The Quirky Reason Big Bank Customer Ratings Are Improving

At the same time banks are losing customers, their customer satisfaction ratings show clear improvement. Huh?

When you think about it for a moment, the two trends not only make sense, they’re directly related to each other. A MarketWatch post highlights a curious revelation from the American Customer Satisfaction Index survey: Satisfaction ratings at big banks, while still markedly lower than credit unions and small banks, improved 1.3%. And here’s the explanation for the rise:

“They are losing the most dissatisfied customers to credit unions and smaller banks,” said Claes Fornell, founder of the ACSI, a national economic indicator of customer evaluations…

“It’s a statistical quirk that if you lose your most dissatisfied customers, your scores will go up,” Fornell said.

The odd takeaway: You’d think that a rise in customer satisfaction would be a good sign, but based on this info, consumers have reason to be wary of companies with recently improved customer ratings.

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http://allbummedout.wordpress.com allbummedout

Excellent points; as people who expect more than a place to park their money abandon these inept banking institutions, those left — who expect NOTHING — will raise their ratings into the stratosphere.

“In the land of the blind, the one-eyed man is king.”
bacotawordpress

Does this say more about the behavior of consumers in an economic recovery or about which consumers are actually recovering (i.e. those in the market for luxury goods).
http://jimsmiller.com Jim S Miller

Claes Fornell’s explanation is that most the dissatisfied customers at Citigroup and Bank of America have moved to credit unions and smaller banks, resulting in a higher ACSI score at these banks. While this may account for some of the increase in their scores, it seems that this would also affect JPMorgan Chase and to a lesser degree Wells Fargo. Citigroup and Bank of America have been two of the most maligned banks in recent years and their scores declined from 2008 to 2009 as a result (some of which might also have to do with them taking their eyes off customer service while they were dealing with other issues). I attribute much of their improvement as a return to pre-crisis levels (although Bank of America still has a way to go to get back to their earlier scores). Chase is moving in the other direction, down 1.5% from 2009. This is the third year in a row their score has declined.

Prime Performance research confirms Chase belongs in last place among the mega-banks. Clearly Chase does not make customer satisfaction a priority. What I can’t figure out is if this is a strategic move or an oversight on their part. Customers are attracted to Chase because of their vast network of branches and ATMs, as well as their frequent offers of over $100 to open a checking account. In our 2010 survey, 35% of Chase customers who recently opened a new account said that a free gift or cash bonus was one of the top 3 reasons why they selected Chase. This compares to 15% across the industry and only 6-8% at credit unions and small banks. Our survey shows that customers who are attracted to banks because of cash bonuses are less satisfied with the service they receive compared to customers who select a bank for other reasons. It may be that Chase’s acquisition strategy is effective enough that they don’t need to worry about retention or that they are more likely to have dissatisfied customers because they are attracting a large number of customers with cash offers.

For my interpretation of the 2010 American Customer Satisfaction Index Results for Banks and Credit Unions: http://insights.primeperformance.net/index.php/post/making-sense-of-the-acsi-results-for-banks-and-credit-unions/

To get a free copy of the Prime Performance 2010 Bank & Credit Union Satisfaction Survey: http://insights.primeperformance.net/index.php/post/credit-unions-and-small-banks-lead-in-customer-satisfaction/

Jim S Miller|PrimePerformance.net