It’s Personal: Drivers of Member Purchase Intent as a Result of the Branch Experience
What do potential members want as a result of a visit to your branch? Or, perhaps more importantly, what drives potential members to want to open an account as a result of a visit to your branch?
To answer these questions, Kinesis conducted research into the efficacy of the branch sales process and identified several service and sales attributes that drive member purchase intent. In our observational research of 100 credit union new account presentations, mystery shoppers were asked to describe what impressed them positively as a result of the visit to the credit union. Excluding the branch atmosphere, the five most common themes contained in these open-ended comments were:
- Interest in Helping/ Personalized Service/ Attention to Needs,
- Professional/ Courteous/ Not Pushy,
- Friendly Employees, and
- Product Knowledge of/ Confidence in the Representative
To understand the relative importance of these behaviors with respect to purchase intent, shoppers were asked to rate their purchase intent as a result of the presentation. Kinesis used this rating to group these shops into two groups (those with positive and negative purchase intent) and compared the results of these two groups to each other. Of these positive impressions, three have strong relationships to purchase intent. They are present with greater frequency in shops with positive purchase intent compared to those with negative purchase intent.
|
Reason for Positive Purchase Intent |
Relative Frequency Positive to Negative Purchase Intent |
| Product Knowledge of/ Confidence in the Representative | 2.7 |
| Interest in Helping/ Personalized Service/ Attention to Needs | 2.5 |
| Friendly Employee | 2.3 |
The representative’s product knowledge was cited 2.7 times more frequently in shops with positive purchase intent compared to shops with negative purchase intent. Similarly, attention to needs and personalized service was present 2.5 times more frequently in shops with positive purchase intent compared to those with negative purchase intent. Finally, shoppers were 2.3 times more likely to cite the friendliness of branch personnel in shops with positive purchase intent relative to negative.
Member experiences which focus on personal attention, interest in helping, personalized service, professional, courteous and friendly encounters drive purchase intent as a result of a visit to a credit union.
Mystery Shop Key Driver Analysis
Best in class mystery shop programs provide managers a means of applying coaching, training, incentives, and other motivational tools directly on the sales and service behaviors that matter most in terms of driving the desired customer experience outcome. One tool to identify which sales and service behaviors are most important is Key Driver Analysis.
Key Driver Analysis determines the relationship between specific behaviors and a desired outcome. For most brands and industries, the desired outcomes are purchase intent or return intent (customer loyalty). This analytical tool helps mangers identify and reinforce sales and service behaviors which drive sales or loyalty – behaviors that matter.
As with all research, it is a best practice to anticipate the analysis when designing a mystery shop program. In anticipating the analytical needs of Key Driver Analysis identify what specific desired outcome you want from the customer as a result of the experience.
- Do you want the customer to purchase something?
- Do you want them return for another purchase?
The answer to these questions will anticipate the analysis and build in mechanisms for Key Driver Analysis to identify which behaviors are more important in driving this desired outcome – which behaviors matter most.
Next, ask shoppers if they had been an actual customer, how the experience influenced their return intent. Group shops by positive and negative return intent to identify how mystery shops with positive return intent differ from those with negative. This yields a ranking of the importance of each behavior by the strength of its relationship to return intent.
Additionally, pair the return intent rating with a follow-up question asking, why the shopper rated their return intent as they did. The responses to this question should be grouped and classified into similar themes, and grouped by the return intent rating described above. The result of this analysis produces a qualitative determination of what sales and service practices drive return intent.
Finally, Key Driver Analysis produces a means to identify which behaviors have the highest potential for return on investment in terms of driving return intent. This is achieved by comparing the importance of each behavior (as defined above) and its performance (the frequency in which it is observed). Mapping this comparison in a quadrant chart, provides a means for identifying behaviors with relatively high importance and low performance – behaviors which will yield the highest potential for return on investment in terms of driving return intent.
Behaviors with the highest potential for return on investment can then be inserted into a feedback loop into the mystery shop scoring methodology by informing decisions with respect to weighting specific mystery shop questions, assigning more weight to behaviors with the highest potential for return on investment.
Employing Key Driver Analysis gives managers a means of focusing training, coaching, incentives, and other motivational tools directly on the sales and service behaviors that will produce the largest return on investment. See the attached post for further discussion of mystery shop scoring.
Emotional Role in Sales & Acquisitions
Previously we discussed the concept of “moments of truth” where some experiences in the customer journey have far greater importance than others. These moments of truth represent increased risk and opportunity to leave a lasting emotional impression on the customer; a lasting impression with significant long-term implications for both customer loyalty and wallet share. The purchase and sales experience is one such moment of truth. One study published in McKinsey Quarterly has determined that the purchase experience of financial services motivated 85% bank customers to purchase more financial products or invest more assets with the institution. (Beaujean et al 06)
We also introduced the concept of defining emotions using two dimensions of mood: valence (positive or negative) and arousal. Again, as we previously observed, modern research into brain activity during the decision process suggests that decisions are made within the brain before we are consciously of them. Emotions provide a short cut to acting on decisions, and rational thought appears to justify decisions after they are made on the subconscious level.
So…given that emotions play a key role in financial decisions, what are the emotions bankers encounter as part of the sales experience?
The emotions financial service customers experience vary by customer, financial need, circumstance and product/service sought, however the emotions a prospective customer may experience include:
• Excited
• Convinced
• Enthusiastic
• Expectant
• Hopeful
• At Ease/Satisfied
• Distressed
• Anxious
These emotions map to the valance and arousal dimensions as follows:
So…what do we do with this enlightenment?
First, knowing that people are motivated to maintain positive emotional states and change/mitigate negative emotional states, it is important for the banker to recognize the prospective customer’s emotional motivation and offer solutions which will achieve either of these ends.
Kinesis has conducted research into purchase intent as the result of financial service sales presentation which may be instructive. Click here for this research.
Time and time again, in study after study, we consistently observe that purchase intent is driven by two dimensions of the customer experience: reliability and empathy. Customers want bankers who care about them and their needs and have the ability to satisfy those needs. Specifically, our research suggests the following behaviors are strongly related to purchase intent:
| Empathy
Interest in Helping Discuss Benefits & Solutions Personalized Comment Listen Attentively Express Appreciation |
Reliability
Promised Services Get Done Accuracy Friendly & Courteous Professionalism
|
Both empathy and reliability require employees with Emotional Intelligence. These are employees with a positive outlook and a, strong sense of self-empowerment; self regulation; awareness of feelings (both their own and customers); master of fear and anxiety and the ability to tap into selfless motives.
Sales presentations are moments of truth with the potential to leave a lasting impression on the customer with significant long-term implications for both customer loyalty and wallet share – with obvious financial benefits for the institution. We’ve found that branches with above average frequencies of behaviors associated with reliability and empathy experienced a 26% stronger three-year branch deposit growth rate than branches with low frequencies of these behaviors.
Next, we’ll take a look at moments of truth in the context of problem resolution.
The Human Element: Sales and Service, Bank’s Last Link in the Marketing Chain
What if I told you that after all your efforts with marketing (product, positioning and price), there is a one-in-ten chance the branch representatives will undermine the sale?
Now more than ever, it is critical for banks to establish themselves as the primary provider of financial services, not only for deposit accounts but across a variety of financial products and services. Increasing the average products per customer will require a strategic approach to both product design and marketing. However, at the end of this strategic marketing process, there is the human element, where prospective customers must interact with bank employees to complete the sales process.
As part of our services to our clients, Kinesis tracks purchase intent as a result of in-branch sales presentations. According to our research, 10% of in-branch sales presentations observed by mystery shoppers, result in negative purchase intent.
What do these 10% failed sales presentations look like?
Here are some quotes describing the experience:
“There was no personal attention. The banker did not seem to care if I was there or not. At the teller line, there was only one teller that seemed to care that there were several people waiting. No one moved with a sense of urgency. There was no communication materials provided.”
Here’s another example…
“It was painfully obvious that the banker was lacking basic knowledge of the accounts.”
Yet another…
“Brian did not give the impression that he wanted my business. He did not stand up and shake my hand when I went over to his desk. He very rarely made eye contact. I felt like he was just going through the motions. He did not ask for my name or address me by my name. He told me about checking account products but failed to inquire about my situation or determine what needs I have or might have in the future. He did not wrap up the recommendation by going over everything nor did he ask for my business. He did not thank me for coming in.”
In contrast, here is what the shops with positive intent look like:
“The appearance of the bank was comfortable and very busy in a good way. The customers were getting tended to and the associates had the customers’ best interests in mind. The response time was amazing and I felt as if the associate was sincere about wanting me as a customer, but he was not pushy or demanding about it.”
Now…after all the effort and expense of a strategic cross-sell strategy, which of the above experiences do you want your customers to encounter?
Would it be acceptable to you as a marketer to at the end of a strategic marketing campaign, have 10% of the sales presentations undermine its success?
These are rhetorical questions.
Time and time again, in study after study, we consistently observe that purchase intent is driven by two dimensions of the customer experience: reliability and empathy. Customers want bankers who care about them and their needs and have the ability to satisfy those needs. Specifically, our research suggests the following behaviors are strongly related to purchase intent:
- Friendly/Smile/Courteous
- Greeting/Stand to Greet/Acknowledge Wait
- Interest in Helping/Offer Assistance
- Discuss Benefits/Solutions
- Promised Services Get Done
- Accuracy
- Professionalism
- Express Appreciation/Gracious
- Personalized Comment (such as, How are you?)
- Listen Attentively/Undivided Attention
As part of any strategic marketing campaign to both bring in new customers as well as increase wallet share of existing customers, it is incumbent on the institution to install appropriate customer experience training, sales and service monitoring, linked with incentives and rewards structures to motivate sales and service behaviors which drive purchase intent.
Measure and Motivate the Right Contact Center Agent Behaviors
Increasingly banks must operate in a multi-channel environment. While the changing role of the branch, combined with automated channels such as online and mobile, are getting a lot of attention, there remains a key role for the contact center in delivering an effective customer experience. Central to this key role is designing an effective customer experience, comprised of the right sales and service behaviors – those which influence customer attitudes and behaviors in a profitable way yielding the most return on investment.
To provide direction with respect to what sales and service behaviors will yield the most return on investment, Kinesis conducted a series of mystery shops to identify which sales and service behaviors have the most influence on purchase intent. In addition to observing specific sales and service behaviors, mystery shoppers were also asked to rate how the call would have influenced their purchase intent if they had been a real customer. This purchase intent rating was then used as means of calculating the strength of the relationship between each behavior and purchase intent.
To determine the relationship between these service attributes and purchase intent, the data for these different studies was cross-tabulated by the purchase intent rating and subjected to significance testing. [i]
When the percentage of calls in which purchase intent significantly increased is tested against the percentage of calls where purchase intent significantly decreased, nearly all the sales and service attributes are statistically significant at or above a 95% confidence level.
| Significantly Increased | Significantly Decreased | Test Statistic | |
| Product knowledge | 98% | 35% | 9.6 |
| Explanations easy to understand | 99% | 45% | 9.0 |
| When thanked, respond graciously | 98% | 42% | 8.5 |
| Friendly demeanor / pleasant voice | 100% | 60% | 8.4 |
| Express appreciation for interest / thank you for business | 92% | 20% | 8.3 |
| Listen attentively | 99% | 60% | 7.3 |
| Ask probing questions | 79% | 10% | 6.4 |
| Offer further assistance | 85% | 25% | 6.2 |
| Speak clearly and avoid bank jargon | 98% | 68% | 5.8 |
| Listen attentively to your needs | 80% | 25% | 5.3 |
| Mention other bank product | 99% | 75% | 5.3 |
| Clear Greeting | 95% | 60% | 5.1 |
| Invite you to visit branch | 64% | 10% | 4.6 |
| Explain the value of banking with bank | 57% | 5% | 4.4 |
| Offer to mail material / mention website | 66% | 20% | 4.3 |
| Ask your name | 68% | 25% | 3.8 |
| Ask for your business / close the sale | 57% | 21% | 2.9 |
| Avoid interrupting | 100% | 95% | 2.9 |
| If no one available to assist you, offered options | 100% | 0% | 2.2 |
| Professional greeting | 98% | 89% | 1.9 |
The differences between the highest and lowest purchase intent for product knowledge and ease to understanding explanations are the most significant, while a professional greeting is the least significant.
Dividing these behaviors into rough quartiles and comparing them side-by-side, reveals some interesting observations:
|
Quartile I |
Product knowledge
Explanations easy to understand When thanked, respond graciously Friendly demeanor / pleasant voice Express appreciation for interest / thank you for business |
|
Quartile II |
Listen attentively
Ask probing questions Offer further assistance Speak clearly and avoid bank jargon When thanked, employee respond graciously |
|
Quartile III |
Listen attentively to your needs
Mention other bank product Clear greeting Invite you to visit branch Explain the value of banking with bank Offer to mail material / mention website |
|
Quartile IV |
Ask your name
Ask for your business / close the sale Avoid interrupting If no one available to assist you, offered options Professional greeting |
The attributes with the most significant differences between high and low purchase intent ratings appear to be those associated with reliability and empathy. It appears mystery shoppers valued such “core” attributes as product knowledge or interest/enthusiasm for the customer. They seem to be less concerned with more peripheral service attributes, such as asking for names, etc. Influencing purchase intent is not as simple as merely using the customer’s name or answering the phone within a short period of time. Rather it is a much more challenging undertaking of being competent in your job and having the customer’s best interests at heart.
[i] Significance testing determines if any differences observed are the result of actual differences in the populations measured rather than the result of normal variation. Without getting into too much detail, significance testing produces a test statistic to determine the probability that differences observed are statistically significant. A test statistic above 1.96 equates to a 95% confidence level, which means there is a 95% chance any differences observed are the result of actual differences in the populations measured rather than normal variation. For all practical purposes a test statistic over 3.1 means there is 100% chance the differences observed are statistically significant (although in reality the probability never reaches 100%). Finally, in interpreting the following analysis, it is important note that test statistics are not lineal. A test statistic of two is not twice as significant as a test statistic of one. The influence on significance decreases as the test statistic increases. However, the test statistic does give us an opportunity to rank the service attributes by their statistical significance.
Best Practices in Bank Customer Experience Measurement Design: Mystery Shopping
“You can expect what you inspect.”
This management philosophy is as true today as it was 50 years ago when W. Edwards Deming used it. Mystery shopping is more than a pure measurement technique conducted properly; it is an excellent motivational tool to motivate appropriate sales and service behaviors across all bank delivery channels.
Unlike the various customer feedback tools designed to inform managers about how customers feel about the bank, mystery shopping focuses on the behavioral side of the equation, answering the question: are our employees exhibiting appropriate sales and service behaviors?
It is the employees who animate the brand, and it is imperative that employee sales and service behaviors be aligned with the brand promise. Actions speak louder than words. Brands spend millions of dollars on external messaging to define an emotional connection with the customer. However, when a customer perceives a disconnect between an employee representing the brand and external messaging, they almost certainly will experience brand ambiguity. The result severely undermines these investments, not only for the customer in question, but their entire social network. In today’s increasingly connected world, one bad experience could be shared hundreds if not thousands of times over. Mystery shopping is an excellent tool to align sales and service behaviors to the brand.
So…what behaviors, channels and employees should be shopped?
Sales channels and sales behaviors offer the most ROI relative to other types of shopping. In terms of prioritizing mystery shopping resources, shops of sales channels and sale behaviors should be the first priority. With the increasing use of universal associates and transforming tellers into sellers, it is incumbent on managers to measure and motivate these higher level sales skills, in both branches and contact centers. After sales behaviors have been prioritized, if resources remain for mystery shopping service scenarios can be included in the mix.
As for the specific measurements, the best practice for mystery shop design is to focus on empirically measureable employee behaviors captured with objective questions. (Was a specific behavior present or not?…Yes or no). The best methodology for deciding which questions to ask is to start with your brand promise, and determine which sales and service behaviors animate the brand. Once you have developed a list of expected behaviors, the next step is to map each behavior to a specific question. Avoid compound questions which ask about two different behaviors, unless you expect both behaviors to be present at the same time, and you are not worried about distinguishing if one is present without the other.
For more information about a process to align behaviors to the brand, click here: “5 Steps to Make Frontline Employees Authentic Representatives of the Brand”
Open-ended questions, either in narrative form or qualitatively asking what shoppers liked or disliked about the experience, add valuable context for understanding the customer experience. Many clients consider these qualitative observations the heart of the shop.
While the core of the mystery shop is objective measurements of specific behaviors, there is a place for subjective impressions. Rating scales are used to capture shopper impressions of various dimensions of the customer experience, as well as the overall experience itself. These subjective ratings provide valuable context for interpreting the customer experience, and specifically the efficacy of the objective behaviors measured. For example, purchase intent ratings calculate a correlation between the objective behaviors measured and purchase intent, identifying which behaviors may be more important in terms of driving purchase intent, and which investments in training, incentives and rewards have the most potential for ROI.
Finally, given mystery shopping measures employee behaviors against bank service standards, it is a best practice to calibrate and align service standards with customer expectations by constantly feeding information uncovered with the customer surveys back into the service standards and mystery shopping. Such an informed feedback loop between customer surveys and mystery shopping will ensure the behaviors measured are aligned with customer expectations.
Call to Action
Research without a call to action may be informative, but not very useful. Call to action elements should be built into research design, which provide a road map for clients to maximize the ROI on customer experience measurement.
For more posts in this series, click on the following links:
- Introduction: Best Practices in Bank Customer Experience Measurement Design
- Customer Surveys: Best Practices in Bank Customer Experience Measurement Design
- Leverage Unrecognized Experts in the Customer Experience: Best Practices in Bank Customer Experience Measurement Design – Employee Surveys
- Filling in the White Spaces: Best Practices in Bank Customer Experience Measurement Design – Social Listening
- A New Look at Comment Cards: Best Practices in Bank Customer Experience Measurement Design – Customer Comments & Feedback
- Customer Experience Measurement Implications of Changing Branch Networks
Compliance and Sales Effectiveness Go Hand In Hand
Compliance and service quality are not mutually exclusive. In fact there is a positive relationship between compliance and, not only service quality, but stronger sales.
To understand the relationship between Truth in Savings Act (TISA) compliance behaviors and the customer experience, Kinesis mystery shopped five US banks with the objective of evaluating TISA compliance and the customer experience. A description of the methodology is at the conclusion of this post.
Employees who correctly quoted APY provided a more satisfactory experience. The overall impression of the entire experience for shops that passed the TISA disclosure requirements was 4.1 compared to 3.4 for shops that failed, on a scale of 1 to 5, where 1 is “Extremely Dissatisfied” and 5 is “Extremely Satisfied”.
| Passed Ave. (Net Sat.) | Failed Ave. (Net Sat.) | |
| Overall impression of entire experience | 4.1 (70%) | 3.4 (24%) |
Beyond the overall satisfaction with the experience, significant differences also exist across all the individual service attributes measured. In all of the following seven attributes measured, shops which passed the compliance test consistently had higher attribute satisfaction ratings.
| Passed Ave. (Net Sat.) | Failed Ave. (Net Sat.) | |
| Job knowledge | 4.0 (64%) | 3.2 (15%) |
| Confidence in the agent | 4.1 (71%) | 3.5 (31%) |
| Use understandable terms | 4.0 (62%) | 3.4 (24%) |
| Professionalism | 4.3 (74%) | 3.8 (53%) |
| Interest in helping | 4.1 (63%) | 3.7 (40%) |
| Valuing customer | 4.0 (59%) | 3.6 (33%) |
| Friendliness/courtesy | 4.4 (82%) | 4.1 (69%) |
Not surprisingly, there is a relationship between compliance and job competence. Employees who comply with the TISA are more likely to demonstrate competence in other aspects of their job. Job knowledge, confidence in the employee, use of understandable terms, and professionalism are the four attributes with the largest gaps between shops that passed and shops that failed.
Additionally, employees who pass the compliance test are more skilled at connecting with the potential customer; receiving higher average ratings for interest in helping, valuing the customer and even friendliness and courtesy.
Now, as if compliance risk and customer service were not strong enough cases for TISA compliance, what about the sale? What about sales effectiveness?
To evaluate the sales effectiveness of the presentation, shoppers were asked to rate their purchase intent as a result of the interaction. The following chart illustrates the distribution of the purchase intent rating for shops which passed the compliance test compared to shops which failed:
Shops which complied with TISA requirements had significantly higher purchase intent compared to shops that failed. Shops which passed exhibited a net positive purchase intent of 46% (46% more shops received positive purchase intent ratings compared to negative). On the other hand, shops which failed the TISA evaluation received a net negative purchase intent of minus 9%, (9% more shoppers assigned negative purchase intent than positive).
There is a relationship between TISA compliance and the customer experience. Employees who are skilled at compliance behaviors, exhibit similar superior service and sales skills compared to those with weaker skills.
——
Methodology
To investigate the relationship between the overall customer experience and compliance, Kinesis mystery shopped 50 branches and the call centers of five banks with significant North American footprints. Among the objectives of the study were to:
1) Evaluate Truth in Savings act compliance, specifically the presence and timing of Annual Percentage Yield quotes, and
2) Evaluate the effectiveness of specific sales behaviors.
Shoppers were asked a mixture of closed-ended questions to evaluate the presence or frequency of specific behaviors, as well as to rate various service attributes with 5-point scales. Finally, to provide a basis to evaluate the effectiveness of each sales behavior, shoppers were asked to rate their purchase intent as a result of the visit. This purchase intent rating was then used as a means of evaluating what behaviors tend to be present when positive purchase intent is reported as opposed to negative purchase intent.
Not All Service Attributes Are Equal: Retail Bank Transaction Drivers of Loyalty
Research has determined the business attribute with the highest correlation to profitability is customer loyalty. Customer loyalty lowers sales and acquisition costs per customer by amortizing these costs across a longer lifetime – leading to some extraordinary financial results. In one study of the retail banking industry, a 5% increase in customer loyalty translated into an 85% increase in profits.[1]
Customer loyalty is driven by the entire relationship with bank. Image, positioning, products, price and service all mix together in the customer’s’ value equation as customers make a continual decision to remain loyal.
What customer service attributes drive customer loyalty?
This article summarizes research into specific transaction service attributes with the intent of identifying which transaction attributes drive customer loyalty, and provides an analytical tool to help managers determine which attributes will yield the highest potential for ROI in terms of improving customer loyalty.
In order to determine transaction attributes which drive customer loyalty, Kinesis surveyed bank customers who had recently conducted a transaction at a branch.
With respect to the transaction, customers were asked to rate the following service attributes:
- Professional dress
- Branch cleanliness
- Prompt greeting
- Greeting made customer feel welcome
- Dependable and accurate
- Prompt service
- Willingness to help
- Job knowledge
- Interest in helping
- Best interests in mind
- Actively listened to needs
- Ability of bank personnel to help achieve financial needs
- Desire of bank personnel to help customers achieve financial goals
- Commitment to community
The next step in the research is to capture a measurement of loyalty against which to compare these attributes.
Measuring customer loyalty in the context of a survey is difficult. Surveys best measure attitudes and perceptions. Loyalty is a behavior based on rational decisions customers make continually through the lifecycle of their relationship with the bank. Survey researchers therefore need to find a proxy measurement to determine customer loyalty. A researcher might measure customer tenure under the assumption that length of relationship predicts loyalty. However, customer tenure is a poor proxy. A customer with a long tenure may leave the bank, or a new customer may be very satisfied and highly loyal.
Measuring customer loyalty in the context of a survey is difficult. Surveys best measure attitudes and perceptions. Loyalty is a behavior based on rational decisions customers make continually through the lifecycle of their relationship with the bank. Survey researchers therefore need to find a proxy measurement to determine customer loyalty. A researcher might measure customer tenure under the assumption that length of relationship predicts loyalty. However, customer tenure is a poor proxy. A customer with a long tenure may leave the bank, or a new customer may be very satisfied and highly loyal.
Kinesis proposes a model for estimating customer loyalty based on two measurements: likelihood of referral and customer advocacy. Likelihood of referral captures a measurement of the customer’s likelihood to refer the bank to friend, relative or colleague. It stands to reason, if one is going to refer others to the bank, they will remain loyal as well. Because customers who are promoters of the bank are putting their reputational risk on the line, this willingness to put their reputational risk on the line is founded on a feeling of loyalty and trust. This concept of trust is perhaps more evident in the second measurement,: customer advocacy. Customer advocacy is captured by measuring agreement with the following statement: “My bank cares about me, not just the bottom line.” Customers who agree with this statement trust the bank to do right by them, and not subjugate their best interests to profits. Customers who trust their bank to do the right thing are more likely to remain loyal.
Kinesis uses likelihood of referral, hereafter labeled “Promoter,” and customer advocacy, hereafter labeled “Trust,” to calculate an estimate of the customer’s loyalty. Imagine a plot where each customer’s Promoter score is plotted along one axis and the Trust score plotted along the other. Using this plot we can calculate the linear distance between the perfect state of the highest possible Trust and Promoter ratings. This distance yields a loyalty estimate for each customer, where the lower the value, the higher the estimate of loyalty – low values are good.[i]
See Using Promoter and Trust Measurements to Calculate a Customer Loyalty Index for a complete description of this methodology.
Calculating a loyalty index has value, but limited utility. A loyalty index alone does not give management much direction upon which to take action. One strategy to increase the actionably of the research is to use this index as a means to identify the service attributes that drive customer loyalty. Not all service attributes are equal; some play a larger role than others in driving customer loyalty.
So…how does the research determine an attribute’s role or relationship to customer loyalty? One tool is to capture satisfaction ratings of specific service attributes and determine their correlation to the loyalty statistic. The Pearson correlation coefficient is a measure of the strength of a linear association between two variables.
Comparing the correlation of the above service attributes to this loyalty estimate yields the following Pearson Correlation for each attribute:
|
Pearson Coefficient |
|
| Want to help me achieve financial goals |
-0.69 |
| Commitment to community |
-0.66 |
| Ability to help achieve financial goals |
-0.64 |
| Best interests in mind |
-0.60 |
| Greeting made customer feel welcome |
-0.56 |
| Interested in helping |
-0.56 |
| Willing to help |
-0.55 |
| Prompt service |
-0.51 |
| Actively listened to needs |
-0.50 |
| Prompt greeting |
-0.49 |
| Dependable and accurate |
-0.45 |
| Professional dress |
-0.42 |
| Knew job Job knowledge |
-0.41 |
| Branch attractive |
-0.39 |
| Branch clean |
-0.37 |
Note the Pearson values are negative; the loyalty estimate is an inverse, where lower values indicate a stronger estimate of loyalty. As a result the stronger negative correlation translates into a correlation to our estimate of loyalty.
The four attributes with the highest correlation to loyalty are:
- Want to help me achieve financial goals,
- Commitment to community,
- Ability to help achieve financial goals, and
- Having my best interests in mind.
Two common themes in the top-four attributes are empathy and competence. Bank customers value relationships with banks that care about their needs and have the ability to satisfy those needs. Again, customer loyalty is driven by the entire relationship with bank. However, in terms of transactional service, customers clearly value empathy and competency and will reward banks who deliver on these two attributes with loyalty.
[i] The mathematical equation for this distance is as follows:
Where:
T = Trust rating
P = Promoter rating
ST = Number of points on the Trust scale
SP = Number of points on the Promoter scale
[1] Heskett, Sasser, and Schlesinger The Service Profit Chain, 1997, New York: The Free Press, p 21
Call to Action: Using Gap Analysis to Put Loyalty Index into Action
For most service industries the business attribute with the highest correlation to profitability is customer loyalty. It is, therefore, very important to gather a measurement of customer loyalty. However, simply calculating a loyalty index is not enough. Estimating customer loyalty is important, and an obvious first step; however, alone – without any context – is not very useful.
What’s needed is a methodology to transition research into action, and identify clear paths to maximize return on investments in the customer experience. What managers need is a tool to help them prioritize the service behaviors on which to focus improvement efforts. One such tool is an analytical technique called Gap Analysis.
Gap Analysis compares performance of individual service attributes relative to their importance, providing a frame of reference for prioritizing which areas require attention and resources.
To perform Gap Analysis, each service attribute measured is plotted across two axes. The first axis is the performance axis. On this axis the performance of each attribute is plotted. The second axis is the importance axis. Each attribute is assigned an importance rating based on its correlation to the loyalty index. Service attributes with strong correlations to loyalty are deemed more important and service attributes with low correlations are deemed less important.
This two-axis plot creates four quadrants:
- Quadrant 1: Areas with high correlations to loyalty and low performance. These service attributes are where there is high potential of realizing return on investments in improving performance.
- Quadrant 2: Areas with high correlations to loyalty and high performance. These are service attributes to maintain.
- Quadrant 3: Areas with low correlations to loyalty and low performance. These are service attributes to address if resources are available.
- Quadrant 4: Areas with low correlations to loyalty and high performance. These are service attributes which require no real attention as their performance exceeds their importance.
To illustrate this analysis methodology, consider the example below with the following service attributes:
|
Performance |
Loyalty Correlation |
|
| Appearance/cleanliness of physical facilities |
4.9 |
0.37 |
| Appearance/cleanliness of personnel |
4.8 |
0.42 |
| Perform services as promised/right the first time |
4.8 |
0.62 |
| Perform services on time |
4.9 |
0.54 |
| Show interest in solving problems |
4.9 |
0.61 |
| Willingness to help/answer questions |
4.7 |
0.55 |
| Problems resolved quickly |
4.4 |
0.56 |
| Knowledgeable employees/job knowledge |
4.6 |
0.41 |
| Employees instill confidence in customer |
4.7 |
0.52 |
| Employee efficiency |
4.7 |
0.58 |
| Employee courtesy |
4.9 |
0.56 |
| Employee recommendations |
4.8 |
0.53 |
| Questioning to understand needs |
4.9 |
0.45 |
Plotted on the above quadrant chart, they yield the following chart:
In this example, problems resolved quickly, employee efficiency, willingness to help, employees instill confidence are the four behaviors with relatively high correlations to the loyalty index and relatively low performance As a result, improvements in these attributes will yield the highest potential for ROI in terms of improving customer loyalty.
Using gap analysis, managers now have a valuable indicator to identify service attributes to focus improvement efforts on. Directing attention to the attributes in Quadrant I should have the highest likelihood realizing ROI in terms of the customer experience improving purchase intent.
Related Article: Using Promoter and Trust Measurements to Calculate a Customer Loyalty Index
It’s Personal: Drivers of Positive Impressions of the Branch Experience
What impresses customers positively as a result of a visit to your branch?
To answer this and other questions, Kinesis conducted research into the efficacy of the branch sales process and identified several service and sales attributes that drive purchase intent. (See the insert below of a description of the methodology).
In our observational research of 100 retail banking presentations, mystery shoppers were asked to describe what impressed them positively as a result of the visit to the branch. Excluding the branch atmosphere, the five most common themes contained in these open-ended comments were:
- Attentive to Needs/ Interest in Helping/ Personalized Service,
- Professional/ Courteous/ Not Pushy, Positive Greeting,
- Friendly Employees, and
- Rep. Product Knowledge/ Informative/ Confidence in Rep.
In an effort to understand the relative importance of these behaviors in driving purchase intent, shoppers were asked to rate their purchase intent, as a result of the presentation, as if they had been an actual customer. Shops were then grouped into those with positive and negative purchase intent and compared to each other.
Of these drivers of a positive impression, three have positive relationships to purchase intent – they tend to be present with greater frequency in shops with positive purchase intent compared to those with negative purchase intent.
|
Reason for Positive Purchase Intent |
Relative Frequency Positive to Negative Purchase Intent |
| Rep. Product Knowledge/ Informative/ Confidence in Rep. |
2.7 |
| Attentive to Needs/ Interest in Helping/ Personalized Service |
2.5 |
| Friendly Employee |
2.3 |
The banker’s product knowledge was present 2.7 times more frequent in shops with positive purchase intent relative to shops with negative purchase intent. Similarly, attention to needs and personalized service was present 2.5 times more in shops with positive purchase intent compared to those with negative purchase intent. Finally, shoppers were 2.3 times more likely to cite the friendliness of the bankers in shops with positive purchase intent relative to negative.
The observations contained within this research are not rocket science. What customers want, what drives purchase intent, is personal: attention to needs, interest in helping, personalized service, professional, courteous and friendly encounters.
Methodology
To evaluate the state of the in-branch sales process, Kinesis mystery shopped 100 branches among five banks with significant North American footprints. Among the objectives of the study were to:
1) Define the sales process among different institutions.
2) Evaluate the effectiveness of specific sales behaviors.
Shoppers were asked a mixture of closed-ended questions to evaluate the presence or frequency of specific behaviors, and open-ended questions to gather the qualitative impressions of these behaviors on the shoppers – in short the how and why behind how the shopper felt. Finally, to provide a basis to evaluate the effectiveness of each sales behavior, shoppers were asked to rate their purchase intent as a result of the visit. This purchase intent rating was then used as a means of evaluating what behaviors tend to be present when positive purchase intent is reported as opposed to negative purchase intent.
Kinesis CEM 