Category Archives: Market Research

The Most Useless Research Stat: Consumer Channel Preferences

Quick two-question survey:

  1. Do you think that banks and credit unions should continue to increase their investment in the mobile channel? (Y/N)
  2. Do you think the “voice of the customer” is important for bank and credit unions to pay attention to?  (Y/N)

If you said YES to both questions, you have a small problem (if you didn’t say YES to both questions, you have a big problem, and should leave this blog now and seek immediate help).

I can’t imagine that you would say NO to Q1. I can imagine, however, that you might hedge on Q2 and say there are times when the voice of the customer is more important than at other times.

Quit picking nits.

The problem is that there is very credible consumer research that — taken at face value — suggests that the mobile channel is not very important to financial services customers.

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Gallup recently surveyed consumers and asked about their channel preferences for 14 different types of banking interactions.

Before we take a look at the data, let me just say that the fact that Gallup asked about preferences for specific types of interactions makes their study head and shoulders better than most other studies, which don’t capture this level of detail.

Here’s what Gallup found:

Source: Gallup Business Journal, How Consumers Interact With Their Banks

There are a number of conclusions you might draw from this:

1. Consumers want to open accounts in a branch. After all, eight in ten consumers said they prefer to open accounts there.

2. Many consumers want to get in a car and drive to their bank every time they have a problem. Well, half of the consumers surveyed did say that they prefer to report a problem or annoyance in person or at a branch.

3. The mobile channel is the second-least important banking channel. Least important honors goes to online chat — not a single respondent listed it as their preferred channel for any of the interactions. But the mobile channel didn’t fare much better. The interaction type that the mobile channel got the most votes for was receiving alerts, but the 3% who preferred mobile pales in comparison to the 29% who want alerts to come to them 3-5 days later from the US Postal Service (for chrissakes, these idiots could walk down to their bank and get the news sooner).

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This is what the data says. It’s the “voice of the customer.” Can’t argue with it.

Sorry, @brettking, branches aren’t dead. People prefer to open accounts there. Sorry, @jimmarous, but all those studies you tweet and blog about that show that consumers prefer direct mail to other channels are wrong — it’s only true for receiving statements.

And for all you bankers and creditunionistas who keep investing in mobile banking capabilities, apparently you’re wasting your money. Nobody (except for a less-than-handful of weirdos) prefers the mobile channel for anything.

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Further analysis from Gallup (to find out what that analysis is, you’ll have to read the article for yourself — it’s not the job of this blog to save your lazy ass from doing a little work) led them to conclude:

‘Migrating customers from channels they prefer to use to channels they don’t may lower their engagement with their bank. Consequent declines in satisfaction and engagement could result in loss of revenue, profitability, and customer retention.”

My take: That’s a bit of a leap.

Forcing customers to use certain channels, preventing customers from using certain channels, and poor experiences in non-preferred channels may all lead to problems and issues.

But the term “migration” implies — at least to me –that there is a process, logic, and/or business rationale behind it. Paying customers (in the form of rewards, higher rates, or lower fees) shouldn’t lead to loss of profitability if the amount paid is less than the cost savings realized.

In addition, consumers who have never tried to complete a particular interaction in a particular channel is never going to say that channel is preferred — until they try it and find out that it really is a better channel for them. 

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Bottom line: Consumer channel preference is the most useless research stat out there. 

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Related posts:

Ignore Consumers’ Channel Preferences

The Truth About Bank Channel Preferences

Channel Preferences Don’t Matter

Consumers Don’t Really Want Portable Checking Account Numbers

Switching Banks

According to a study conducted by BT and YouGov, 61% of US banking customers want portable banking account numbers. As reported by The Financial Brand:

“The research, which surveyed more than 6,500 people across six countries, found most consumers agreeing that a portable account number — one allowing them to switch banks without changing account details and causing major disruptions — would be useful.”

My take: No way. US consumers don’t want a “portable” banking account number (can’t speak to consumers in other countries, though).

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There’s an old marketing parable (?) that “people don’t want a drill, they want a hole.” This talk of portable banking account numbers is the same thing. 

What people want is less hassle closing accounts. If you tell them a portable banking account number will accomplish that, then, sure, they’ll tell you that they want portable banking account numbers. 

We want portable phone numbers across carriers because we tell so many people our number that switching numbers is a pain. Plus, I have a really cool number (because I’m a Yankees fan in Boston — remind me to tell you that story one day), and there’s no way I’ll give it up. 

But you’ve got to be one really strange nerd to know your checking account number, and be adverse to giving it up. 

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This kind of research scares me. 

Why is BT and YouGov asking US consumers if they want portable bank account numbers?

BT stands for British Telecom, no? Go back to England, BT. We have enough crappy telcos in this country, already, thank you very much. 

YouGov, on the other hand, according to its website, ”is a professional research and consulting organization, pioneering the use of technology to collect higher quality, in-depth data for companies, governments, and institutions so that they can better serve the people that sustain them.”

The people sustain the government? Huh?

If this research is aimed at influencing US policy on making it easier for consumers to switch banks by creating portable account numbers, they better be careful what they ask for. 

After all the Dodd-Frank disasters, I wouldn’t expect our government to have any foresight on unanticipated consequences, but government attempts to make it easier for consumers to switch banks by mandating portable account numbers will backfire.  

The cost of deploying this scheme is way beyond my ability. But I will bet that two things will happen:

1) FIs will pass the cost on the consumers, and

2) FIs will deploy other tactics to make it tough to switch — like 2-year contracts like the telcos use. 

In an interesting article on Financial Brand, Mike Branton of Strategy Corps reports on research that shows that consumers express a willingness to pay for what Mike calls “lifestyle financial services” like identity theft alerts and credit score reporting.

Want those services for free? No problem. Just renew your checking account contract for another 2 years, and we’ll throw in ID theft alerts for free. 

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Each year (at least for the past couple of years that I’ve seen research for), no more than 10% of US consumers switch banks. And it’s not for certain that it’s a different 10% each year. 

Why do we need a government policy that adversely impacts the other 90% to serve the 10%? Is that “fair” (which seems to be the mantra of the current administration)? 

It’s not like a policy mandating portable bank account numbers will help the unbanked. They don’t have account numbers. 

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Making it difficult to switch bank accounts is a fundamental element of Porterian (you know, Michael Porter of Harvard) strategy: Create barriers to exit.

Does this it make it inconvenient for the minority of consumers who want to switch? Yes.

But, boo hoo. We have bigger issues in the financial services industry to fix than this.  

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There’s another disconnect in this situation, as well. 

While there’s no doubt that (many) banks make it difficult to switch — out of them, that is — there seems to be no shortage of banks (and credit unions) touting how easy it is to switch to them. Here’s one example from one large regional bank:

This is just one example. There are plenty of other examples I could have included, especially from credit unions.

So, is it easy or not? 

If it is, then we certainly don’t need portable account numbers. And if it’s not, then there are a lot of FIs make false advertising claims.

Stop Spewing Mobile Wallet BS

If I’ve learned anything about doing consumer research it’s this: You can’t ask consumers their opinions about things that they don’t know.

So, feel free to publicize your research about which mobile wallets are most popular with consumers, if you want, but I’m not buying any of it.

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comScore recently conducted a study regarding consumers’ awareness of mobile wallets and found the following (chart pulled from a Venture Beat article):

According to the study, nearly half of all consumers (assuming the study was a study of all consumers) have used PayPal’s digital wallet. That would mean that pretty much everybody in the US who owns a smartphone has used PayPal’s digital wallet.

I can hear the PayPal people laughing at that all the way here on the other side of the continent.

I find it funny, too, because, until recently, PayPal didn’t even have a digital wallet. According to articles published last March, May 2012 was the expected launch date for the Paypal digital wallet. (p.s. I can’t find any articles that confirm that it was launched last May).

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Well, hold on a second here. Maybe our terminology isn’t accurate.

Maybe Paypal has a digital wallet, but not a mobile wallet. Yes, that must be it.

But if that’s the case, then Amazon’s one-click buying should be considered a digital wallet, too. And since you can make P2P transactions from many banks’ online banking platforms, that’s kind of a digital wallet, too, no? But comScore didn’t ask about the awareness of either of those wallets.

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If you’re confused about the difference between a digital and mobile wallet, or what a mobile wallet exactly is, welcome to the club. According to the Venture Beat article (citing the comScore study), less than half of the respondents really understand what a digital wallet is.

But, if that’s the case, then I have a question for Venture Beat: Why would you title the article “PayPal destroys Google Wallet, MasterCard, Square, and Visa in digital wallet study”?

Total BS. The comScore compared apples to vaporfruit, and VB — which acknowledged the consumer confusion — runs with a bogus headline.

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Let’s take a look at some of the other numbers.

According to the comScore study, 1% of respondents use (or have used) the Lemon Wallet and 2% use LevelUp.

The companies, themselves, report quite different numbers.

A Mobile Commerce Today article from December 2012 stated that LevelUp had reached the 500k user mark. Meanwhile, a Bank Systems & Technology article from November 2012 said that Lemon Wallet had 2.5 million users. 

My calculator says the number of Lemon Wallet users are 5 times the number of LevelUp users. Yet the comScore study reports that LevelUp’s market penetration is double that of Lemon’s.

Maybe my calculator is broken.

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What should we make of all this?

Simply, that the mobile wallet space is one messy pile of you-know-what at the moment, and that any claim about who’s winning or losing is: 1) bogus, and 2) the work of a fool.

Consumers Don’t Want Mobile Offers

BuyVia, an app/website that claims to be the first all-in-one smart shopping experience across devices (whatever that means), conducted a consumer survey which found:

“The majority (56%) of shoppers want to be notified of deals via push notifications on their mobile devices when in an area with local deals.”

My take: Oh really?

As a wannabe legitimate market researcher, I would never publish research results based on an insufficient sample, but from time to time I use my wife and/or daughters as sanity checks (which is ironic, since I usually blame them for my insanity).

I asked my wife “Do you want to be notified of deals via push notifications on your Blackberry when you’re in an area with local deals?”

The look on her face said “What are you talking about?” but her mouth said “What’s a push notification, and how would I know if I was in an area with a local deal? What does that mean?”

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I could ask 1,000 consumers the same question I asked my wife to get their responses and see if the answers differ from my wife’s.

But I’ve already asked consumers about their interest in receiving offers, and the results I got don’t jive with BuyVia’s.

In Q2 2012, Aite Group asked 1,115 US consumers “how important is it to you to receive special offers from merchants on your mobile device when shopping?” Just 14% said “very important,” 27% said “somewhat important,” and 60% said “not very important.”

By generation, how many responded “very important”? A not-so-whopping 23% of Gen Yers, 17% of Gen Xers, 8% of Boomers, and 0.6% of Seniors.

From this, I’d find it hard to conclude that “the majority of shoppers want to be notified of deals via push notifications on their mobile devices when in an area with local deals.” But maybe BuyVia was only considering younger consumers to be “shoppers.” After all, us old people (Boomers, Seniors) don’t really matter any more, do we?

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Why don’t consumers want offers pushed to them?

IF you’re thinking it’s because consumers see advertising as a nuisance and a disruption, I would agree. But I think that there is another reason: Data privacy.

Aite Group also asked consumers about their willingness to share various types of personal data with merchants and retailers in order for that data to be used to personalize offers. For the various types of sources, we asked them to tell us:

  • I have no reservations with this information being accessed
  • I have no reservations as long as I have given the provider permission
  • I am willing to allow access to this data but only if I am asked for permission each time
  • I am willing to allow access to this data but only if it is done anonymously
  • I am not willing to let merchants and retailers access this information under any circumstances

The differences between generations are, again, significant:

Percentage that say that merchants and retailers should not access 
this information under any circumstances
Source                                Gen Y   Gen X   Boomer  Senior
Current searches                       28%     40%     51%     65%
Purchase history (from retailer)       28%     44%     55%     66%
Search history                         29%     44%     55%     70%
Purchase history (from FI)             32%     48%     56%     71%
Location information                   33%     44%     56%     73%
Payment information (i e credit cards) 35%     47%     60%     73%
Social networking profiles and posts   35%     46%     62%     74%
Web browsing history                   35%     47%     56%     74%
Checking/savings account balances      40%     56%     67%     85%

Source: Aite Group survey of 1,115 US consumers, Q2 2012

Still want to try and convince me that the “majority” of consumers want offers pushed to them?

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The truth (like I can claim to know the “truth”) is not as simple as “consumers want mobile offers” or “consumers don’t want mobile offers.”

We want offers to magically appear when we want them to, which can be at any point in the purchase decision process. That point differs across people, and differs for even a particular consumer based on product, mood, and a million other factors.

We say we don’t want merchants/retailers to use our personal data, but then complain when they don’t “know” us. 

We’re OK with our favorite merchant or vendor pushing offers at us, but G*d forbid that a big evil bank pushes an offer at us. That’s grounds for regulatory reform. (If you get an unwanted offer from a big bank, tell Dick Durbin. He’ll enact legislation to outlaw the practice). 

The reality is that some subset of your customers and prospects will be OK with your pushing offers to their mobile device, and using some subset of their personal data to personalize that offer, and provide some rationale for why the offer is relevant. 

The best you can do is figure out which customers/prospects are in that subset, and what you can do to grow the segment. 

In the meantime, don’t believe claims like “the majority of consumers want to be notified of deals via push notifications on their mobile devices when in an area with local deals.”

The Case For Working From Home

Telecommuter is a strange word. According to a 1994 paper I came across online, the term was first used in the early 1970s. It’s amazing, come to think of it, that somebody was writing about it even in 1994 when we were all on Compuserve, starting to use AOL, and dial-up speeds were painfully slow. Pretty sure there was no IM at that point. Not sure if the guys who started Twitter were even born yet.

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It’s a topic that holds great interest for me, because for the past year and a half or so, I’ve transitioned to become a full-time telecommuter.

Well, I mean, I guess I have, since I would never use the term “telecommute” to describe what I do. I don’t use a telephone (make all my calls thru Skype) and in no way, shape, or form do I commute (unless you consider going up and down the stairs in the house as “commuting”).

I started telecommuting — oh, for chrissakes, let’s call it what it is: working from home — out of necessity. Some personal stuff caused me to work from home. The precipitating condition has long passed, but I haven’t gone back into the office on a regular basis.

And here are my two conclusions about the situation: 1) I’m a helluva lot more productive, and 2) I’m a helluva lot more happier about my job.

Now, when I say I’m more productive, I’m not making it up. I can prove it — the number of reports I’ve published has increased, and the number of interactions I’ve had with clients and the press have increased. So I can quantify my improved productivity.

Now my fellow telecommuters and I have third-party validation of the productivity benefits of telecommuting.

Well, kind of. I’ll tell you about the study, and you can decide if it proves the case for telecommuting.

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Researchers from Stanford University worked with a Chinese travel agency to understand the impact of telecommuting on the agency’s 12,000 employees. According to a GigaOm article:

Workers were asked whether they would volunteer to dial-in and were then screened to ensure their home-based workspace was adequate and they had a solid enough record to be trustworthy. Then 255 were set free to telecommute. The results, according to Smithsonian.com were heartening. After a few weeks, the telecommuters were performing better than their counterparts in the office. They took more calls (it was quieter and there were fewer distractions at home) and worked more hours (they lost less time to late arrivals and sick breaks) and more days (fewer sick days). This translated into greater profits for the company because more calls equaled more sales. The telecommuters were also less likely to quit their jobs, which meant less turnover for the company.

After reading this, I had to check the dateline on the article. It said November 2011, but I would’ve sworn that the article was written in 1995.

I mean, c’mon, really now. Stanford wants to study the productivity of telecommuting so it: 1) goes to China, 2) picks a travel agency, and 3) asks employees to dial-in from home?

First off, I’m sure there are no cultural differences between Chinese workers and the rest of the world that would question the universality of the test participants (sarcasm).

Second, a travel agency? Really? Didn’t they go out of business 10 years ago? And even if they didn’t, since a lot of a travel agent’s job already involves spending a lot of time on the phone, was that the best type of job to test the productivity impact of telecommuting?

Third, who “dials-in” anymore? Maybe in China, I guess.

Hey Stanford geeks: Was there really no company in the United States that you could find to test the productivity impact of telecommuting?

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A firm called Wakefield Research did. They found more than 1,000 U.S. workers who work from home, and surveyed them to find out what they do when they “work” from home. Wakefield found that:

  • 43% watch TV or a movie
  • 26% take naps
  • 24% admit to having a drink
  • 20% play video games

In other words: People who work from home behave no differently than those who go into the office.

Granted, those are my personal observations, but I’m sure I could do some research to corroborate that.

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Look, I may be a bourgeois capitalist pig, but I’m not a total jerk. Working from home is my contribution to society: I don’t waste natural resources like gas by driving my 7 MPG Hummer into Boston every day, and by staying off the roads, I’m doing my share to alleviate the traffic problems that exist here.

And by not going to the office, my co-workers aren’t subjected to hearing me eat at my desk or having to smell the food I’m eating (like that’s not a problem in your office).

So I don’t care what any so-called researcher says about working from home, telecommuting, or whatever term you use to describe it. The costume parties, team building exercises, and baby showers will have to go on without me. 

Facebook Fans Aren’t Better Customers, Better Customers Are Facebook Fans

Marketers who obsess over driving social media connections (like Facebook likes and Twitter follows) because they see or hear that social media likers/followers are more likely to buy, are better customers, or whatever, are missing an important point:

Social media connections don’t cause the desirable behavior/attitudes — they’re the result of something else. That “something else” is customer engagement.

In a survey of more than 1,100 US consumers, Aite Group asked respondents how frequently they performed financial management activities like creating/managing a household budget, categorizing/forecasting their spending, analyzing the return on their savings and investments, and seeking help and guidance in making financial decisions (there were 13 activities, overall).

Based on their responses, respondents received a score for each activity and an overall Financial Activities Score. That score qualified them for one of three groups (with the percentage of the population each group represents): Level 1: Inactive (30%); Level 2: Moderately Active (50%); and Level 3: Highly Active (20%).

Highly Active consumers (Level 3) are the most likely to:

Grow their relationship with their primary financial institution. Just 4% of Inactive consumers expanded their relationship with their primary FI in the past 12 months (by increasing balances and/or number of accounts). Among Moderately Active consumers, that percentage is 11%, and among Highly Active consumers it’s 14%.

Refer their FI. Highly Active consumers are 1.5 times more likely to refer their primary FI to family/friends than Moderately Active consumers, and twice as likely as Inactive consumers. 

Use and reap the benefits of PFM. Nearly two-thirds of Level 3 consumers use an online PFM tool, in contrast to just one in four Level 2 consumers, and one in 10 Level 1 consumers. More importantly, Highly Active consumers reap the benefits of PFM. In a soon-to-be-published Aite Group report, I defined three levels of benefits that users achieve from PFM: 1) Oversight: The ability to know where their money is and where it goes; 2) Insight: The ability to better control and manage their financial accounts; and 3) Foresight: The ability to make better financial decisions. Among PFM users, Highly Active consumers are four times as likely as Level 1 and 2 consumers to have reached the Foresight level of benefits. The benefit to FIs of PFM users reaching the Foresight level will be described in the report.

Connect with FIs on social media. Among Highly Active consumers, nearly three in 10 are Facebook fans of their primary FI, and one in five follow the FI on Twitter. Among other consumers, those percentages are in the low single digits.  Looking at it from a different perspective, of the customers that follow their primary FI on Twitter, 95% are Moderately Active or Highly Active consumers. Ninety percent of Facebook fans come from these two segments.

Bottom line: Encouraging customers who aren’t actively involved in the management of their financial lives to “Like us on Facebook!” or “Follow us on Twitter!” is a waste of financial services marketers’ time and efforts. The customers who make those connections are already good customers. 

Customer engagement — engagement with one’s financial life — is what financial marketers should be encouraging.

 

 

Understanding Online Customer Experience: Which Methods Work?

eConsultancy published its second annual Reducing Customer Struggle report, and in a blog post regarding the study, included two charts that revealed marketers’ perceptions on which methods are most effective for discovering problems or issues with the online customer experience, or understanding the online customer experience in general.

In the first chart,  a little more than half of the marketers surveyed said their firm analyzes direct messages/comments from social media, yet only a third of them consider the method to be very effective for discovering problems/issues with the online customer experience (which was in line with the rated effectiveness of most of the other methods asked about).

The second chart revealed responses to a slightly different question: Which approaches does your business use, and how effective are they for understanding the overall customer experience? To this question, more than three-quarters of respondents rated social media analysis/VOC tools and online reputation monitoring/social listening tools as effective.  

My take: There’s a disconnect here (not with the research, but with marketers’ responses).

I have a hard time believing that analyzing calls to customer service and web analytics are less effective than OL reputation monitoring/social listening tools at understanding consumers’ issues with the online customer experience.  

And how can only 33% say that analyzing direct messages (a social media component) is effective, but 77% say that social media analysis/VOC tools are effective? In fact, 33% said customer surveys are effective, but 77% believe that VOC tools are effective. Aren’t customer surveys an example of a voice-of-the-customer tool by definition?

Come to think of it, how can a higher percentage of marketers say that they use VOC tools than use customer surveys?

Bottom line: I don’t know. Maybe I’m misreading something in the research. Or maybe marketers don’t know what they’re talking. Or both.

Thanks to eConsultancy for publishing the snippet of their research. I’ve always been impressed with the work they do.

A New Metric For Banks And Credit Unions: Referral Performance Score

Regular readers of this blog know how much I detest the Net Promoter Score. Biggest management scam of the century in my book. 

There are a number of reasons why I dislike the metric, including my contention that measuring intentions isn’t as useful as measuring behavior. 

After all, I intend to lose weight, exercise more, eat right, stop smoking, work harder, be a better husband/father/work colleague, and make the world a better place. 

In that context, FIs should track a new metric: Referral Performance Score:

RPS = % of customers/members that refer friends/family to the bank/credit union x % of referrers that grow their relationship (by increasing account balances and/or adding new accounts)

Based on a recent survey of more than 1,000 US consumers conducted by Aite Group, I calculated the Referral Performance Score for Large Banks and Credit Unions (based on respondents’ indication of which type of institution they consider to be their primary FI). 

The result is good news/bad news for credit unions, and bad news/good news for large banks. 

Here’s what the chart says: Only about one-third of large bank customers referred their primary bank to family/friends in the past year, in contrast to the nearly half of credit union members who consider their CU to be their primary FI that did so. (Note: this does not represent all credit union members).

However: Among referrers, of those whose primary FI is a large bank, one in five grew their relationship with that FI (by increasing account balances and/or number of accounts). On the other hand, less than 10% of CU primary members that referred their CU grew their CU relationship.

Multiply the two percentages together to calculate the Referral Performance Score. A high RPS score means that a lot of people are referring AND growing their relationships. 

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Bottom line: While a lot of CU primary members refer their CU to family and friends, few of them are growing their own relationships. In contrast, even though a smaller percentage of large bank primary customers refer the bank, a much higher percentage are growing their own relationship. 

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A lot of people referring but not growing their own relationship is suboptimal, as is a large percentage growing their relationship but not referring (although I’ll take the latter any day of the week). 

If I could do the research over, I’d ask respondents to be more specific about how many referrals they provided (but you, as bankers and creditunionistas should be tracking that already, right?). That would enable me to calculate a more robust relationship performance score. 

The weakness in the current calculation notwithstanding, Referral Performance Score is far superior to the hokey-pokey net promoter score (put your left foot in, take your left foot, and shake it all around). 

Segmenting customers/members into a 2×2 quadrant based on referred/didn’t refer and grew relationship/didn’t grow relationship can give banks and credit unions an opportunity to understand the differences in demographics between the segments, track progress over time, and understand why customers who grow their relationship aren’t providing referrals, and understand why customers who provide referrals but aren’t growing their relationship, aren’t.

Consumers Do/Don’t Want Relationships With Brands

Do consumers want to have a relationship with brands?

On one hand, a research study published by the Association for Consumer Research says yes, and states:

“Consumers want to build a relationship with a certain brand when they regard the brand as beneficial or valuable to them. Thus, if consumers feel that they are getting a good value and are satisfied after initially using the brand, they want to build a relationship with it.”

On the other hand, a blog post on the Harvard Business Review site posits the opposite opinion. As to whether or not consumers want a relationship with brands,

“They don’t. Only 23% of consumers said they have a relationship with a brand. When you ask the 77% of consumers who don’t have relationships with brands to explain why, you get comments like ‘It’s just a brand, not a member of my family.’”

So who’s right? Both of them.

How can that be? It’s easy. They both define “relationship” to suit the view they choose to support.

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The ACR researchers actually skirt the issue altogether, and assert that benefits+value=satisfaction=relationship.

The HBR bloggers, on the other hand, establish a condition that proves impossible to meet, that a relationship can only be akin to something we have with a family member.

This is an unfair condition. First off, our relationships with individual family members aren’t all alike. My relationship with my spouse if very different from my relationship with my children, which in turn is different from my relationships with my siblings and other further-flung family members.

And what about work colleagues? We often talk about having a “working” relationship with someone, don’t we? That’s nowhere the same as a relationship with a family member.

It’s hard to believe that only 23% of people told the HBR bloggers that they have a relationship with a brand. Really? There’s no brand you feel an affinity toward, or loyal to?

I mean, look, you really don’t want to be in the same room as me if I find out we’re out of my favorite cereal in the morning. Is that not a relationship I have with the brand?

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There are two things going on here. 

The first is this annoying, never-ending quest on the part of marketing consultants and academics to “discover” the “secret” of customer “loyalty.” And to produce a list of the three (or five or seven) things you have to do to “win” that loyalty, and the ONE thing to measure. 

This is called Silverbulletitis which I define as:

A condition in which the sufferer expects easy answers and solutions to difficult problems.

As Ringo Starr once said, “It don’t come easy. You know don’t it come easy.” We shoulda listened to him.

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The second thing is pretty annoying, as well: It’s marketing’s lack of established definitions. 

While the accounting world suffers from attempts to make the scientific creative, at least it has generally accepted definitions for its commonly-used terms, like assets and liabilities.

But not only can the marketing not define relationship, we can’t even produce generally accepted definitions for terms like market share and yes, even the term customer.

So, as a result, researchers and consultants go off, do research, and come to the conclusion they were predisposed to come to by simply defining terms the way they want to define them.

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Whether you agree with me or not, I’m sure that won’t affect the relationship you have with this blog. Right?

If Not For Everybody, Who Are Credit Unions For?

In an interesting post titled Credit unions: not for everybody on the Shared iDiz site, Brian Wringer writes:

“A whole lot of people — the majority of consumers, really — could benefit from switching to a credit union. Why, oh why, do all those people insist on throwing their money away with banks? But I prefer to look at it another way — CUs appeal to an elite, exclusive group of people. Overall, I’d say it’s a group of people who are paying attention. I’ve seen stats indicating that CU members on average are a little healthier, wealthier, and even better drivers than the average. CU members seem to make slightly better decisions in life.”

My take: An interesting assertion. CU members pay attention, and are healthier, wealthier, and make better decisions–OK, slightly better decisions–than other consumers. But is it true?

Based on a survey just completed by Aite Group and BancVue, I might be able to shed a little light. The problem is we didn’t capture data about CU members–we identified consumers who consider a credit union to be their primary financial institution.

That’s obviously just a subset of the overall member base, but if this subset isn’t more attentive, healthier, wealthier, etc., then Brian’s assertion holds little water, since CU members who don’t consider a CU to be their primary FI likely consider a large bank to be their primary FI, and that’s just not going to support Brian’s contentions.

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The first challenge we have is in defining what “pays attention” means. Could mean a million things, but I’d like to propose that from a financial services perspective, we could create a proxy for “attention” by looking at the various financial management-related activities that consumers do, and the frequency with which they do them.

The survey asked respondents about 14 different financial-related activities like creating and managing a budget, categorizing and forecasting their spending, analyzing the allocation of and returns on savings and investments, accessing financial educational content, and seeking advice on a variety of financial-related topics.

I assigned points based on the frequency with which respondents did the activities — ZERO points if not done at all, and up to 10 points for an activity that was performed on a weekly basis. Theoretically, credit unions could achieve a total score of 140 if 100% of the people who consider a CU their primary FI (let’s call them CU primary members) did each of the activities every week.

I computed the score not just for CU primary members, but for people who consider a large bank their primary FI, and for people who consider a community bank their primary FI.

The result: Large banks received a score of 22.3, credit unions scored 19.3, and community banks got a 17.5. Across the range of activities, more large bank primary customers performed the activities, and did so more frequently, than CU primary members.

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Let’s take a look at income. Forty-two percent of large bank primary customers earn more than $60k per year. The corresponding percentage for CU primary member is 35%.

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Wondering about level of education? After all, they say (I don’t know exactly who, but you know, the royal they) that educated people are healthier than uneducated people. Among large bank primary customers, 52% have a college degree or higher. Among CU primary members, it’s 41%.

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In case you’re interested, large bank primary customers and CU primary members are equally as likely to “friend” their primary FI on Facebook (a paltry 12%), and about as likely to view videos on their primary FI’s YouTube page (a measly 5%). Large bank primary customers are nine times more likely their primary FI on Twitter than CU primary members, however (9% for large bank primary customers, 1% for CU primary members).

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Among CU primary members, just 34% are working full-time. Compared to large bank primary customers, CUs have a higher percentage of the unemployed, homemakers, and retirees. Not that I’m saying these groups don’t make good decisions, or aren’t good drivers.

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Bottom line: I think you get the picture. Any belief that CU members are healthier, wealthier, wiser, more attentive, more this, or more that, than other consumers might be the result of smoking something illegal. 

If you share those illegal things with me, though, I promise not to tell on you, and I’m sure I can find a way to massage the data to support your view of the financial services world.