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Wednesday, May 1, 2013

Banks That Only Measure Satisfaction Are Leaving Money on the Table

By Jay Freeman, Senior Adviser

This post is part of Gallup's ongoing series on the shifting landscape for financial institutions. It provides insights into channel optimization, emerging customer behaviors and preferences, product penetration and relationship growth, engaging the most critical affluent and business customers, and reshaping banks' overall value proposition.

I had the opportunity several weeks ago to hear the head of retail banking for one of America’s largest retail banks speak at an industry-sponsored conference. It was notable that he spent at least half of his allotted time talking about what he termed “customer engagement.” While the speaker’s focus on customer engagement was commendable, he eventually revealed that his bank measures engagement by one metric alone: the level of customer satisfaction -- in effect, the customer’s response to the question “Are you satisfied?” on a scale of 1 to 10.

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Customer satisfaction is, no doubt, a good place to begin -- it just isn’t enough. Gallup research has shown that truly different customer behavior emerges when the customer is not only rationally satisfied, but also emotionally attached. Emotional attachment starts with satisfaction, but adds elements of confidence, integrity, pride, and even passion. By measuring these attributes, Gallup’s research has shown that customers can be grouped into four different segments ranging from actively disengaged to fully engaged. We say that these most emotionally attached customers are “fully engaged” with their bank.

Gallup recently polled U.S. retail banking customers as part of Gallup’s most recent Retail Banking Industry survey and found that those who are extremely satisfied with their bank are, in fact, more likely to consider their bank for a host of products, services, and increased deposits. Still, the research shows that banks that only consider customer satisfaction -- even extreme “top box” satisfaction -- without the emotional component, are leaving significant cross-selling and up-selling opportunities on the table. For example, while less than half (45%) of customers who are satisfied say they would consider their bank the next time they needed a product or service, that consideration skyrockets to 83% among customers who are both satisfied and fully engaged. 

Customers who are fully engaged and satisfied are also more likely to say they will open new accounts, switch an account from another bank, increase their balances, add ancillary products and services, or obtain financial planning advice than are those customers who are just satisfied.

 Competitive pressure and the slow economy are conspiring to create an environment where every bank needs to be thinking about how to improve customer engagement, and that is dependent on being able to accurately measure the customer experience. Customer satisfaction is a good place to begin, but it is customer engagement that produces differentiated financial results.

Jay Freeman is a Senior Adviser to Gallup, bringing more than 30 years of leadership experience in retail banking to Gallup and its clients. For more than a decade, Jay led Sales & Service Development within Wells Fargo’s Community Bank, developing bank-wide initiatives to both elevate the customer experience and deepen customer relationships. Jay now brings his executive insights and bottom-line focus to a broader audience, as a regular contributor to Gallup’s Focus on Financial Services blog series.


Emily said...
May 2, 2013 at 2:42 AM  

Very interesting article, thanks. Do you know how engagement was measured in your example above?

SG said...
May 9, 2013 at 8:41 PM  

Would love to understand how one can measure 'emotional attachment' and 'customer engagement'

Anonymous said...
May 10, 2013 at 8:53 AM  

How can we engage the customers ? Any tips ?

Unknown said...
December 12, 2013 at 3:58 PM  

When you say financial landscape? What geographic areas are included in your study? Is this a global trend?

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