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.
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.
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.