In the middle of a crisis, it’s human nature to deal with things day by day. But a new report from Forrester Research analyst Bill Doyle asks bankers to look ahead and consider what impact the global financial crisis will have on customer loyalty.
The report reveals customer advocacy scores for US banks have fallen to their lowest levels ever – bad news for banks seeking to retain customers in turbulent times.
Closer to home, business banking research house East & Partners has found promoters and advocates are virtually non-existent in business banking in Australia. Less than 1 per cent of all businesses are willing to recommend their bank to a friend or colleague.
Retaining customers will be critical for banks in 2009, and this means bankers are going to have to get better at convincing customers they care.
The financial crisis has driven a larger number of bank mergers, which can be tough on customers. Forrester argues Washington Mutual, Wachovia and Merrill Lynch customers are all likely to experience service hiccups as they are absorbed by their suitors, something which is likely to keep customer advocacy scores low. Westpac and the Commonwealth Bank will also have to work hard to retain St George and BankWest customers.
Customer decisions to switch banks are typically driven by a desire for better pricing (interest rates), lower fees, or better customer service.
Google Insights reveals since the credit crunch there has been an upward trend in the number of searches for “cheap banking”.
The report reveals customer advocacy scores for US banks have fallen to their lowest levels ever – bad news for banks seeking to retain customers in turbulent times.
Closer to home, business banking research house East & Partners has found promoters and advocates are virtually non-existent in business banking in Australia. Less than 1 per cent of all businesses are willing to recommend their bank to a friend or colleague.
Retaining customers will be critical for banks in 2009, and this means bankers are going to have to get better at convincing customers they care.
The financial crisis has driven a larger number of bank mergers, which can be tough on customers. Forrester argues Washington Mutual, Wachovia and Merrill Lynch customers are all likely to experience service hiccups as they are absorbed by their suitors, something which is likely to keep customer advocacy scores low. Westpac and the Commonwealth Bank will also have to work hard to retain St George and BankWest customers.
Customer decisions to switch banks are typically driven by a desire for better pricing (interest rates), lower fees, or better customer service.
Google Insights reveals since the credit crunch there has been an upward trend in the number of searches for “cheap banking”.
Source: Google Insights for Search
Forrester’s Doyle rightly points out “The direct banks’ products are simple and transparent, unlike the synthetic products that got us into the current mess”.
So what are the attributes that drive loyalty?
Forrester’s research has found three attributes which drive loyalty to smaller institutions over larger ones. They are:
1) “My banking institution always honours its promises or guarantees.”
2) “My banking institution offers the best prices, rates or fees.”
3) “Even if not regulated, my banking institution would do what’s right for the customer.”
Perhaps the best thing bankers can do now is try and underpromise and overdeliver?
