The key take-away from the Reputation Institute’s study was that unlike many other consumer products and services, banks are struggling to recover from negative sentiment caused by what consumers see as the financial sector’s role in the recession. In the words of the study, banks need a theme that “… not only resonates with the public interest but elevates the sense of esteem, trust, and admiration they engender.” It is no surprise that the reputation of banks and financial institutions has dropped significantly since 2009. According to the latest Edelman Trust Barometer survey of 5,000 adults in more than 23 countries, less than one-third of Americans trust banks to do what is right. Across the 20 industries covered by the Edelman study, banks, insurance companies and financial services rank as the bottom three industries in terms of consumer trust and reputation. It is clear from this study that companies in the U.S. financial sector have yet to recover their pre- 2009 trust levels. Consumers just do not trust them. Before the tide can turn, financials have considerable work to do to rebuild trust levels among U.S. consumers.Linkage Between Reputation and Advocacy Banks often pay lip service to reputation. But reputation carries both opportunity and risk, not only for the financial services industry but across all business-to-business and business-to-consumer sectors. Why is corporate reputation so important? Why must companies do everything possible to create, optimize and protect perceived reputation and sentiment? Because if they do not, they will not grow; and worse, they might not be around for long. Market Probe’s customer advocacy research approach helps corporate clients understand how to best leverage the insights into reputation to go beyond lip service. After all, if a company can influence and shift customer behavior to grow its reputation, increase trust and make customers like and respect it for all the good it is doing, can any organization afford to ignore its advocates? Market Probe’s studies clearly show the direct connection between downstream advocacy behavior and customer experiences, service transactions, strategic relationships, brand positioning and messaging, and even loyalty program components. There is also direct business outcome connection between advocacy and corporate reputation and trust. This finding deserves targeted attention.
Our 2010 National Retail Bank Customer Advocacy Study of 7,000U.S. adults first identified the correlation between customer advocacylevel (Advocate, Allegiant, Ambivalent, and Alienated) and share ofcustomer. Advocates drive positive business outcomes. Their behavioris important for banks to understand. It is equally important forbanks to understand what is alienating their customers. If a companyfails to understand its alienated customer segment, it is impossible togenerate change through corporate messaging and value propositiondevelopment.The greatest insight that Market Probe gained from ourNational Retail Bank Customer Advocacy Study is thatadvocacy monetizes at a stronger and more consistent ratethan other key customer research measures. A consistenttheme emerged: customer behavior in the marketplace isa direct reflection of advocacy levels. For all companies,the question they need answered is: What is your advocacylevel, and is it helping or hurting your reputation?We found that Advocates have a strong willingness to explore newproducts from their primary bank: 50% of Advocates will considernew products versus only 5% of Alienated customers. Advocates arevirtually certain to have a continued relationship with their primarybank compared to Alienated customers, who are virtually certainof not continuing their relationship. When Advocates consider newproducts and services, they will do so with their primary bank, whileAlienated customers will look to the competition.Clearly, banks must pay close attention to whatever elements ofcommunication, image and experience drive customer behavior.Earned trust and reputation are high on the list. In Market Probe’sbanking study, a significant degree of variation existed within thelevels of advocacy behavior, as demonstrated for the top 15 U.S.banks included. Interestingly, but not surprisingly, the banks with highcustomer advocacy levels also had strong corporate reputations.
Beyond simply creating superior customer experiences, the banks thatearned high levels of advocacy did so in large part because of theirsolid reputations and the trust and confidence they created amongtheir customer bases. One of the key confirming elements of customeradvocacy research is the impact on loyalty behavior, positive andnegative, of informal brand-related communication sent and receivedby customers, rather than the traditional ‘push’ messaging engaged inby companies for decades.The most recent Edelman Trust Barometer study findings identified thedegree to which customer trust protects or undermines reputation.When a company is distrusted, 57% of their customers will believenegative information after hearing it one or two times, compared to15% who will believe positive information after hearing it one or twotimes. Conversely, when a company is trusted, more than 50% of theircustomers will believe positive information after hearing it one or twotimes, compared to 25% who will believe negative information afterhearing it once or twice. These are compelling findings and furtherincentive to look at how a focus on advocacy can not only promotegrowth, but also positively improve corporate reputation.
Our National Retail Bank Customer Advocacy Study shed further lighton the strong relationship between reputation attributes related totrust and customer confidence and Market Probe’s advocacy segments.The attributes related to the elements of reputation and image showedstrong correlations to how our advocacy segments are defined andhow they behave. Those customers who were identified as Advocatesgave high scores to banks they felt demonstrated strong reputation andimage behaviors, while those who felt disengaged with banks providedlower reputation-based scores. Advocates Alienated Is a strong and stable bank 84% 5% Is a warm and welcoming 81% 1% Has a good reputation 87% 2% Has earned my trust and confidence 87% 1% Always looks out for my best interests 62% 0% Always treats me fairly 84% 2% Values my business 70% 0% They go the extra mile and often impress me 60% 1% I feel like I belong at this bank 70% 1% Data shows top two box scores on a 10-point scaleAnalysis of two separate banks’ image and reputation-based attributesoffers insight into which elements are important to leveragingincreased degrees of advocacy, and which detract from positivereputation and may damage a corporate reputation. WithBank A, there are some moderate image-related negative behaviordrivers or creators of alienation, principally the effect on image of alack of consistency. This bank can build greater advocacy levels byleveraging the impact of a reputation and image by taking proactiveinitiatives on behalf of their customers. Bank A
Based on multivariate analysis outputs, it is apparent that Bank B has abigger image and reputation challenge. The single greatest contributorto customer alienation is the inability to earn customer trust andconfidence through service. This type of negative image and reputationwill surely undermine and destabilize this bank’s many customerswho might otherwise be fairly ambivalent about the bank but whoremain customers based on inertia, also creating bank distrust withinother stakeholder groups. Because of its power, this single issue canundermine bank reputation among the general public, employees,vendors and even some of the more positive customers.While Bank B does generate some positive image-related perceptions,including the sense of customer belonging and image of proactivelybeing there for their customers as is evident among their Advocates,the strength of the negativism associated with low trust and confidenceis clearly the first priority for relationship and image fence-mending.It is imperative that a positive communication and value propositionplan is developed to offset the damage caused by a lack of trust andconfidence in the bank. Bank B
The Power of Trust, Reputation and Advocacy It should be noted that these findings on the impact of image and reputation and their relationship to advocacy are not unique to the financial services industry. In truth, virtually every company in every B2B and B2C industry is vulnerable to reputation attack and resulting business impact. As noted by Dr. Leslie Gaines-Ross, Chief Reputation Strategist for international public relations firm Weber Shandwick: “There is an increasingly critical connection between brand and service promise, corporate and brand reputation trustworthiness, the transactional experience (as delivered by people, processes, communications and culture), and downstream customer behavior. Any small ripple in reputation change (such as through a product-related issue, online rumor or executive miscue), brand performance or customer service can have a tsunami-like effect on business outcomes which may last indeﬁnitely.This is especially true now because of the permanency provided by social media.” 1 To further illustrate this point, we look at research results for a high- tech B2B company to demonstrate again that customer Advocacy levels, regardless of industry or business type, impact reputation and image. Market Probe gathered customer insights related to key elements of reputation and image including stable company, positive reputation, reliability, trustworthy company, industry expertise, market leadership, stands out from competitors, investment in the future, as well as related areas of performance that contribute to relationship-building such as ease of doing business, risk reduction, strategic relationship management, understands business objectives. Our study demonstrates both the challenges and the opportunities inherent in customer advocacy-building. Among the image, reputation and relationship diagnostics, the one that leveraged positive behavior the most was “Reduces commercial risk.” This is a performance component which definitely speaks to a greater need for better customer assurance and trust-building – a significant attribute that drives corporate reputation. The level of trust and reputation that customers had in this case study are equally driving a negative
corporate reputation for their customers. The combination of these two reputation elements strongly suggests that this company has its improvement priorities well identified. They need to specifically determine what is behind their poor image and then initiate a tactical and strategic corporate communications program with stakeholders to turn the situation around, as represented by two diagnostics in the graphic below.Concluding Thought Ms. Leslie Gaines-Ross offers a fitting final observation on the increasing importance of trust and reputation on stakeholder behavior, and how to protect and enhance it: “Going forward, to generate lasting trust, positive reputation, and continued consumer conﬁdence for brands, products and services, companies will need to focus on customer-centric leadership, as well becoming more transparent and authentic. They will have to ramp-up inclusion of employees and customers, and more actively engage in ofﬂine and online dialogue with all stakeholders, particularly their advocates. Successful companies will, at the end of the day, stress inside-out and outside-in advocacy in all of their actions and processes to both drive positive business outcomes and be accountable to all of their constituents – even the virtual ones.” 1 Market Probe understands both the power of enterprise image and reputation and the important linkage of perceived corporate trust and reputation to customer advocacy behavior. We have developed actionable tools and techniques through our SHARE+ advocacy research framework and targeted analyses to help companies protect and enhance their reputations. 1 Afterword, from The Customer Advocate and The Customer Saboteur, Michael W. Lowenstein, ASQ Press, 2011