accounts:
Continue Reading this article
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For some banks, good is no longer good enough. These companies have become Champions by going beyond satisfaction and exceeding their customers’ expectations, to not only win market share and maximize financial performance, but also raise the bar for other companies, both within and outside their industry.
Congratulations to the following financial services companies who were among the 50 companies recognized as 2012 “Customer Service Champions”:
The J.D. Power special report, “Beyond Satisfaction: J.D. Power 2012 Customer Service Champions–Brands That Deliver Service Excellence to Maximize Business Results,” is based on customer feedback, opinions and perceptions of more than 800 companies in more than 20 industries, gathered from J.D. Power studies conducted in the United States between 2000 and 2011.
For more information about how the 50 J.D. Power 2012 Customer Service Champions differentiate themselves from their competitors, view the entire press release and access an Executive Summary of the special report, available HERE.
We fielded our 2012 Financial Services Screener Survey in November of last year and found that customer defection is continuing a three-year rise (7.7% in 2010, 8.7% in 2011, and 9.6% in 2012 ). Not surprisingly both big and regional Banks are taking the hardest hit with defection rates increasing from 7% in 2010 to 10% this year which could be heavily influenced by the negative press big banks continued to receive in the media as well as consumer programs aimed at encouraging customers to leave big banks in favor of small institutions.
While it would be simple to attribute these trends to unwanted fees or service charges, the assumption would only be partially correct. The data from the 2012 Bank Customer Switching and Acquisition Study implies more complexity than one might otherwise presume. In response to identifying the single most influential reason customers started shopping for a new primary banking relationship, four reasons stand out regardless of bank size, and these are:
Fees and Rates: Either because they are dissatisfied at their current bank and want to shop around, or see more competitive rates elsewhere.
Life Circumstances: A factor largely outside the control of the bank, this includes events such as marriage, graduation, divorce, unemployment and retirement.
Unmet Expectations: A negative driver that some experience, or combination of experiences, did not fulfill the customer’s expectation of what banking at their former primary bank would be like.
Customer Service: A likely tangent to unmet expectations, poor customer service is a condition that, as this year’s data illustrated, is seldom a primary driver but one that sets the conditions for the customer leaving when another trigger (like fees or rates) arises.
While all banks share these four reasons as the top ranked shopping triggers, there are noted differences in priorities depending on which bank the customer had previously.
- One third of customers at the largest banks cite fees and rates as the primary shopping trigger incenting them to look elsewhere for a new primary bank relationship.
- Life circumstances trigger shopping more for customers of smaller mid-sized and community banks, as well as Credit Unions. Limited geographical coverage and fewer services severely limit the ability of banks with smaller footprints to meet the needs of many customers going through major changes in their lives.
- As a primary shopping trigger, customer service was identified by only 5% to 9% of customers across all types of banks. However, inasmuch as respondents could only select a single main reason for shopping, it is clear that service is a critical contributing factor, as opposed to the primary driver.
The 2012 U.S. Bank Customer Switching and Acquisition Study is based on multiple evaluations from 5,062 customers who shopped for a new banking account or new primary financial institution during the past 12 months. Below are some highlights from the study, as well as links to how the industry experts are reacting to the results:
- Acquisition of new customers by smaller banks and credit unions has increased by 2.2 percentage points to an average of 10.3 percent in 2012 (from 8.1 percent in 2011).
- Among big banks, regional banks and midsize banks, switching rates average between 10.0 and 11.3 percent, while the defection rate for small banks and credit unions averages only 0.9 percent, a significant drop from 8.8 percent in 2011.
- 9.6 percent of customers in 2012 indicate they switched their primary banking institution during the past year to a new provider. This is up from 8.7 percent in 2011 and 7.7 percent in 2010.
- Fees are the main reason customers shop for a new primary bank. In particular, one-third of customers of big and large regional banks cite fees as the main shopping trigger.
- Regardless of bank size, more than one-half of all customers who said fees were the main reason to shop for another bank also indicated that their prior bank provided poor service.
- In capturing customers who are shopping for a new bank, several of the more successful banks achieve higher acquisition rates through the use of promotions and cash incentives.
- At one of the highest-performing big banks, 19 percent of customers indicate promotions were the reason they selected their new bank.
How are the industry experts reacting to the results of the J.D. Power and Associates 2012 U.S. Bank Customer Switching and Acquisition Study?
Los Angeles Times
Credit Union Times
WONKBLOG by The Washington Post
The Financial Brand
Bank Marketing Strategy
For more information regarding the J.D. Power and Associates 2012 U.S. Bank Customer Switching and Acquisition 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.