Thursday, July 29, 2010

Small banks' loyalty shines against Big 4

Brisbane consulting firm Engaged Marketing has released findings from its 2010 Benchmarking survey outlining customer experience outcomes for leading Australian banks and other major service industries. Joint winners by a smile, in the banking sector, were Bank of Queensland and Bendigo Bank who both achieved a positive Net Promoter Score (NPS) of 30% and significantly outperformed banking giants Westpac and Commonwealth Bank who achieved negative scores.

Engaged Marketing Founder and CEO Chris Roberts said Bank of Queensland and Bendigo Bank both achieved great scores. The Australian banking category as a whole achieved a score of just 3 percent and didnn't fare nearly as well as US banks who achieved an average category score of 20 per cent.

"What this research shows is that for every one negative comment made about a bank, it takes around four or five positive referrals to negate the damage. Based on around 18 million banking relationships there may be as many as 30 million negative comments being made about banks by their customers every year. This makes achieving a positive customer experience, first time, more important than ever," Mr Roberts said.

The complete benchmarking study ranks high profile organisations and is based on more than 6690 consumer responses Australia wide. All respondents were existing customers of their respective brands. Companies were rated and ranked using the highly regarded Net Promoter Score.

Nine banks were assessed in the innovative survey, including the Big 4, St George, Suncorp, Bank of Queensland, Bankwest and Bendigo Bank. In fact, six of the nine banks achieved negative scores while only Bendigo, Suncorp and BOQ achieved positive scores.

"Net Promoter Score is widely recognised as one of the most accurate measures of customer loyalty and importantly is a proven predictor of business growth," Mr Roberts said.

Based on many of the scores achieved, it seems certain that many main bank customers continue to be disappointed with experiences provided by Australian banks. These results strongly suggest that many Australian banks have huge potential to grow simply by focusing on improving their customer experiences.

"There has never been a more critical time to go back to basics and focus on the customer. The continued strong utilisation of social media injects an additional element of urgency because everyone knows word of mouth is the most effective marketing channel available to customers" he said.

And just in case you thought the importance of word of mouth had lost its edge, according to the Engaged Marketing survey, 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.

Engaged Marketing is a strategic marketing consultancy focused on helping businesses grow by developing fresh customer, marketing and organisational strategies. Engaged Marketing is an approved Net Promoter Score® Loyalty Partner. Chris Roberts is an Industry Fellow at the University of Queensland, Australia. The full 2010 Benchmarking Study is available from Engaged Marketing.

Net Promoter, NPS and Net Promoter Score are registered trademarks of Satmetrix Systems Inc., Bain & Company and Fred Reichheld