CAMBRIDGE, Mass. — American consumers consider credit unions to be twice as likely as many of the nation's biggest banks to do what's best for the consumer, not the institution's bottom line, a new study shows.
Sixty-six percent of credit union members responding to a Forrester Research survey of 5,005 U.S. consumers agreed with the statement: "My financial provider does what's best for me, not just its own bottom line," according to the research and advisory firm's 2007 report on customer advocacy.
At the bottom of the list were HSBC's credit cards operation and Citibank banking at 24% each. Chase's banking, US Bank's banking and Citibank's credit cards were close behind at 27% each. Bank of America and Wells Fargo came in at 33% and 32%, respectively, for their banking services.
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The not-for-profit diversified financial services outfit USAA led the list at 88% of its members agreeing with that statement. Second were independent financial advisers at 76%, followed by independent insurance agents, the A.G. Edwards brokerage and credit unions at 66%.
Regional/local banks as a whole notched 48% approval from their customers in that regard.
Forrester says consumers who rate their firms high on customer advocacy will consider those firms for as much as twice as many products as those who don't, making it a key driver of deeper relationships.
"Forrester research shows that a key driver of deeper customer relationships is a trait we call 'customer advocacy,' the perception by customers that a firm does what's best for them, not just what's best for its own bottom line," says Bill Doyle, lead author of the Forrester report.
"Top-rated firms like credit unions…manifest customer advocacy by emphasizing product independence and delivering solutions that take the whole customer relationship into account," Doyle says in his report.
Overall, banking, brokerage and insurance services are all up in customer advocacy ratings in the past year. Forrester attributes that to a stronger economy that makes consumers less sensitive to issues such as hidden fees, as well as efforts by the firms themselves to focus more on raising customer satisfaction and loyalty "in an effort to generate organic growth."
The top-rated organizations all stress product independence and "deliver advice for the whole relationship," the Forrester report says, citing USAA's relationship with its military-based membership through its licensed representatives who offer free financial advice to any member.
"In 2006, about 600,000 members took advance of the service," Doyle says. "Even though the reps are salaried, not on commission, and the advice is product neutral, the program is highly effective at generating cross sell, in large part because USAA's high customer advocacy has earned future-purchase consideration."
The Forrester analyst notes that two-thirds of credit union members have rated their CUs high on advocacy for the past three years, compared with just one third of customers of large banks this year, the banks' best year so far.
Doyle says that perception translates into credit union members being "much more likely to own multiple products" at their CU than are customers of the 10 largest U.S. banks.
"Why? Demonstrating customer advocacy means making decisions and recommendations that take into account customers' overall relationships…not just their relationship with any one product group," the Forrester report says.
"Organizational silos and political infighting prevent many large banks from effectively serving the whole customer," the report says.
"Credit unions aren't hamstrung in the same way."
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