The Role of Loyalty in Financial Services - US - May 2015

SCOPE AND THEMES
What you need to know
Definition
Data sources
Consumer survey data
Consumer qualitative research
Direct marketing creative
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
The market
Banking industry increasingly concentrated
Strengthening economy leads to new opportunities
The consumer
In many FS sectors, majority of customers unsatisfied
Financial service providers seeking referrals should just ask
Loyalty built by customer experience, trust, and relevant services
Parents are engaged consumers
Older consumers more loyal, show higher satisfaction
25-44 year-olds more likely to make recommendations
More affluent consumers most loyal
What we think
ISSUES AND INSIGHTS
How can FS firms convert loyalty into referrals and repeat business?
The issues
The implications
How can FS providers increase loyalty among parents?
The issues
The implications
How can providers deal with issues regarding trust and security?
The issues
The implications
TREND APPLICATION
Trend: Experience is All
Trend: Make it Mine
Trend: Prove it
MARKET DRIVERS
Key points
Number of banks falling
Figure 1: Number of FDIC-insured banks and credit unions, 1995-2014*
With more handheld devices, online banking becomes paramount
Figure 2: US mobile phone sales and forecast, 2012-17
Unemployment falls below six percent
Figure 3: US unemployment rate March 2013-March 2015
With improved economy comes positive outlook
Figure 4: Personal financial outlook, July 2012-September 2014
Women playing more prominent financial role
Figure 5: Individuals with annual income of $150,000 or more, by gender, 2003-13
Millennials face challenge of hefty student debt
Figure 6: Share of debt for consumers aged 20-29, 2005 and 2014
LEADING COMPANIES
Key points
American Express, Discover lead credit card companies in satisfaction
Midsized banks face new technology challenges
Figure 7: J.D. Power customer satisfaction index Rankings, retail banks – Mid-Atlantic Region, 2014
INNOVATIONS AND INNOVATORS
Citi®Double Cash Card rewards consumers for making payments
Figure 8: Citi®Double Cash Card banner ad, 2015
Apple Pay looks to shake up payment industry
Figure 9: First National Bank of Omaha ApplePay ad, 2015
Betterment, Wealthfront offer “Robo-Advisor” investment guidance
Figure 10: Betterment online ad, 2015
MARKETING STRATEGIES
Incentive-based referral strategies are popular
Figure 11: Kroger 1-2-3 Rewards® Visa®  refer a friend offer email, 2015
Figure 12: Chase email, 2015
Figure 13: Chase travel rewards email, 2015
Fraud and security protection can put customers at ease
Figure 14: Bank of America website, 2015
Figure 15: Wells Fargo customer email, 2015
Excellent customer service includes in-person check-ins
Figure 16: Merrill Lynch Retirement Check-up email, 2015
Figure 17: Geico customer satisfaction survey, 2015
Figure 18: Allstate Payment confirmation email, 2015
Discover card offers free credit score as consumer perk
Figure 19: Discover Card account statement, 2015
LEVEL OF CUSTOMER SATISFACTION
Key points
Respondents are satisfied with primary banking provider
Customer satisfaction is not strong in many financial sectors
Figure 20: Current satisfaction level, January 2015
Satisfaction with financial services providers increases with age
Figure 21: Current level of satisfaction – Any satisfied, by generation, January 2015
Opportunity to reach young women via personal bankers
Figure 22: Current level of satisfaction – Satisfied, by gender and age, January 2015
Satisfaction with provider increases with household income
Figure 23: Current level of satisfaction – Satisfied, by household income, January 2015
Several financial services sectors are doing well with parents
Figure 24: Current level of satisfaction – Satisfied, by demographics, January 2015
Black consumers least satisfied
Figure 25: Current level of satisfaction – Satisfied, by demographics, January 2015
LIKELIHOOD TO RECOMMEND
Key points
Consumers not always following through on desire to recommend
Figure 26: Likelihood to recommend, January 2015
Men aged 18-34 likely to recommend several financial sectors
Figure 27: Likelihood to recommend, by gender and age, January 2015
Opportunity for primary banking providers to connect with less affluent
Figure 28: Likelihood to recommend, by household income, January 2015
Majority of social media users are likely to recommend FS providers
Figure 29: Likelihood to recommend, by social media use, January 2015
Hispanics far more likely to recommend
Figure 30: Likelihood to recommend – Likely, by demographics, January 2015
INCIDENCE OF RECOMMENDATION
Key points
Majority of respondents don’t recommend
Figure 31: Actual recommendations, January 2015
Millennials and Gen Xers more likely to make recommendations
Figure 32: Actual recommendations, by demographics, January 2015
Men aged 18-34 most likely to recommend
Figure 33: Actual recommendations, by demographics, January 2015
Recommendations happening on social media
Figure 34: Actual recommendations, by demographics, January 2015
REASONS FOR NOT RECOMMENDING
Key points
Consumers need more opportunities to make recommendations
Figure 35: Reasons for not recommending, January 2015
PURCHASING BEHAVIORS
Key points
Most consumers don’t purchase additional services from providers
Figure 36: Financial services products purchased, January 2015
Consumers aged 55+ are least likely to purchase additional financial services
Figure 37: Financial services products purchased, by demographics, January 2015
Parents two times more likely to purchase additional products
Figure 38: Financial services products purchased, by demographics, January 2015
Opportunity to cross-sell products to Hispanics
Figure 39: Financial services products purchased, by demographics, January 2015
TYPE OF FINANCIAL SERVICES PRODUCTS PURCHASED
Key points
Credit cards the financial product acquired most frequently
Figure 40: Types of financial services products purchased, by demographics, January 2015
Men more likely to purchase additional financial products
Figure 41: Types of financial services products purchased, by gender, January 2015
Consumers aged 45+interested in new investment products
Figure 42: Types of financial services products purchased, by demographics, January 2015
Millennials with mid-level income purchase most additional products
Figure 43: Types of financial services products purchased, by age and household income, January 2015
LIKELIHOOD FOR REPEAT BUSINESS
Key points
Customer loss is a potential issue for most financial sectors
Figure 44: Likelihood for repeat business, January 2015
Loyalty builds with age
Figure 45: Likelihood for repeat business – Likely, by age, January 2015
Social media users more loyal
Figure 46: Likelihood for repeat business – Likely, by social media user, January 2015
Loyalty increases with household income
Figure 47: Likelihood for repeat business – Likely, by household income, January 2015
CONSUMER ATTITUDES TOWARD LOYALTY
Key points
Loyalty built by customer experience, trust, and relevant services
Figure 48: Consumers' attitudes toward loyalty, any agree, January 2015
Consumers associate loyalty to dedication and commitment
Figure 49: Collage of Qualboard quotes and images of consumers’ definition of loyalty, February 2015
Males 18-34 one demographic group whose loyalty may be influenced
Figure 50: Consumers' attitudes toward loyalty – Agree, by gender and age, January 2015
Those with high household income value pillars of loyalty
Figure 51: Consumers' attitudes toward loyalty – Agree, by household income, January 2015
Majority of parents feel they are being taken for granted
Figure 52: Consumers' attitudes toward loyalty – Agree, by children in household, January 2015
LOYALTY INDEX
Key points
Satisfied customers are loyal customers
Figure 53: Current level of satisfaction – Satisfied, by loyalty index January 2015
Loyal customers very likely to recommend services to network
Figure 54: Likelihood to recommend – Likely, by demographics, January 2015
Loyal customers very likely to repeat business
Figure 55: Likelihood for repeat business – Likely, by demographics, January 2015
APPENDIX – TRADE ASSOCIATIONS
American Bankers Association (ABA)
American Financial Services Association (AFSA)
Consumer Bankers Association (CBA)
Credit Union National Association
Independent Community Bankers of America (ICBA)
Mortgage Bankers Association (MBA)
National Credit Union Association (NCUA)