The results of Market Force Information’s 2017 Customer Experiences and Competitive Benchmarks Study should serve as a call to action for banks across the country. Despite the best of intentions and millions of dollars invested for customer experience improvements, customer loyalty scores at traditional banks have declined across the board. And not surprisingly, the percentage of consumers who say they intend on switching banks in the next 6 months has edged up to 14% in 2017.  

The Current Situation:

Customer loyalty among the nation’s largest retail banks declined an average of 6.5% as measured by Market Force Information's Customer Loyalty Index (CLI) over the last year.   

This decline in customer loyalty is evident in the deterioration of the two underlying metrics that comprise the CLI: satisfaction with one’s primary bank and the likelihood for a consumer to recommend their primary bank to a friend or colleague. 

In 2016, 1 in 10 consumers were dissatisfied with their primary bank. In 2017, that figure has increased substantially to 1 in 5 consumers who now say they are dissatisfied with their primary bank. Similarly, in 2016, 1 in 5 consumers would not recommend their primary bank. In 2017, that figure has increased to 1 in 4 consumers who say they would not recommend their primary bank. 

Of course, we would intuitively assume that there is a direct relationship between a consumer’s level of satisfaction with their primary bank and the likelihood that they would recommend that bank to friends and colleagues. But what many are not aware of is the significance of that relationship.  

Market Force Information's data scientists have quantified the relationship between those two metrics and found that a customer who is delighted (i.e. gives their primary bank a 5 on a 5-point satisfaction scale) with their primary bank is 4.4 times more likely to recommend their primary bank than a customer who is merely satisfied (i.e. gives their primary bank a 4 on a 5-point scale).

What can be done to stop the decline?

To answer this question, banks must study the broader experience of consumers as they interact with non-traditional financial services and non-financial services providers (e.g., Apple, Amazon, Nordstrom, PayPal, Navy Federal Credit Union, USAA, Venmo, and Zelle). Not only are there lessons to be learned from these customer experience leaders, but opportunities for partnerships or acquisitions as well.       

Traditional banks must also take time out to thoroughly evaluate the state of their current customer experience program. In speaking with dozens of major banks across North America, I have observed that most banks have an abundance of data and enthusiasm paired with inconsistent or, in some cases, practically non-existent execution. A sign hanging in the office of the head of customer experience at one of the largest banks in North America said it best, “Data, data everywhere and not a thought to think.”

Despite the best of intentions and millions of dollars of investment in technology, many banks struggle with understanding and effectively communicating what’s most important, identifying which opportunities for improvement exist and isolating which opportunities will deliver the greatest ROI. Even fewer banks have done a good job of having a consistent, technology-enabled process of conducting insight-driven action planning and driving transparency and accountability for execution throughout the organization.

This lack of execution has not gone unnoticed by their customers. In fact, when asked about their primary bank’s performance on several key satisfaction drivers, a third of consumers said their primary bank did not perform any of them well. Had these banks performed well on all of the satisfaction drivers, they would have experienced a 90% lift in customer satisfaction according to advanced predictive modeling performed by Market Force’s industry leading analytics team.  

If the issues cited above sound all too familiar, Market Force can help. To find out more about how you can improve customer experience, loyalty, and financial performance, or simply learn more about the 2017 Customer Experiences and Competitive Benchmark Study, please schedule a briefing

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Chuck Rogers is the Financial Services Practice Leader for Market Force. By leveraging Market Force Information’s customer experience best practices framework, Chuck enables clients to improve their ability to attract, grow and retain customer revenue streams by providing a unique blend of customer experience thought leadership, research-based consulting and industry expertise.