Customer advocacy drives revenue, but few financial institutions practice it
July 22, 2013
Forrester released their Customer Advocacy 2013 report for US banks, insurers, investment firms and credit card issuers in late June. It reports on the perception customers have of their financial institution with respect to the question does your financial institution prioritize customer needs over their own bottom line?, and compares that perception to the customers likelihood to consider the same institution for future purchases. The report ranks the USA’s largest 96 financial services firms based on a survey of more than 50,000 customers. Over the next few blog posts we will summarize the most important findings of the report, and add some commentary from our own experience.
Customer advocacy drives future purchases
The correlation between customer advocacy ratings and likelihood to consider the bank for a future purchase is strong. Customers of organizations with high customer advocacy scores also had a high percentage of customers considering them for future purchases. Organizations with low customer advocacy rates also had a small percentage of customers considering them for future purchases.
For example, USAA was rated top in consumer advocacy in banking, insurance, and investment. Their customers were also the most likely to consider them for their next purchase in all three verticals.
Most financial services firms score badly, especially large ones
The rest of the industry did not score well. 76 of the 96 companies ranked had less than half their customers score them highly on customer advocacy. The report also indicates that the larger a financial institution is, the lower its customer advocacy score. This presents an opportunity for most firms: improve customer advocacy scores relative to peers and increase revenue. The biggest risk lies in front of the world’s largest institutions, because they have the most customers to lose and a larger organization to change. Being large has, in some ways, become a liability.
Customer advocacy presents an opportunity to differentiate
Financial services firms that commit to customer advocacy have the opportunity to set themselves apart and increase their sales per customer. Smaller financial institutions will find this easier to do than largest ones. This truth is reflected in the report’s results as credit unions already out-perform national banks and independent financial advisors already outscore national wealth management brands.
But large firms have advantages over their smaller peers: national branch networks, international relationships, and a much larger product offering. Leveraging their strengths, taking advantage of their ability to make big investments in technology, and committing to customer advocacy offers an opportunity to reverse the flow of customers from large institutions to small ones.
Poor customer engagement technology is the cause of many big financial institutions customer advocacy problems. Single customer file, mobile engagement technology, and smart business processes are the tools needed to commit to improving customer advocacy.
At Recombo we help our customers build these tools. To learn how to redesign your customer onboarding process to be customer-centric, download our eBook The Executive’s Guide to Digital Customer Onboarding.