Building Investor-Focused Relationships

Data from the J.D. Power U.S. Full Service Investor Satisfaction Study clearly shows that good market performance influences satisfaction.  However, it’s the development of strong relationships with investors that determines which firms thrive. Firms must ensure that advisor actions align with investor expectations and, thus, strengthen both loyalty and advocacy.

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Keys to building strong relationships include:

Ensure financial planning activities clearly define a strategy based on key needs and goals. As the relationship progresses, plans must adapt to changes in both the investor’s life circumstances and the broader financial environment.

Tailor the communications approach to the unique needs of the investor instead of using a “one-size-fits-all” approach. Investors want to believe their advisors understand them and their needs, which begins with interacting via their preferred method.

Build transparency into all interactions. Two key issues for all investors are whether they are making as much as they can and whether they are paying too much. Ensuring there is clarity in both areas will help to build trust.

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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.

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Improving ‘Engagement’ with Tenured Business Banking Customers

Data from J.D. Power’s 2013 Small Business Banking Satisfaction Study finds that Product Offerings satisfaction declines significantly as a customer’s tenure with the bank increases. Customer perception of product-related communication (or lack thereof) is a key driver of the satisfaction differences noted across different customer segments.

Analysis of customer verbatim comments may indicate that banks are more focused on communicating with newer business customers, in an attempt to ensure satisfaction and ultimately increase loyalty and cross-sell potential. Conversely, longer-tenured customers may feel ‘forgotten’ as the level (or quality) of communication received from their bank decreases over time.

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It is important for financial institutions to stay in-touch with their business customers, particularly those with longer tenures, as those customers appear to be more critical of their bank’s attempts to communicate with them. And it is especially important to focus on engaging tenured business banking customers that DO NOT have an assigned account/relationship manager.

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‘Personal Touch’ significantly impacts satisfaction with mortgage origination

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.

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The Impact of Fee Changes in Retail Banking

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.

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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.

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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.

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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.

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Improving Affluent Customer Satisfaction to Increase Loyalty

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.

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Financial Impact of Reducing Problems among Credit Card Customers

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.

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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.

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Canadians Less Satisfied With Their Banks

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 & Associates2012 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.

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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

 

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Phone Contact is Key For Mortgage Servicer Satisfaction

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. 

 

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