Ipsos Loyalty - Retail Banking Loyalty Report - Australia 2011
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Transcript of Ipsos Loyalty - Retail Banking Loyalty Report - Australia 2011
Ipsos Loyalty Industry Reports - 2011 Retail banking – Australia
What is your customer retention & growth strategy?
What follows are highlights of our findings.
What do I need to do to acquire more customers? ACQUISITION
What do I need to do keep the customers I have? CUSTOMER RETENTION
How do I get my current customers to use me for more of their banking products & services? SHARE OF WALLET
Customer Retention
Share of Wallet
Aquisition
We have some ideas. In early 2011 we spoke to 1,000 Australians
about their experiences in retail banking with the specific goal of
understanding what was driving their behaviour.
Why did they choose their bank? Why are they loyal to their bank?
Where are the opportunities to grow your business with existing
customers?
A record $12 billion collective profit for the first half of fiscal year 2011 and Australia’s big four now rate in the top 20 for banks globally (in terms of market value). With the help of a few purchases (St. George & Bankwest) and GFC related consumer flight, Australia’s big four have seen their share of deposits swell from 69 to 81 percent. Quite the enviable position to the American big four where they hold roughly 39 percent of all customer deposits.
Quite the list of accomplishments but these successes are drawing
unwanted attention – often in the form of negative media and most
recently in the form of a government inquiry aimed at improving
“competition and efficiency in the country’s banking sector”.
What will this translate to? A more level playing field for smaller
banks perhaps. An increase in viable banking options for banking
customers? Only time will tell.
In some ways this retail banking back-story is just noise –
from a customer retention & growth strategy, the questions
haven’t changed:
Results in 30 seconds! The key findings you need to take away are: A. Customers continue to rely on experiences and reputations when choosing their banks B. Top 4 banks lead on share of wallet but trail on almost every other loyalty and satisfaction measure
44%
38%
34%
26%
26%
Previous experience with this bank
Fees and Interest rates
The reputation of the company
Friends or family recommended it to me
The experience at the branches
Why did you choose your main bank? A Top 4 Banks vs Other Banks –
Key loyalty measures B
52 64
75 89
25
58
77 80 83
27
Loyalty Index
Brand preference
Likely to stay
Share of core
business
Recent trend in spend
Top 4 banks Other banks
Smaller banks lead on loyalty except for share of wallet
Experiences and reputation are key attractors
Results in 30 seconds! The key findings you need to take away are: C. Leading on share of wallet means top 4 banks have more high value customers
but many are vulnerable in terms of loyalty
D. Australian banks compare favourably with other banks globally on loyalty although they are lagging a little in brand preference and satisfaction, suggesting a degree of loyalty may be due to behaviour and habit
Are your valuable customers at risk? C How does the Australia banking industry
compare to the rest of the world? D
28%
21% 25%
34%
28%
22% 20%
23%
Top 4 banks Other banks
Low value vulnerable Low value content
High value vulnerable Profitable Loyal
Loyalty Index Brand Preference Satisfaction Recommendation
Australia US UK China India
Service, ease and problem resolution We all know that rates & charges and products are important and our analyses confirmed this. But what is really interesting is what else is coming together for customers to make them feel that extra bit of loyalty to their bank?
After the basics, the most important drivers of loyalty are those things you do to make life easier for your customers – personalised service in the branch and on the phone, resolving their problems, and making key personal contact points easy (ease of getting in touch and ease of using your phone banking system)
Top 10 drivers of retention
Overall customer serviceService in branch
Service on phone
Internet service
Staff knowledge
Friendliness
Ease of getting in touch
Personalized service
Ability to resolve issues
Ease of telephone bankingsystemInternet bankingWaiting time in branches
Waiting time on phone
Branch convenience
Complaints handling
Products & services
Range of products
Financial advice
Accurate statements
Loyalty/rewards scheme
Rates and charges
All Banks
Top 4
Other
Where are the leaks? Sometimes your customer retention & growth strategy isn’t about getting new or keeping existing customers
• For many companies the major gains from their customer growth strategy will come from getting their current customers to give them a greater share of their banking wallet.
• Customer deposits in the forms of saving and checking accounts are key to a stable banking business but too many customers are getting other banking products from other providers.
84%
69%
57%
38%
15%
5%
4%
79%
53%
54%
29%
10%
2%
2%
Savings accounts
Credit cards
Day to day current or checking accounts
Mortgage
Personal loans
Insurance to cover your income, mortgage / creditrepayments
Sharedealing / investment trading accounts
% with product % having this product with main bank
Around 23% of credit card holders are leaking to other banks
Around 24% of mortgage holders are leaking to other banks
1
15
12
4
-6
6
-2
-16
-1
-5
7
-2
0
5
1
-2
What’s the norm? Normative data can provide crucial contextual information – nobody likes rates and charges so how do you know if you’re performing well? And if you’re leading the pack locally how do you know if you’re stacking up internationally?
Australian banks compared quite well globally on loyalty but in terms of brand preference, satisfaction local banks were more mediocre – potentially due to a perception that there is a lack of choice. Recommendation is reasonably strong here, whereas in the UK this just doesn’t appear to be something they enjoy doing.
LOYALTY INDEX BRAND PREFERENCE RECOMMENDATION SATISFACTION
On the whole, UK bank customers are less loyal than Australian bank customers.
Australia’s scores are represented by the blue dotted line and all other scores are relative to Australia.
US bank customers are a bit more likely than Australian customers to recommend their bank.
US UK China India Australia
What’s behind the Ipsos Loyalty Index? Ipsos surveyed 10,000 customers of different brands in different sectors; and surveyed them again a year on. The variables that best predicted Loyalty were used to create the Ipsos Loyalty Index.
Loyalty, from our research and experience, is about attitudes AND behaviour and it is the combination of both of these in the Loyalty Index that provides the extra predictive validity above and beyond single item measures.
Customer Attitudes + Behaviour = Loyalty
ATTITUDINAL LOYALTY
BEHAVIOURAL LOYALTY
Brand preference
Likelihood to stay
Share of business
Recent spending
Loyalty Index
Prediction of 12 month churn
55%
44%
57% 49%
60% 51%
73% 68%
All industries Banking
Loya
lty
Ind
ex
Likelihood to recommend (NPS)
Satisfaction
Likelihood to continue
Loyalty Index
About the research
We surveyed 1,000 Australians and asked them a series of questions aimed at understanding what was driving their behaviour towards their main bank. Questions included:
• What banks do you currently have a relationship with?
• What bank do you consider to be your main bank?
• What banking products do you currently own?
• What banking products do you currently own with your main bank?
• How well is your main bank performing across categories like customer
service, having quality products and rates & charges?
We analyzed this information to answer questions like:
• What is the relationship between customer advocacy and new customer acquisition?
• What are the key drivers of customer retention? • Where are the opportunities for banks to increase their share
of their customers banking spend?
Let us know if we can help! Brett Tucker | Managing Director, Ipsos Loyalty [email protected] +61 2 9900 5130 - office