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Are your customers satisfied? It’s a pretty simple question, and one that elicits a straightforward answer. Either they are, or they aren’t.

 

But when it comes to actually measuring customer satisfaction and loyalty, this question isn’t terribly revealing. In fact, you can say that about several of the seemingly black-and-white queries that retail banks depend on for the answers they need to get an accurate read on their customer base, such as “Would you recommend our bank to someone else?” or “Are you satisfied with your overall banking relationship?”

 

Yes, it is great that customers say they are satisfied. After all, an unhappy customer becomes the customer of another bank. What business isn’t thrilled when clients become evangelists for their brand, promoting their services and products to friend and family? In fact, retail banks have for years weighed customer loyalty using a promoter score system based on the answer to that one question.

 

But how do you get the right answers when you aren’t asking the right questions?

 

Data gleaned from such superficial questions is, at best, incomplete, painting only a partial picture. Many times a customer who identifies himself as loyal to a bank is simply too lazy to go through the hassle of switching accounts to another bank. A stagnant marketplace can often lift loyalty scores. Also truly loyal customers are often forgiving of shortcomings, perhaps too much so, which can obscure flaws that are costing you customers.

 

Simply put, without knowing why someone has remained a customer and digging underneath the simple answer to gauge how deep that loyalty goes, you can’t make smart decisions about marketing, new products or strategies to retain clients and attract new ones. It also means the bank may be missing red flags that warn of trouble spots on the horizon.

 

Data shows that even so called “satisfied customers” leave for greener pastures, or rarely use one institution for all of their banking needs.

 

Research shows that 75% of customers that defect to another bank or financial services company say they were “satisfied or completely satisfied” with your business at the time they made the switch. And it’s an even bigger problem with the all-important Millennials that are expected to drive the banking industry’s future growth as they look to financial institutions in the coming years for retirement accounts, new business loans and home mortgages. This younger, tech-savvy generation that has embraced mobile technology and view banks as a means to process financial transactions, not a trusted financial advisor. Thus, they are far less likely than their parents to stick with a bank. Last year, 18% of Millennial customers switched banks, according to data from Accenture. That was almost twice the clip of people age 35 to 54 and more than six times the rate of Baby Boomers.

 

Just as painful, is that loyal customers aren’t always profitable. Data collected from Informa Research Services’ SEA Score, which measures members and customer engagement, show there is almost no correlation between a customer’s intention to stay with their current financial institution and whether they would use that same bank’s other financial products and services. Just look at credit card transactions, and the impact on your business. One quarter of all consumers use a credit card as their primary form of payment, accord into Informa Research Services. But how many of your customers also use cards from other issuers?

 

Did you even think to ask?

 

For more information on Informa Research Services' customer engagement and loyalty research and The SEA Score™ program, contact us at 800.848.0218 or email info@informars.com.

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