Allegiance has been tracking banking customer experience (CX) since 2007 as part of our Pulse of America benchmarking service. The resulting dataset tells us all kinds of interesting and useful things about the state of the industry. Now I thought I’d share some tidbits publicly. Look out for a series of related posts over the coming weeks.
To begin, let’s consider the state of banking CX at a high level. As part of the Pulse of America methodology, we segment customers into three groups – Engaged, Swing, and Disengaged – based on their responses to a series of engagement-related survey questions. These segments are conceptually similar to the three Net Promoter segments (Promoter, Passive, and Detractor), where Engaged customers are more valuable than Swing customers who are more valuable than Disengaged customers.
Now the news: Since 2007, the Engaged segment has shrunk from 35% to 26%, while the Swing segment has swelled from 55% to 62% (see Figure 1). In other words, more and more banking customers are sitting on the fence.
That matters because declining engagement means declining revenue – and vice versa.
We can’t change the past, so let’s focus on the improvement opportunity. Using our Pulse of America data and some conservative assumptions (and significant effort from Allegiance brain Kyle LaMalfa), we’ve calculated that a retail bank with one million customers stands to gain more than $33 million in annual revenue by moving 5% of customers from the Disengaged segment to the Swing segment and moving another 5% from the Swing segment to the Engaged segment (see Figure 2). That’s a smaller change than we experienced from 2007 to 2013, and we’ve seen actual companies surpass it. It’s achievable.
The $33 million opportunity comes from a combination of increased customer retention, share of wallet, and acquisition from positive referrals. I’ve shared the details of the retention increase below. I’ll follow up with similar details for share of wallet and referral-based acquisition in the next couple of days.
Effective voice of customer (VoC) programs are essential to achieving and measuring this opportunity. If you’re struggling to get your program where it needs to be, check out our new Fast Track Program for Financial Services. It enables banks to implement comprehensive, value-generating programs in just a couple of weeks, versus the months of development and hundreds of thousands of dollars traditionally required.