Bank Satisfaction: Up Or Down?

American Banker reported on JD Power’s 2008 Retail Banking Satisfaction Study, which surveyed more than 19,000 people in January of this year. According to the article:

“Rising fees and poor complaint resolution were people’s chief gripes in a retail banking customer satisfaction survey that gave the industry poorer grades than a year ago.”

Sounds reasonable.

But what the article failed to mention was that in February, American Banker reported on the latest American Customer Satisfaction Index study which found that, in a survey of 18,000 consumers, satisfaction with banks was higher than the previous year.

So, is satisfaction with banks up or down?

My take: It’s hard to believe that consumer satisfaction with banks is up. The impact of the credit crisis, rising fees, and tough economic conditions overall have been building for a while now. The Consumer Confidence Index has steadily declined for at least a year now. It’s hard to believe that any consumer-focused industry would be experiencing increasing satisfaction in this environment.

Debating if overall satisfaction is up or down, though, obscures some more important questions:

1) What’s Wachovia doing right? As banks’ index dropped 3.5%, Wachovia’s score increased by about the same percentage. In the ACSI study, banks as a group scored 78. Excluding the five largest banks — of which Wachovia is one — the score was 80. Wachovia’s performance flies in the face of other firms’ declining scores, and is in sharp contrast to the other large banks which dragged the industry down.

2) What’s up with credit unions? According to the American Banker article, the JD Power study included credit unions, which “accounted for 9 points of the drop in this year’s overall score.” That’s very counterintuitive, and seems to contradict plenty of press releases from CUs themselves touting their astronomically high member satisfaction rates.

3) Is satisfaction the right thing to measure?
Trust me, the last thing I want to do is give the Net Promoter Syndrome sufferers an opening here, but we’ve got to face the facts: If two large-scale studies that purport to measure “customer satisfaction” with banks can produce directionally-different results, maybe there’s something wrong with the measure that’s being used.

Bottom line: While you can’t blame the firms whose satisfaction scores increased for tooting their horns, I do hope that behind closed doors that the banks are giving a bit more scrutiny to the JD Power and ACSI findings, and doing what any good marketing analyst would do: Trying to accurately attribute the change in results — whether negative or positive — to the factors that influenced those changes, whether they be internal effects (like improved or diminished service levels) or external factors (like economic conditions).

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6 thoughts on “Bank Satisfaction: Up Or Down?

  1. Ron,

    Many of us in the “experts” category (not always a complimentary label, I know) have been beating the drum for many years that “satisfaction” is a poor predictor of customer behavior and therefore a poor measure for *any* business to hang its hat on. Yet it persists, propelled in part by these kinds of highly publicized studies that keep selling the satisfaction snake-oil. Satisfaction is at best a measure of how well a business is doing in meeting minimum expectations.

    I’m not a net promoter fan either, but there is one thing about it I like: it shifts the focus from satisfaction to customer behavior, which is what really drives business results. But it is utterly unable to explain *why* consumers are doing what they are doing.

    Brian Lunde

  2. @Brian: Thanks for your comment. I’m going to pick a nit with you here: I don’t think NPS shifts the focus to behavior at all. It asks about “intention”. If it measured the number of customers who actually referred the firm to friends/family I’d like the metric a lot more. But as it stands, measuring “likelihood to refer” on a 10-point scale, I don’t think it’s any better than “how satisfied are you?”.

    The second point that I want to respond to (and I’m not picking nits anymore) is the “satisfaction is a poor predictor of behavior” comment. You’re absolutely right. And it just goes to show how a metric like “satisfaction” can become the de facto standard without any critical analysis of why it’s being adopted.

  3. Ron, point well-taken re: intention vs. actual behavior. But, if you rely only on actual behavior metrics, it’s a bit like driving via the rear-view mirror. Behavior has already happened.

    You also need predictive, upstream measures (similar to quality management, where we need measures in the process, not just at the end, to manage to results). That’s where behavioral intentions (and the attitudes underneath them) can have value in a measurement architecture. I can speak for our firm’s experience, at least: we have empirically proven in a number of client situations that behavioral intentions (well-measured, and not limited to recommend) *do* predict actual future behavior. Naturally the prediction isn’t perfect, nor would I argue the relationship is absolutely stable. But it is definitely good enough to use diagnostically to drive action planning around how to impact actual future behavior.

    So it’s a both/and; of course actual behavior is crucial to monitor, but you also need leading indicators.

    Brian

  4. Pingback: Customer Experience Leadership

  5. Here’s to consider – if we look for consumer advocacy – brand recommendations – online then we have an organic way to measure naturally occurring brand and product recommendations.

    We have done this for Mini (and others) and changes in the Online Promoter Score are a leading indicator of changes in sales.

    More here:

    http://humanvoice.wordpress.com/2008/05/19/brand-advocacy-matters-2/

    This is actual behavior (recommendations) not intention (sure I would recommend that brand).

    TO’B

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