Ipsos Loyalty - Retail Banking Loyalty Report - Australia 2011
Ipsos LoyaltyIndustry Reports - 2011Retail banking – Australia
What is your customerretention & growth strategy?A record $12 billion collective profit for the first half of fiscal What do I need to do toyear 2011 and Australia’s big four now rate in the top 20 for acquire more customers?banks globally (in terms of market value). With the help of a ACQUISITIONfew purchases (St. George & Bankwest) and GFC related Customer Shareconsumer flight, Australia’s big four have seen their share of How do I get my current customersdeposits swell from 69 to 81 percent. Quite the enviable to use me for more of their banking Retention of Wallet products & services?position to the American big four where they hold roughly 39 SHARE OF WALLETpercent of all customer deposits.Quite the list of accomplishments but these successes are drawing Aquisition What do I need to do keepunwanted attention – often in the form of negative media and most the customers I have?recently in the form of a government inquiry aimed at improving CUSTOMER RETENTION“competition and efficiency in the country’s banking sector”. We have some ideas. In early 2011 we spoke to 1,000 Australians What will this translate to? A more level playing field for smaller about their experiences in retail banking with the specific goal ofbanks perhaps. An increase in viable banking options for banking understanding what was driving their behaviour.customers? Only time will tell. Why did they choose their bank? Why are they loyal to their bank?In some ways this retail banking back-story is just noise – Where are the opportunities to grow your business with existingfrom a customer retention & growth strategy, the questions customers?haven’t changed: What follows are highlights of our findings.
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 Top 4 Banks vs Other Banks – A Why did you choose your main bank? B Key loyalty measures Previous experience with this bank 44% 89 83 Fees and Interest rates 77 75 80 Smaller banks lead 38% 64 on loyalty except 52 58 for share of wallet The reputation of the company 34% 25 27Friends or family recommended it to me 26% The experience at the branches Loyalty Brand Likely to Share of Recent 26% Index preference stay core trend in business spend Experiences and Top 4 banks Other banks 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 loyaltyD. 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 How does the Australia banking industryC Are your valuable customers at risk? D compare to the rest of the world? 34%28% 28% 25% 21% 22% 23% 20% Top 4 banks Other banks Loyalty Index Brand Preference Satisfaction Recommendation Low value vulnerable Low value content Australia US UK China India High value vulnerable Profitable Loyal
Service, ease and problem resolutionWe 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 feelthat extra bit of loyalty to their bank?After the basics, the most important drivers of loyalty are those things you do to make life easierfor your customers – personalised service in the branch and on the phone, resolving theirproblems, and making key personal contact points easy (ease of getting in touch and ease ofusing your phone banking system) Overall customer service Rates and charges Service in branch Loyalty/rewards scheme Service on phone All Banks Accurate statements Internet service Top 4 Financial advice Staff knowledge Other Range of products Friendliness Products & services Ease of getting in touch Complaints handling Personalized service Branch convenience Ability to resolve issues Ease of telephone banking Waiting time on phone Waiting time in branches Internet banking system Top 10 drivers of retention
Where are the leaks?Sometimes your customer retention & growth strategyisn’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% Savings accounts 79% 69% Around 23% of credit Credit cards card holders are 53% leaking to other banks Day to day current or checking accounts 57% 54% 38% Around 24% of Mortgage mortgage holders are 29% leaking to other banks 15% Personal loans 10% Insurance to cover your income, mortgage / credit 5% repayments 2% Sharedealing / investment trading accounts 4% 2% % with product % having this product with main bank
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 SATISFACTION RECOMMENDATION 15Australia’s scores are US bank customers are arepresented by the blue 12 bit more likely thandotted line and all other Australian customers toscores are relative to 7 recommend their bank.Australia. 6 5 4 1 0 1 -1 -2 -2 -2 On the whole, UK bank customers -6 are less loyal than -5 Australian bank customers. -16 Australia US UK China India
What’s behind the Ipsos Loyalty Index?Ipsos surveyed 10,000 customers of different brands in different sectors; and surveyed them againa 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 combinationof both of these in the Loyalty Index that provides the extra predictive validity above and beyondsingle item measures. Customer Attitudes + Behaviour = Loyalty Prediction of 12 month churn Brand preference 73% 68% ATTITUDINAL 60% LOYALTY 55% 57% 49% 51% Likelihood to stay 44% Loyalty Index BEHAVIOURAL Share of business LOYALTY Recent spending All industries Banking Likelihood to recommend (NPS) Likelihood to continue Satisfaction Loyalty Index
About the researchWe surveyed 1,000 Australians and asked them a series of questions aimed atunderstanding what was driving their behaviour towards their main bank. Questionsincluded:• 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 Loyaltybrett.firstname.lastname@example.org +61 2 9900 5130 - office