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Your Customers Are Talking About You!Are You Harnessing That Power?

March, 2011

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Dr. Tom FussoEVP/Division Headt.fusso@marketprobe.com

AGENDA Perspective of Customer Advocacy

Current Realities of Your Customers

Customer Advocacy in Retail Banking

Impact on New Customer Acquisition & Organic Growth

Targeting Bank Management of Investable Assets

Your Speaker/Agenda

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What is the best measure to manage your customer base? Is it ……. . .

The best measure:

Should best reflect the current reality of your customers

Should lead to new customers and organic growth

Cust

omer

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Customer Involvement

In today’s marketplace, it is just not enough to have very satisfied customers to drive business growth; a business needs very satisfied customers who will frequently and consistently speak in favor of the brand, both online and offline. As Professor Philip Kotler says, “Let your advocates do the marketing for you.”

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Customer Advocacy Impact

Successful brands that Successful brands that enjoy high levels of enjoy high levels of customer advocacycustomer advocacy

Success is partially built on harnessing the power of your current customers to drive both new customer growth and organic growth.

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Advocacy Constructs Worth RepeatingAdvocacy Constructs Worth Repeating

Market Probe’s Advocacy Framework is built on two key constructs:

Advocacy Advocacy AttitudesAttitudesCustomers hold long-term attitudes basedon both rational andemotional reactions of their experiences with your company’s various performances over time.

Expressions of Expressions of Support From Existing Support From Existing

CustomersCustomersHow do existing clients of your

company speak of their experiences with their peer

group both online and off-line? This communication happens allthe time in a variety of settings.

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What is Market Probe’s Advocacy Ladder?Market Probe’s Advocacy Ladder is a pictorial representation of a customer base into Advocacy segments.

Advocate

Allegiant

AmbivalentAmbivalent

Alienated

The best customers of your brand. Your need to engage them.

Implement customer experience improvements to move them to Advocates.

Implement customer experience improvements to move them up the Advocacy Ladder.

Implement customer experience improvements to reduce the Alienated group.

Move up the Advocacy Ladder

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Primary Bank Customers are Telling Others Positive Things About Their

Bank!Express Positive Things Past 6 Months

34%

26%

16%

24%

Not Once

1-2 Times

3-4 Times

5+ Times

66% told others at least once something positive about their bank!

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Customers Varied in How Much They Talked About Their Primary Bank to Other People

We used both actual behavior and attitudes to segment customers by involvement with their bank.

Advocate

Allegiant

AmbivalentAmbivalent

Alienated

Advocates, 22% of an average customer base, made a positive statement about their bank 6.3 times to a friend or colleague in the past few months.

Segment SizeTop 15 Bank Average

Number Recent Positive Expressions

22% 6.3 Times

30% 4.1

30% 0.9

17% 0.0

10

37%

35%

27%

27%

25%

25%

24%

23%

23%

22%

22%

19%

18%

13%

11%

Bank #1

Bank #2

Bank #3

Bank #4

Bank #5

Bank #6

Bank #7

Bank #8

Bank #9

Bank #10

Bank #11

Bank #12

Bank #13

Bank #14

Bank #15

Banks Vary in the Proportion of Their Customer Base Who are Advocates

Percentages of Advocates

Source: 2010 Bank Customer Advocacy

Monitor

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Impact of Advocacy on Positive Buzz:Two Regional Banks

Best-in-Class Bank B

Primary Bank Customers (DDA Plus 1+ Products) 2.6 Mil 2.0 Mil

Percentage of Advocates 37% 19%

Number of Advocates 962,000 380,000

Annual Number of Instances Talking About Bank (Positive Buzz) 7.6 5.2

Annual Instances of Positive Buzz from Customers 19.8 Mil 10.4 Mil

Best-in-Class Bank reaps

9,400,000 additional instances of

customers talking positively about

their bank over competitor!

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Impact of Raising Advocacy Levels at Bank C Yield Substantial Incremental Amounts of

Positive Buzz from CustomersBank C Current

Bank C to Best-in-Class

Primary Bank Customers 3.7 Mil 3.7 Mil

Percentage of Advocates 21% 37%

Number of Advocates 777,000 1,370,000

Annual Instances of Positive Buzz from Customer Base 23.5 Mil 29.6 Mil

Bank C would reap 6,000,000

instances of their customers

talking positively about their

bank to others!

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Share-of-WalletAveraged Across All Segments

Retention IntentAveraged Across All Segments

Impact of Raised Advocacy Levels at Bank C Also Yields Incremental Gains in Share-of-

Recent Purchases and Retention Intent

Current Goal

39.2%42.8%

Current Goal

48.8%

59.2%3.6 point o

r

9.2% increase10.4 point o

r

21% increase

Translates into

incremental 133,000

products purchased

per year

Translates into

incremental 385,000

households that will

definitely remain

with Bank C

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Advocacy Driver AnalysisSwing up and swing down analysis identifies the

attributes that drive customers from Alienated to Ambivalent, Ambivalent to Allegiant, Allegiant to Advocate.

Analysis repeated for brand, product and key touchpoint attributes for input into an overall improvement action plan.

10%

14%

17%

15%

22%

5%

1%

6%

12%

Staff always takesthe time to talk with me

I have an open andhonest relationship with the

people at my bank

Staff proactively suggests productsand strategies that will help me

Staff suggests only thoseproducts that are best for me

Staff follows up withinformation as needed

Staff delivers servicein a timely manner

Staff are trained to offerreliable services

Staff appears competentand knowledgeable

Staff makes me feel likea valued customer

24%

21%

14%

1%

Alienated Advocate

Critical to Reducing Alienated Critical to Building Advocates

13%

13%

9%

6%

1%

Quality of Staff Services

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What are the benefits of Advocacy?

Advocacy is the most contemporary construct to help understand customer behavior in today’s marketplace.

Advocacy provides the strongest linkage to a critical metric of business growth that is often ignored in all satisfaction/loyalty research –

New Client Growth driven by Advocacy

Advocacy establishes the strongest linkage to organic growth of a business: Retention Rates and Share-of-Wallet Growth

Advocacy meets the criteria of an effective market segmentation: size, stability and business value

Advocacy is an ideal metric for tracking studies for both B2B and B2C situations, where other single-question metrics fall short.

Advocacy helps define priorities and action plans to enhance customer experiences

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Call for Action

If your key metrics are not sensitive to market share fluctuations or staff efforts to improve

Key metric trend lines are flat

Internal clients are not able to take sufficient action with the current metric

Increasing demands for accountability

Introduce the advocacy approach to your management as part of re-engineering and redefining the value of your current customer research.