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. This is the second in a series of posts in which I share tidbits of insight to help practitioners make the business case for improvement.
As I described in my last post, we segment customers in our Pulse of America panel 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.
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 simple terms, that means more and more banking customers are sitting on the fence.
That matters because declining engagement means declining revenue – and vice versa.
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. In other words, it’s achievable.
The $33 million opportunity comes from a combination of increased customer retention, share of wallet, and acquisition from positive referrals.
I shared the details of the retention increase in my last post. Here are similar details for referral-based acquisition:
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.