Jim S Miller

Thoughts on the Client Experience and Banking

Making sense of the JD Power Retail Banking Satisfaction Study

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Customer satisfaction with banks is starting to rise for the first time since 2007, according to the J.D. Power and Associates 2011 U.S. Retail Banking Satisfaction Study which was released last week.  The overall bank satisfaction score returned to 2008 levels with the improvement driven by increased satisfaction with in-person branch interaction, product offerings and account information.  While large and medium banks improved the most, small banks continue to have the highest scores, which is true across all age groups.  Scores increased the most in the North Central Region, while the greatest decline was in the Southeast.

2011 Winners and Losers by Region

California

Winner: Rabobank

Last Place: Bank of America

Florida

Winner: Regions Bank

Last Place: Chase

Mid-Atlantic

Winner: Northwest Savings Bank

Last Place: Citibank

Midwest

Winner: First Midwest Bank

Last Place: Citibank

New England

Winner: Eastern Bank

Last Place: Chase

North Central

Winner: First Merit Bank and Flagstar Bank (tie)

Last Place: Old National Bank

Northwest

Winner: Umpqua Bank

Last Place: Bank of America

South Central

Winner: Hancock Bank

Last Place: Bank of America

Southeast

Winner: First Federal (FS&LA of Charleston)

Last Place: Wells Fargo

Southwest

Winner: Arvest Bank

Last Place: Bank of America

Texas

Winner: Frost National Bank

Last Place: BBVA Compass (Compass Bank)

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.

While it appears that many of these are independent factors, usually the scores for a given bank are highly correlated.  There is significant consistency in how customers score a bank across all the factors (just look at the Power Circle Ratings at jdpower.com to see how obvious this is).  Customers who feel generally satisfied with their bank will score them well across all dimensions unless they have a significant experience that causes them to do otherwise.  In our research at Prime Performance, we find that customers who feel the bank employees are friendly, rate the bank higher on unrelated factors, such as wait time and even interest rates and fees.

 

If you want to improve your bank’s score, or you did very well and want to make sure you maintain your high score, what should you do? Most of the highest scoring banks do not have the lowest fees, best interest rates, most locations, truly differentiated products or better alternative delivery channels.  As long as a bank is reasonably competitive in these areas, they often have a minimal effect on customer satisfaction.  Fixes in these areas can be very expensive, but the good news for banks is that there is a much more cost effective solution to increase customer satisfaction. Through experience with our clients that are included in the J.D. Power rankings, the banks that have succeeded have done so by having an unrelenting focus on their customers.  The logical starting point is in-branch transactions.  If you can’t satisfy your customers in-person, you will never be able to do so remotely or through technology.

At Zappos, the on-line shoe store that is known for providing outstanding customer service, most transactions take place on the web with no direct human interaction.  Nonetheless, Zappos puts a major focus on the service they provide through their call center (see Best Practices in Client Experience Strategy: Zappos).  Their philosophy is that at some point each of their customers will call about something and they better get it right.  They consider the call the make or break touch point.  In banking the same is true with the branch, and even thought branch visits are declining, it will be for the foreseeable future.

An outstanding branch experience directly improves customer perception of the banks in-person account activities and problem resolution (which usually takes place in the branch), but also helps customers feel better about the bank’s product offerings, facility, account information and even fees.  When banks focus on getting the in-person transactions right, it usually spills over to the rest of the bank. According to Michael Beird, director of banking services at J.D. Power and Associates, “big banks have exhibited strong performance this year in the areas of service that customers value heavily. Enhancing in-person interaction with increased employee courtesy and knowledge, improving the overall experience of branches and reducing problems that customers experience are all areas in which large banks have traditionally lagged their smaller peers.

Banks spend a significant amount of time and money on product development and technology initiatives.  Based on what customers are saying, they would be wise to divert some of this investment to “friendly” development.  Hiring employees with the right attitude, defining what is “friendly” (smiling, eye contact, thanking, etc.), and measuring the customers’ reaction to how they are treated are all key elements in “friendly” development.  Banks that invest in this type of development will more effectively meet the needs of their customers, have a more loyal customer base, and will see greater satisfaction from their customers.  Big banks need to increase their efforts in this area to further close the gap with their smaller competitors, while small banks should not take their “friendly” lead for granted and need to ensure that their practices are consistent during every interaction with every customer.  At Prime Performance, we can help you with this “friendly” development and help you achieve a customer experience that is exceptional.

 

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Written by Jim S Miller

April 28, 2011 at 11:52 am

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