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.

US SBB Account Initiation, PO & Credit services_Final_11.6

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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Managing Staff Turnover

There was an article in American Banker last week titled “Big Ideas for Banks in 2014”, and one of the topics focused on the importance of retaining talented employees at bank branches. The article mentioned that high levels of employee turnover can hurt the ‘relationship’ between customers and the bank, which in turn can impact the bank’s ability to retain accounts.

This theme was also very evident in JD Power’s 2013 Small Business Banking Study (released in October 2013). Analysis of study data found that 43% of small business customers had their account manager changed during the past 12 months, and of those, 13% report that their account manager changed two or more times.The impact on satisfaction is significant, as shown in the chart below.

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More importantly, turnover of small business account managers can also have a significant impact on financial performance. Study data clearly shows that small business customers who experience account manager turnover report lower levels of intended loyalty and share of wallet held with the institution. Turnover of account managers also drives an increase in reported problems, which can also be costly for financial institutions through the allocation of valuable resources and labor time associated with problem resolution.

But while an ideal scenario is for financial institutions to keep account manager assignments stable over time, in reality, changes will occur for a variety of reasons. In those cases, there are some best practices that financial institutions can follow that may mitigate the negative impact of account manager changes:

First, it is important that institutions act quickly when account management changes. Customers who are affected by a change should be notified as soon as possible and introduced to their new account manager. Delaying the notification can ultimately have a negative impact on customers’ overall banking experience, especially customers who attempt to contact their account manager and learn they are no longer there.

Second, it is critical that newly assigned account managers reach out to their customers and schedule a time to meet with them. During this meeting, it is important for the new account manager to establish an understanding of the customer’s needs and expectations (e.g., how often customers want to meet, what communication method customers prefer).

Third, new account managers must ensure they are providing the most appropriate solutions based on the customer’s business needs. They must be responsive to customer contacts, responding on the same day of the contact, if possible, and proactively reaching out to customers at least once every three months.

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Small Business: Respect and Dedication

Original post by Banking.com Staff on December 4, 2012

In a recent blog on Banking.com, we explored how small businesses don’t always get the respect they deserve from the banking world. There’s no question that this sector of the economy is always vital, and increasingly optimistic. In fact, the number of businesses that report being ‘better off’ jumped from 16 percent in 2009 to 33 percent in 2012. This is also a market rich with possibility: on average, small businesses hold deposits four times greater and loan balances 15 times greater than retail banking customers.

And yet, this market continues to rank near the bottom in banking satisfaction.  So what’s going on—and what can the industry do to make thing better? The new J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study, a comprehensive research report that identifies and highlights the situation described above, digs deeper into the problems and identifies many of the pain points.

As mentioned in the previous blog, credit is still the primary issue, but it’s not the only one.  The J.D Power study lays out more fundamental problems too. In particular, while small businesses are sometimes lumped in with retail banking, there are major differences between the two. Continue reading ›

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Small Business Banking Still the Red-Headed Stepchild

Our J.D. Power and Associates 2012 U.S. Small Business Banking Satisfaction StudySM  suggests that banks should focus on small business customers because of the value they represent, when compared to retail customers. On average, small businesses hold deposits four times greater and loan balances 15 times greater than retail banking customers.1 Small business customers also carry higher levels of personal banking business than the average consumer. In addition, the profit margins on small business customers are typically larger than those on larger corporate banking customers.

Yet, based on the results of the study, just released today, it appears that small businesses, like Rodney Dangerfield, get no respect. Despite overall satisfaction increasing by 19 index points year over year to 736 (on a 1,000-point scale) in this year’s study, it still represents one of the lowest-scoring financial services businesses that J.D. Power and Associates examines. Only mortgage servicing is lower. Even its perennial low-scoring counterpart, credit card, has surpassed small business banking in satisfaction to levels enjoyed in the retail banking sector.

Now in its seventh year, the study measures small business customer satisfaction with the overall banking experience by examining eight factors: product offerings; account manager; facility; account information; problem resolution; credit services; fees; and account activities.

The Small Stuff Matters
The study finds that when small business banking customers are greeted by name, the positive impact on overall satisfaction is 106 points. However, this occurs only 47 percent of the time, compared to 64 percent of the time among retail banking customers, representing a 17-percentage-point gap. This disparity occurs even though small business customers bank in person at the branch more than twice as often as retail customers (36 times vs. 16, respectively, on an annual basis). Continue reading ›

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A Few Post Halloween Banking Tips &Treats

In case you missed a few of our recent online events and complementary research reports, we’re including them for you here.  We promise, just like the day after 1/2 price Halloween candy, it’s not a trick. Just a heartfelt way for us to treat you, our loyal banking fiends and fans for your continued supportEnjoy!

What Do Small Business Owners Expect From Their Bank?

This exclusive webcast provides an inside look into the results of our J.D. Power and Associates 2012 US and Canadian Small Business Banking Satisfaction Study that will be released next week.  Below are only some of the many issues discussed during the webcast:

  • How customers’ perceptions have changed since 2011
  • The latest trends emerging in the small business banking industry
  • Which factors are having the biggest impact on customer satisfaction

Download the full webcast

The Dividends of Improving Best Practices for Social Media Research

In this whitepaper, we’ll show you that without well-established and proven guidelines on query construction and data extraction, very different results and conclusions can be obtained by different analysts attempting the same social media data search.

In extreme cases, analysts can create such highly divergent queries that the associated data leads to different answers to even simple questions, such as:

  • Which brand is my main competitor?
  • Is Product1 more of my brand’s conversation this month centered around product?
  • Is the sentiment expressed toward my brand this month more or less positive than the sentiment expressed toward my brand last month?

Download the full whitepaper

Using Voice of the Customer Information to Improve Business Performance: 5 Keys to Success

This presentation explores how clients use J.D. Power and Associates and other Voice of the Customer data with ROI or other business metrics to analyze under-performance to drive improvement.

Download the full presentation Continue reading ›

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What Do Small Business Owners Expect From Their Bank?

With the fluctuating economy and new banking regulations continuing to affect the expectations that small business owners have of their banking experiences, financial institutions need to be armed with the insights that can help them meet and exceed these expectations. They need to know:

  • How customers’ perceptions have changed since 2011
  • The latest trends emerging in the small business banking industry
  • Which factors are having the biggest impact on customer satisfaction

Our J.D. Power and Associates 2012 US and Canadian Small Business Banking Satisfaction Studies will provide these insights and much more!

Join us for an exclusive webcast during which we will give you an insider’s look into the results of these studies!

Webcast Details:

DATE:  Tuesday, October 30

TIME:  2:00 – 3:00 PM ET

SPEAKER:  Jim Miller, Senior Director, Banking Practice at J.D. Power and Associates

 

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2011 US Small Business Banking Satisfaction Study

The 2011 Small Business Banking webcast recording is now available!

Please click here to download a complimentary copy.  You’ll get an insider’s look into the study results, including the following:

  • How customers’ perceptions have changed since 2010

  • The latest trends emerging in the small business banking industry

  • Which factors are having the biggest impact on customer satisfaction

The 2011 Small Business Banking webcast recording provides these insights and much more. Download your complementary webcast recording today!

 

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What Matters MOST to Small Businesses?

I have the distinct honor of presenting the J.D. Power trophy to M&I Bank for the closing session at the Small Business Banking Conference next week in Scottsdale, AZ. I have been asked by a number of bankers and media alike what Small Businesses found most satisfying this year in their banking relationships with M&I Bank. From our research, here is a brief summary of what stood out most in contributing to their achievement.

Account Management: 77% of M&I Bank small business customers reported they had someone assigned to their relationship. Our research shows that small companies, particularly those under $1 million in annual sales, appreciate having a name of someone who is knowledgeable and caring. Ironically, frontline Customer Service Representatives score just as well as Business Bankers in satisfaction for these smaller firms. As needs grow more complex, of course, the role of a Business Banker or Branch Manager becomes the more likely contact.

Problem Incidence: Problems are a fact of life and no one knows that more than small business owners. However, avoiding problems is key to satisfying customers and M&I Bank had the lowest reported problem incidence rate for the 24 banks in the study, 25% versus the industry average of 37%. In many cases, banks with fewer problems demonstrate the ability to answer questions and resolve issues at the point of contact, before a concern becomes a problem in the customer’s mind.

In-person Performance: M&I Bank had strong performance this year in both the efficiency associated with servicing branch customers, as well as the knowledge demonstrated by frontline personnel. While Online continues to grow in importance as a primary channel for information and routine transactions, Small Businesses are still dependent on branches for many day-to-day activities. Focusing on branch fundamentals such as peak time staffing, courtesy, product knowledge and proactive communication remains an important priority in achieving customer satisfaction for these customers.

These are just a few of the performance elements from this year’s research that made a difference to the customers of top performing banks and demonstrate just how important personal service is to the Small Business owner.

Congratulations again to M&I Bank on this year’s achievement in J.D. Power and Associates 2011 Small Business Banking Study!

 

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Who Ranks Highest in Small Business Customer Satisfaction?

The study, now in its sixth year, measures small business customer satisfaction with the overall banking experience by examining eight factors: product offerings; account manager; facility; account information; problem resolution; credit services; fees; and account activities.

 

Drivers of Satisfaction Among the Highest Performers Include:

  • Relationship management and the quality of assigned contacts
  • Positive in-person experience
  • Expedited problem resolution
*Effective July 2011, BMO Financial Group, the parent company of BMO Financial Corp., acquired Marshall & Ilsley Corporation (M&I). As a result, M&I Marshall Ilsley Bank, M&I Bank N.A. and The Harris Bank N.A. have since merged into Harris N.A.
Source:  J.D. Power and Associates 2011 U.S. Small Business Banking Satisfaction Study
Charts and graphs extracted from this post must be accompanied by a statement identifying J.D. Power and Associates as the publisher and the J.D. Power and Associates 2011 U.S. Small Business Banking Satisfaction Study SM.  No advertising or other promotional use can be made of the information in this post or J.D. Power and Associates survey results without the express prior written consent of J.D. Power and Associates.
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The Plight of Small Business Banking

Everyone probably remembers that one kid in school who just never fit in or was not accepted by the other kids in the class.  Maybe he was too smart…or shy…or short…or tall.  But whatever the reason, he just didn’t fit in.  Gym class was the worst, of course. When it came time to choose up teams, the kids would fight over who would have to take him onto their team.  For the last kid chosen, the gym teacher would often have to assign him to one team or the other while the other kids groaned or complained how unfair it was.  Childhood is a painful time and not knowing how or where you fit in can be a troubling feeling that creates stress, sadness, confusion and frustration.

That situation is typical of what Small Business owners go through with their banks.  It often starts off well enough, with the Customer Service Rep making the customer feel like the bank values his business.  He gets introduced to the staff and even has a wonderful bank calendar for the office!  Life seems great, at least until something goes wrong, or questions arise….maybe the first statement arrives with a few surprise fees.  He calls the 800 number on the statement but gets transferred around because it’s ‘a business account’ and the agent cannot access those accounts. After several frustrated calls, the customer soon discovers that Small Businesses often get lost in the banking ‘abyss’.

What’s going on?  Many banks lack a strategy on how to handle the Small Business owner. He may be assigned to the Mid-Market or Commercial Division, in which case his $2M annual sales is a rounding error compared to average accounts in Corporate.  Or he is assigned to the branch, but his needs are more complex than the average consumer and the branch staff lacks the focus, time or capacity to take the time to understand his needs.  In other words, no one wants to choose the Small Business owner for their team and the gym teacher ends up assigning him to a team by default. Continue reading ›

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