The New Metrics of Consumer Loyalty

So many assumptions about banking – and business in general – have shifted over the past 20 months that it’s reasonable to question whether long-held beliefs about consumer loyalty need to be revised as well.

SRM’s analysts have conducted primary research on this topic since 2012, providing insight into the evolution of consumer perception and loyalty over time. Our latest report draws on a survey conducted in late summer 2021 – a particularly interesting juncture when the COVID-19 landscape had seemed to settle into a degree of equilibrium and thoughts of a return to some form of “normal life” had begun to enter the conversation.

Let’s take a quick look at a few key findings:

Service Remains King – But It’s Not the Sole Factor

SRM’s study explored both engagement and loyalty and the subtle yet important differences between the two. The good news is that financial institutions (FIs) – particularly credit unions and community banks – continue to perform very well in consumer trust. This advantage is more critical than ever because consumer expectations are increasingly driven by their experiences beyond banking.

When asked for the number one reason for choosing and staying with a given financial institution, great service still leads the pack – as it has for years. Even high-profile factors like ease of use and personal recommendations trail quality service as differentiators.

Interesting nuances emerge when evaluating a consumer’s decision to stay with a provider instead of opening a new account with another financial institution. Loyalty programs and value for money gain in importance, and “doing what they say” moves ahead of a bank’s reputation. Individuals begin to form opinions based on their own experiences rather than the overall brand’s presented image – they also place more weight on pocketbook factors in their personal factoring.

Sustainability Issues Have an Impact

Among the most surprising findings of SRM’s study that proved effective in increasing customer loyalty was the perception of a firm’s commitment to climate change. It ranked third only to an FI’s care and effort to a consumer’s individual needs as a driver of Net Promoter Score. Commitment to climate seems to resonate most strongly with those engaged with credit unions and community banks. Individuals doing business with large national banking brands and digital-first neobanks tend to place less importance on this dimension.

Similarly, those polled seem to have largely self-selected concerning the importance they place on their bank or credit union’s commitment to social impact. We found a strong correlation between brand perception on this attribute and the importance of social impact expressed by the brand’s customers, implying that they’ve already voted with their pocketbooks. Of course, any change in direction could lead them to reconsider.

The Bottom Line

Most banks and credit unions need to recalibrate their long-term strategies to reflect changes in expectations that began to take hold even before the pandemic. SRM’s consumer loyalty report can provide valuable insight into such a refresh. In the coming weeks, we’ll summarize what our research revealed about channel preference, neobanks, and the impact on financial services when compared to retail brands like Amazon.