Opportunity is knocking for credit unions as a recent J.D. Power and Associates study reveals that brand image matters most to consumers when selecting a retail bank.

The J.D. Power and Associates 2009 Retail Bank Shopping Study found that 36% of a shopper's selection decision is driven by the bank's brand image, while branch proximity (21%) and products and services (14%) round out the major influences in consumers' final bank selection.

“Some crucial aspects of a bank's brand image-such as perceived financial stability and reliability-can be difficult for a bank to improve, which negatively affect the bank's likelihood of being selected,” said Michael Beird, director of the banking practice at J.D. Power. “However, branch employees can positively impact a bank's brand image by providing personal service, communicating proactively and having a customer-driven focus. These three aspects combined account for 15% of importance in the shopping process, which is even greater than the importance of bank products and services.”

The study found that nearly one-third of customers who avoid considering a particular bank altogether do so because of a previous poor service experience with that bank. Other commonly cited reasons for avoiding a particular bank include issues with branch proximity/operating hours, as well as poor policies, such as high rates and fees.

“Many customers who shop for a new bank have had prior exposure to a bank's service as noncustomers through experiences such as cashing checks or getting product information,” said Beird. “As a result, banks can use visits by noncustomers as an opportunity to showcase their services and improve consideration when these customers shop for a new bank.”

In addition to customers' personal experiences, the service experiences of other customers are also important. Recommendations-both positive and negative-account for 31% of importance weight in a bank's brand awareness, while positive recommendations drive 36% of a shopper's consideration of a bank.

“Word of mouth recommendations have the power to influence both awareness and the probability that customers will consider a bank in their shopping process,” said Beird.

The study also found that satisfaction with the account initiation process increases considerably when staffers perform simple actions to improve the service experience when opening a new account-including greeting the customer when entering the branch, keeping wait time to five minutes or less, calling the customer by name and providing the customer with a detailed needs assessment. Among the 19% of customers who experienced all these actions, satisfaction scores represented 84 points above the industry average. In addition, the percentage of customers who said they “definitely will” reuse the bank for future products and services increased to 66% compared with an industry average of 47%.

The 2009 Retail Bank Shopping Study is based on responses from more than 7,500 consumers.

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