Frequent visitors less fulfilled

Research shows the number of visits to a bank branch can affect customer satisfaction

By Craig Phillips

An old maxim states that familiarity breeds contempt, and in retail banking this appears to be partly true.

A new benchmark tracking study of customer interactions with banks, involving more than 2,500 individuals, suggests there is an optimum level of relations consumers want to have with their primary banking institution.
Those people who never directly interact with their bank and those people who physically interact more than five times a month, are less likely to recommend their bank to friends or family, compared to those who have moderate levels of interaction.

So it would seem that frequency of contact does not equate to higher satisfaction for the majority of customers.
In fact, according to the research half of those who visit their retail bank four or five times a month (perhaps to make a weekly transaction of some form) can be classified as ‘detractors’ - those likely to be unhappy customers trapped in a bad relationship.

Over half (54.3 per cent) of people who tend to never visit their bank and 49.5 per cent of those who do so four times a month can be classed as ‘detractors’.  Likewise, 50 per cent of those who visit five times a month and 44.1 per cent who visit more than five times, are ‘detractors’.

The level of interaction with the highest degree of ‘promoter’ behaviour from customers (those likely to be loyal enthusiasts who keep buying from a company and urge their friends to do the same) was an average of three times a month.  The lowest level of ‘detractor’ behaviour was displayed by those who interact directly twice a month.

This suggests the optimum level of bank customer interaction lies somewhere between two and three times a month.

The research shows that certain transactional products require no relationship. At the other extreme it reveals that once frequency reaches a certain level the probability of experiencing some form of error or mistake with a bank rises.

However for a proportion of retail banking customers, as you would expect for some individuals, repeat transacting does equate to higher satisfaction as it entrenches the business in their mindset.

30.4 per cent and 29.7 per cent of those who, on average, visit their bank in person five times or more than five times a month respectively can be classed as ’promoters’.

This is ahead of 22.5 per cent of those who generally never physically walk into their bank branch in order to conduct their banking.

Overall 24.9 per cent of all participants in the twice-a-year tracking study can be classified as ‘passives’ - those likely to be satisfied but unenthusiastic customers who may be easily wooed by the competition.

From a product point of view, the highest degree of ‘detractors’ are amongst those people with a mortgage (47.3 per cent), which makes sense given the recent rate rises outside the Reserve Bank of Australia’s changes.

The greatest incidence of ‘promoter’ behaviour was among customers with a personal loan (30.4 per cent), while the biggest percentage of ‘passives’ were to be found among those people with a margin loan (25.4 per cent).
From a gender point of view, females were more likely to be ‘promoters’ compared to males.

The CoreData retail banking tracker uses the notion of Net Promoter Score (NPS), and is part of a suite of four new bi-annual tracking measures for the financial services industry. The other areas covered are financial planning, business banking and private banking sectors. Each of these reports breaks customer advocacy down to the individual group levels within all of the four sectors.

Members Equity recorded the highest proportion of ‘promoters’, while among the majors St George was ahead of ANZ in terms of customer advocacy, while CBA followed by NAB had the greatest number of ‘detractors’.

Craig Phillips is head of market intelligence with financial services research group brandmanagement