Customer advocacy remains the best predictor of future purchase intent among financial services consumers, according to a study released yesterday by Forrester Research.
The Cambridge, MA-based Forrester Research’s “Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages, And Insurers” found customer advocacy, which is a consumer’s perception that a firm does what’s best for its customers, not just the firm’s own bottom line, is the strongest driver of customer loyalty.
Forrester tested dozens of variables, including the length of a customer’s relationship with a firm, the quality of a firm’s customer service, a firm’s money management skills and its use of technology.
Other findings from the report include:
- Property and casualty insurers cluster near the top of the rankings. P&C insurers that sell direct to consumers-such as USAA, GEICO, AAA, and Progressive-have the highest scores. P&C firms that sell through producers, such as Safeco and Allstate, follow them closely. Other insurers like MetLife round out the top half of this year’s rankings. P&C firms ranked high because they offer simple products that are easy to compare, the report said.
- Full-service brokerages tumble. Morgan Stanley, wracked by management turmoil and sales scandals, fell precipitously in Forrester’s ranking during the past year, as did A.G. Edwards, Wachovia Securities and Merrill Lynch. Forrester said the reason is that the full-service brokerage model is under assault, especially from competitors like Charles Schwab and TD Ameritrade, which market aggressively. E*TRADE – another direct firm – is the only brokerage to have risen significantly in rank this year. Tools like E*TRADE’s Cash Optimizer and Loan Optimizer make the firm’s rates and fees more transparent — part of a concerted effort to improve the firm’s customer advocacy.
- The biggest U.S. banks continue to dominate the bottom of the rankings. Citibank and JPMorgan Chase are the two lowest-ranked firms in Forrester’s ranking. In fact, six of this year’s bottom seven firms are large banks like Washington Mutual, Wells Fargo, and Bank of America. Firms with high organic growth – like those at the top of the customer advocacy rankings – are best positioned to grow in the coming years, as intense competition forces firms to focus on selling more to the customers they already have, the report said.