Jim S Miller

Thoughts on the Client Experience and Banking

ING Direct and Bank of the West Top Bank Reputation Survey

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According to the 2012 American Banker/Reputation Institute Survey, ING Direct has the best reputation of the 30 banks included in the survey. Rounding out the top 5 are Bank of the West, BBVA, Comerica and Ally Bank. Last year’s winner was BMO Harris Bank, which dropped 8 points (on a 100 point scale) falling to 7th overall. Bank of America ranked 28th last year, but their score dropped over 9 points putting them firmly into last place in this year’s survey.

Each bank was ranked by at least 100 people who reported having some level of familiarity with the brand. While some customers ranked banks with which they have direct experience, a majority of the surveys are from people who do not deal with the bank directly.

The reputation scores in the study are derived from survey responses that speak to what Reputation Institute identifies as the seven dimensions of corporate reputation. These are the perceptions consumers have about a company’s citizenship, financial performance, governance, innovation, leadership, products and services, and workplace environment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

My thoughts on this survey….

It is interesting that the top four banks in last year’s survey experienced significant increases from 2010 to 2011, followed by a decline in scores in 2012. Take a look at the three-year trends for Harris Bank, Zions Bank, Charles Schwab and Ally Bank. After a large increase in 2011, in 2012 they are all within one point (on a 100 point scale) of their 2010 score. It makes sense to me that Bank of America’s scores declined by almost 10 points from last year due to the negative press about debit card fees, mortgages and their financial performance, but it seems unlikely that the top four banks from last year would all see their reputation scores drop back to their 2010 levels. As I mentioned above, each bank received a minimum of 100 surveys. I don’t know how many surveys each bank had or the total number in the study. At the minimum of 100, the margin of error is over 9 points. This may account for some of the annual changes in scores.

There are two schools of thoughts on the best way to measure reputation. One is to simply ask people to rate the overall reputation of firms they are familiar with. This allows the consumer to base their opinion on whatever is important to them. The other is to ask consumers to rate firms on a series of different attributes. This is the approach used in this survey by the Reputation Institute. They ask people to rate a company based on seven attributes; citizenship, financial performance, governance, innovation, leadership, products and services, and workplace environment. The advantage to this methodology is that it can give additional insight into why a company has a good or bad reputation. Conceptually I agree with this (it is nice to measure reputation, but better to understand what drives reputation), but I have questions about how well a typical consumer can rate a company on these attributes. This is especially true when people try to rate firms with which they do not have direct experience. I have been in banking for over 20 years and I would find it hard to rate some banks that I am very familiar with on these attributes. How many consumers keep up with the financial performance or governance of a bank they don’t deal with? How can consumers accurately rate a company’s leadership or workplace environment? Without knowledge about these areas, survey respondents end up answering all of the questions based on their overall impression of the company. If they think the company generally has a good reputation, they score each attribute high. In the end, it probably comes out the same as if the survey had asked them to rate based on overall reputation. The danger is that it gives a false sense about how a company scores on the individual attributes.

It would be interesting to add a question to this survey, which is how likely are you to considering opening your next account at each bank. The online banks score well in this survey, yet we know most customers choose a bank based on the location of the branches. Reputation is an important asset of any firm, but leveraging that reputation to gain new customers and retain existing ones is the key driving the bottom line.

 

Related post: https://jimsmiller.com/2011/05/25/harris-bank-ranked-most-reputable-bank-in-u-s-capital-one-ranked-least-the-most-reputable-u-s-banks-2011/

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Written by Jim S Miller

June 26, 2012 at 7:13 pm

Book Review: High-tech, High-touch Customer Service

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Most customer service books focus on either online or offline experiences. Finally there is a book that is relevant to both. I have read hundreds of customer experience books and Micah Solomon’s first book, Exceptional Service, Exceptional Profit, is by far the best. We bought over 200 copies to send to our clients and prospects and is required reading at Prime Performance. High-tech, high-touch customer service builds on the fundamentals from his first book and shows how the use of the right technology, people and company culture create long-term customer loyalty.

 

Lessons from high-tech, high-touch customer service:

  • Perfection is rarely enough. The softer science – care and comfort – is what lets you reach and retain a customer.
  • “Today, what’s been experienced once is now expected.” Customer expectations increase once they see something is possible, especially when it comes to technology. An email confirmation has become so standard that if you don’t get one, you think something is wrong. Companies need to keep up with these increasing expectations.
  • Technology is not a substitute for a customer focused culture. The ongoing technological revolution amplifies the problems of not having a strong culture. The wrong tweet from an employee not steeped in the company culture can spread like wildfire. A poor customer experience with a single employee or online can be all over the internet in minutes. It takes years to build a solid reputation, but it can quickly be tarnished without a strong customer service culture. Solomon talks about the fiasco formula: Small Error + Slow Response Time = Colossal PR Disaster
  • Principles of successful service. The book outlines simple rules for customer service which every company should adopt.
  1. Customers need a choice of channels.
  2. Self-service needs to have escape hatches.
  3. Don’t make your customers think about your organizational chart.
  4. Usability is a science that needs to be respected.
  5. Customers need to be able to shift lanes.
  6. Self-service can’t be set and then forgotten. It’s an endless work in progress.
  7. Your staff needs to have used – recently – your self-service channels.
  8. Ugly upsells through self-service are a brand killer.

 

High-tech, high-touch customer service is a must read for any company trying to create the right mix of people, culture and technology to drive customer satisfaction and loyalty.

 

Written by Jim S Miller

June 18, 2012 at 12:28 pm

Helping Customers Manage Financial Stress Increases Customer Satisfaction

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Sixty-One Percent of Customers Report High or Moderate Personal Financial Stress

Five years into the financial crisis, consumers continue to feel high levels of stress about their personal financial situation.  In a survey conducted in April of over 5,000 bank and credit union customers, 18 percent said they feel a high level of stress about their financial situation.  Forty-three percent have a moderate level of stress, 30 percent a low level of stress and only 8 said they feel no financial stress.

Stress by Generation

Financial stress is fairly uniform across generations, with the exception of Pre-Boomers (born before 1946).  Twenty percent of Gen Y (born after 1980) and Gen X (born between 1965 and 1980) are experiencing high financial stress, 19 percent of Boomers (born between 1946 and 1964) and 11 percent of Pre-Boomers.

 

The Impact of Financial Stress on Customer Satisfaction

The results of this survey show a strong correlation between financial stress and customer satisfaction.  Overall the industry, including banks and credit unions, has a net satisfaction score of 78%.  The net satisfaction score is the percent of satisfied customers minus the percent of dissatisfied customers.  Customers with high stress have a net satisfaction score of only 70 percent, those with moderate stress, 77 percent, low stress, 84 percent and customers with no stress 68 percent.

Helping Customers Manage Financial Stress

In this economy it is inevitable that many customers will feel financial stress, but helping customers manage that stress is not only good for customers but also increases customer satisfaction.  Customers who say their bank is very effective at helping them manage financial stress have a net satisfaction score of 95 percent, with 0.4 percent of customers saying they are dissatisfied with the overall service they receive. Customers who believe their bank is not at all effective at helping them manage financial stress have a net satisfaction score of 48 percent and those who feel their bank adds to their stress have a score of only 20 percent.

With sixty-one percent of customers feeling moderate or high levels of financial stress, banks have the opportunity to differentiate themselves by helping their customers better manage their stress.  In some cases this might be done by discussing product options or making sure customers understand the products and services they have and are in the right product.  Offering financial education, both on-line and in-person will also help customers realize that the banks are there to help them.  Banks which do this will be rewarded with increased satisfaction and loyalty.

Written by Jim S Miller

May 15, 2012 at 7:14 pm

Consumers Believe Credit Unions Have the Best Reputation

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In April 2012, Prime Performance asked over 5,000 U.S. consumers to rate the reputation of business sectors. Each consumer was randomly asked to rate the reputation of 5 out of 34 sectors using a scale of 1 to 7 where 1 is a very bad reputation and 7 is a very good reputation. Excluding sectors which the consumers said they were not familiar, consumers gave over 23,000 ratings.

Credit unions top all business sectors in reputation with an average reputation score of 5.78, followed by grocery stores, 5.50, and community banks, 5.40. Regional banks came in 7th at 5.04 and national banks 18th at 4.15. When asked to rate the banking industry consumers gave it an average score of 3.98, ranking 24th. The bottom 5 sectors are: the mortgage industry, 3.35; the federal government, 3.30; oil and gas industry, 3.26; Wall Street firms, 3.09; tobacco industry, 2.71.

Surveys have shown that the banking industry has a bad reputation, but most customers like their bank. In this survey we wanted to see how consumers rate the reputation of the banking industry when it is broken into smaller sectors. We also wanted to find out how these financial sectors compared to non-financial sectors.

Even though the banking industry rated 24th out of 34 sectors, a majority of the industry has a good reputation. Community banks and regional banks rated in the top 10 sectors. Even national banks rated 18th. There may be a lesson in this for banks and bankers. Defining yourself as part of the banking industry may not help win over potential customers. With only a few exceptions, banks can position themselves as either a community or regional bank. This may be a wise move from a brand and marketing perspective, and might also make for more pleasant conversations with friends and family.

Written by Jim S Miller

May 10, 2012 at 7:12 pm

Satisfaction with Branches Offsets Decreasing Satisfaction with Bank Fees

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JD Power and Associates 2012 US Retail Banking Satisfaction Study

Despite increasing dissatisfaction with fees, overall customer satisfaction is up slightly from 2011, according to the J.D. Power and Associates 2012 U.S. Retail Banking Satisfaction Study. A one point increase in the J.D. Power satisfaction score is primarily due to higher satisfaction in areas such as banking facilities, account activates, and problem resolution.

Chase in Florida achieved the greatest increase in the J.D. Power study with an improvement of 56 points over 2011, followed by Prosperity Bank in Texas, up 53 points. TCF Bank in the Midwest Region had the steepest decline, dropping 52 points this year, followed by Citibank in Texas, down 41 points. The survey shows customer satisfaction heading in different directions at some of the largest banks. Bank of America is in last place in six of eleven regions and their scores declined from 2011 in ten out of eleven regions. Meanwhile, Chase’s scores improved in all ten regions in which they are included, with scores going up between 9 and 56 points. Satisfaction with PNC also increased in all four of their regions, with scores improving by between 11 and 27 points. PNC is also the winner in Florida.

2012 Winners and Losers by Region

California

Winner: Rabobank

Last Place: Bank of America

Florida

Winner: PNC Bank

Last Place: Bank of America

Mid-Atlantic

Winner: Northwest Savings Bank

Last Place: Bank of America

Midwest

Winner: Commerce Bank

Last Place: TCF National Bank

New England

Winner: Rockland Trust Co.

Last Place: Citibank

North Central

Winner: Independent Bank

Last Place: Bank of America

Northwest

Winner: Banner Bank

Last Place: Bank of America

South Central

Winner: Arvest Bank

Last Place: BBVA Compass

Southeast

Winner: First Federal

Last Place: Bank of America 

Southwest

Winner: Arvest Bank

Last Place: BBVA Compass

Texas

Winner: Frost National Bank

Last Place: Citibank

Ten Most Improved Banks (vs. 2011)

Bank Name                                         Region                     Change

Chase Bank                                         Florida                                 +56

Prosperity Bank                                 Texas                                    +53

US Bank                                               South Central                    +38

New York Community Bank           Mid-Atlantic                       +38

First Niagara Bank                            Mid-Atlantic                      +36

TD Bank                                              Florida                                +35

Fifth Third Bank                                Southeast                           +32

Regions Bank                                     Texas                                   +31

Webster Bank                                     New England                     +31

Arvest Bank                                        South Central                    +28

 

Ten Banks with Steepest Declines in Customer Satisfaction (vs. 2011) 

Bank Name                                         Region                       Change

TCF Bank                                              Midwest                             -52

Citibank                                                Texas                                   -41

United Community Bank                  Southeast                           -38

Marshall & Ilsley Bank (M&I)          Midwest                             -38

Regions Bank                                       Southeast                           -37

Citibank                                                New England                    -30

Comerica Bank                                   Texas                                   -28

First Financial Bank (OH)               North Central                    -27

Zions Bank                                          Southwest                          -26

FirstMerit Bank                                 North Central                    -26

 

A little background on the J.D. Power methodology. The score is not based on how satisfied customers claim to be with their bank (i.e. how customers respond to a single question about their overall satisfaction), but instead the satisfaction score is based on the scores for six factors (each of which are weighted based on its importance as calculated by the J.D. Power regression model).

The six factors, as defined from jdpower.com, are:

Product Offerings: This score is based on how customers rate the variety of services available, ease of making account changes, effectiveness of communication regarding products/services and competitiveness of interest rates for their primary financial institution.

 Facility: This score is based on how customers rate the hours of branch operation, number of branches, and ease of access for their current primary financial institution.

 Account Information: This score is based on how customers rate the ease of understanding and clarity of account information provided from their current primary financial institution.

 Fees: This score is based on how customers rate experiences with their primary institution’s fee structures.

 Account Activities: This score is based on how customers rate the various transaction methods used (as applicable) including in-person, ATM, online, automated phone, and phone transactions with a live representative for their current primary financial institution.

 Problem Resolution: This score is based on how customers rate their problem resolution experience with their current primary financial institution.

Written by Jim S Miller

May 1, 2012 at 9:08 am

Vanguard Leads in Client Satisfaction and Loyalty; Scottrade Highest in Satisfaction with Less Affluent Clients

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Vanguard leads other major investment call centers in client satisfaction according to the Prime Performance 2012 Investment Call Center Satisfaction Survey.

Vanguard clients give the firm a Net Satisfaction Score of 81 percent, followed by Scottrade, 78 percent and Fidelity Investments, 77 percent. The average Net Satisfaction Score for the ten firms included in the survey is 67 percent. Vanguard’s 2012 Net Satisfaction Score, increased by 5 percent from 2011. Vanguard and Fidelity are the only firms scoring higher in 2012, 5 percent and 3 percent, respectively, while the industry average Net Satisfaction Score dropped by 3 percent.

A Net Satisfaction Score is the percent of satisfied customers minus the percent of dissatisfied ones. A score of 100 percent is perfect.

The survey, conducted in December 2011, polled 2,543 clients of ten major investment firms who spoke to a call center representative with the past month. The ten investment firms include; Charles Schwab, E*Trade, Fidelity Investments, JP Morgan Chase, Merrill Lynch, Morgan Stanley Smith Barney, Scottrade, TD Ameritrade, Vanguard and Wells Fargo.

In addition to having the highest satisfaction, Vanguard clients are the most likely to continue using the firm over the next 12 months. Eighty-six percent of Vanguard clients say they are likely to continue with the firm, and only 3 percent say they are unlikely, resulting in a net score of 84 percent. Vanguard is followed by Charles Schwab and Scottrade, both with a net score of 81 percent. The industry average is 71 percent. Vanguard is also most likely to be recommended by clients, with 82 percent saying they are likely to recommend the firm and 4 percent unlikely, resulting in a net score of 78 percent. Scottrade also has a net score of 78 percent, with 80 percent of clients likely to recommend the firm and 3 percent unlikely.

Scottrade’s clients rated the firm highest for doing what is in their client’s best interest. Seventy-two percent of Scottrade’s clients believe they act in their client’s best interest and only 5 percent believe they act more in the firm’s best interest, resulting in a net score of 66 percent. Vanguard and Fidelity both have the next highest net score of 60 percent, well above the industry average of 50 percent. Scottrade is also the customer satisfaction leader among less affluent investors. Scottrade receives the highest Net Satisfaction Scores among households with household income less than $75,000 per year and among households with a net worth less than $500,000.

Vanguard scores high in satisfaction and loyalty because they are able to meet their clients’ transactional and emotional needs. Their clients say Vanguard representatives are both friendly and knowledgeable. They ask questions about client’s financial needs, handle most inquiries in one contact, value their client’s time, minimize the effort required by their clients and thank their clients for their business. Operational efficiency is no longer sufficient to create a competitive advantage. Firms need to take the right amount of time with each client to build a trusting relationship. Clients will remember how the representative made them feel long after they have forgotten the reason for their call.

Despite Visiting Branches Less Often, Customers Still Care About Branches

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According to Novantas research, customer preferences, attitudes, and behaviors continue to shift away from branches into remote channels. The survey shows that customers have continued to move away from the branch as their primary channel for core service transactions (see figure 2) and are becoming more self-service oriented. Novantas expects this trend to continue as branch transactions have been declining by 4-5% annually over the last three years.

Source: Novantas U.S. Multi-Channel Customer Research 2012

While customers are moving to self-service channels, they continue to place significant value on physical branches.  According to Novantas, “It is clear that many customers are still very attached to branches, even as they become less dependent on them.” There are still many situations where the branch is the preferred option for interacting with the bank. “Having a branch near where I live” is still the top reason for choosing a new bank and 87 percent of customers claim the branch was an important factor.

 

Forty-seven percent of customers believe that a bank is not legitimate unless it has branches (up from 41 percent in 2011). Among survey respondents who chose “a well-respected brand” as a top reason for selecting a bank, 71 percent said they would never us a bank that did not have a physical branch.

The Novantas research shows that branches continue to be the preferred channel for opening new accounts. For establishing a new banking relationship, 71 percent of customers prefer to use the branch, while 53 percent of customers opening an additional account at their bank prefer to do so in a branch.

Source: Novantas U.S. Multi-Channel Customer Research 2012

 

Novantas sees three distinctive customer segments emerging today: Branch Traditionalists, who mainly use branches, the Ultra-Connected, who make high usage of all channels, including the branch, online, mobile phone and call center, and the Virtually Domiciled, which is a group of customers who use branches infrequently and primarily use remote channels to interact with the bank. Branch Traditionalists (25-40% of the population) visit the branch 3.0 times per month and the Ultra-Connected (30-45% of the population) visit a branch on average 3.6 times per month. The Virtually Domiciled (25-35% of the population) visit the branch about 0.2 times per month.

 

Even though the Virtually Domiciled make infrequent use of the branch, 78 percent claim that branches near home are a top reason for selecting a bank. For this group, this is second only to user-friendly online banking, which is a top reason for 86 percent of the Virtually Domiciled. For all other customers, 92 percent selected branches near home as a top reason for selecting a bank, followed by a well-respected brand and user-friendly online banking, both at 81 percent.

 

The challenge for banks is to balance the desire of customers to make heavy use of self-service channels with their desire to have convenient branches for higher value transactions or for when self-service does not meet their needs. As the number of branch transactions decline, each in-person interaction becomes more influential in fostering customer loyalty. Banks need to make sure they continue to deliver an outstanding customer experience in their branches while improving their self service capabilities.

 

The full Novantas report can be found at: http://www.novantas.com/articlepdf/multi-channel_survey_FINAL_email.pdf

 

 

Written by Jim S Miller

April 11, 2012 at 7:06 pm

Posted in Uncategorized

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