Brisbane consulting firm Engaged Strategy has released findings from its independent 2011-2012 Consumer Recommendation & Loyalty Study outlining customer experience outcomes for leading Australian financial institutions. The internationally recognized standard Net Promoter Score (NPS) was used to benchmark top banking brands.
The findings suggest that rather than ‘merely’ satisfying customers, banks should deliver experiences and propositions that are worthy of recommendation. This will allow them to leverage the most effective marketing channel, their very own customers as they spread the word to family and friends.
The bank that led the way was Bendigo Bank with a NPS of 27 per cent. Suncorp achieved 11 per cent and came second, while third place went to Bank of Queensland with 8 per cent.
In terms of categories, Credit Unions scored 36 per cent, second tier banks (Bendigo Bank, Bank of Queensland, Suncorp & St George) scored 10 per cent and the four majors achieved an average score of -12 per cent. The overall industry score was 0 per cent.
Engaged Strategy Founder and CEO Christopher Roberts said, “By focusing on creating experiences worthy of recommendation, banks can create more promoters and our research has found that promoters of a financial institution are 50 per cent more likely to buy additional products than detractors.”
And just in case you thought the importance of word of mouth had lost its edge, according to the Engaged Strategy study, recommendations from friends or family still has the greatest influence on purchase decisions by a mile, with 45 percent of respondents stating that it was the greatest influence when making a purchase decision compared to other marketing mediums. In addition, 38 per cent of customers said that the primary reason they choose their current bank was because of a recommendation from someone they knew.
“Our research shows that for every one negative comment made about a bank, it takes around four to five positive referrals to negate the damage. A bank may do many good things however one negative comment can have a devastating effect as bad news travels fast, especially nowadays with social networking. This makes achieving a positive customer experience, first time, more important than ever,” Mr Roberts said.
“When you factor in the above, it’s an economic no brainer that banks need to focus on creating experiences worthy of recommendation, not mere satisfaction, to drive growth.”
The complete benchmarking study ranks high profile organisations and is based on more than 2470 consumer responses Australia wide. Eight banks were assessed in the innovative survey, including the Big 4, St George, Suncorp, Bank of Queensland, Bendigo Bank and an amalgamated group of Credit Union customers.
All respondents were existing customers of their respective brands. The Net Promoter Score measures customers’ likelihood to recommend an organization on a scale of 0 to 10, where 0 is highly unlikely and 10 is highly likely. Those who gave their brand a score of 0 to 6 were classified as Detractors, while those who gave a 9 or 10 ranking were classified as promoters. The Net Promoter Score is the percentage of Promoters minus Detractors.
Engaged Strategy is a strategic consultancy focused on helping businesses grow by developing fresh customer, marketing and organisational strategies. Engaged Strategy is an approved Net Promoter Score® Loyalty Partner. Christopher Roberts is an Industry Fellow at the University of Queensland, Australia. The complete 2011-2012 Financial Institution Consumer Recommendation & Loyalty Study is available from Engaged Strategy.
Net Promoter, NPS and Net Promoter Score are registered trademarks of Satmetrix Systems Inc., Bain & Company and Fred Reichheld