While
the U.S. economy may be showing signs of a modest recovery, retail
banks continue to struggle with their most basic mission: satisfying
customers. In fact, a recent consumer survey reveals that overall
satisfaction of retail banking customers has decreased for a fourth
consecutive year, to 748 on 1,000-point scale, primarily due to low
marks in customer service, according to the J.D. Power and
Associates 2010 U.S. Retail Banking Satisfaction Study.SM
To gauge consumer attitudes, J.D. Power recently surveyed nearly 48,000
retail bank customers across the United States. Respondents were asked
to rate their bank on a variety of topics encompassing account
activities; account information; bank facility; fees; problem
resolution; and product offerings.
Results of the study show that poor customer service is the most common
reason why customers switched banks in 2010. According to the study, 37
percent of customers who changed their primary banking relationship in
2010 did so because of poor customer service at their previous bank.
This represents a real missed opportunity for banks, according to the
study.
“As retail banking customers become considerably less loyal, banks need
to focus on getting the fundamentals right,” said Michael Beird,
director of the banking practice at J.D. Power and Associates. “Banks
who get back to the basics—such as maintaining a clean branch and
greeting customers as they enter the branch—may help to alleviate some
of the distress customers are feeling and increase overall
satisfaction.”
Performing simple service acts such as greeting customers as they enter
the branch, offering additional assistance, and thanking them for their
business may increase overall satisfaction by nearly 50 index points.
However, less than one-half of customers reported experiencing those
services.
Loyalty
suffers
J.D. Power and Associates research indicates a clear connection between
customer satisfaction and customer loyalty. Generally speaking,
satisfied customers are loyal customers. On the flipside, customers who
report lower levels of satisfaction are much more likely to switch
service providers, no matter the industry.
According to the study, expressed loyalty to banks, which is measured
by the percentage of customers saying they will “definitely not switch”
in the next 12 months, has fallen significantly during the past three
years. It was only 34 percent in 2010, compared with 46 percent in
2007. Further, the gap between larger and smaller banks is
considerable, with 40 percent of customers at smaller banks reporting
that they will definitely not switch, compared with 33 percent at
larger banks.
High fees often cited as reason for switching
Fees continue to have a major impact on customer loyalty, as well.
According to the study, 29 percent of customers who switched banks in
2010 cited high fees as their reason for leaving. The study also finds
that customers can be highly satisfied even when paying fees, provided
that they receive sufficient value for the price paid. Fee-paying
customers with above-average fee satisfaction indicate better
experiences with branch access and appearance, promptness of being
served, and the bank’s Web site navigation and range of services.
“While fees have a significant impact on customer satisfaction, banks
can mitigate this effect by giving the customer choices,” said Beird.
“Customers tend to be considerably less dissatisfied when they have
different overdraft options, such as transferring from a savings
account or sending a balance alert.”
The way customers bank is changing
As technology continues to infiltrate every aspect of daily life, banks
too need to adapt to changing customer preferences. According to the
study, 51 percent of customers report a preference to bank online—an
increase from 44 percent in 2008. In addition, 7 percent of customers
report using a mobile device to check balances, transfer funds, and pay
bills.
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