Andrew Wiseman reflects on a recent client conversation about claimed and actual recommendation in financial services
First up, a confession: I love talking about customer loyalty (or the lack of it) and the shortcoming of metrics like NPS. Spoiler alert: this isn’t going to be another one of those NPS bashing blogs, there’s merit in the metric when used correctly.
I was having a conversation with a financial services client recently and we got talking about the advocacy gap (the gap between claimed recommendation and actually recommending) and active detraction (telling people not to use a service).
To put some of these things to the test, we conducted some research to work out what the advocacy gap looks like when it comes to current accounts. Before even getting to the NPS, I was intrigued to see that a lot of people have more than one current account, although I’m not believing that one participant who said they had 15, recommended them all highly, had recommended and actively dissuaded them.
Of course, having more than one account is totally normal. People have personal and joint accounts, and many people have bought into some of the fintech brands such as Monzo and Revolut for the benefits these bring.
Anyway, moving onto the main course. Our survey showed that NPS for current accounts in the UK was +18. Respectable, if not earth-moving. It’s worth pointing out that this number is lower than other studies, notably the NPS Prism Global Benchmarks Report. Still, +18 is decent enough. 40% of current account customers claimed they would recommend their bank to friends or family. However only 26% of current account customers actually have. That means there’s 35% of claimed ‘promoters’ who are not actively recommending their bank. That’s the advocacy gap, and not just a small one.
What about when it comes to active detraction? I was positively surprised to see that only 7% had actively discouraged someone to use their bank in the last 6 months. 7% doesn’t sound a lot – but then we need to remember that:
– A single negative review requires around 40 positive experiences to neutralise its effect, according to Inc.com;
– 21% of consumers lose trust in a brand due to word-of-mouth negativity – even if they’ve never been a customer: a “negative brand halo”, if you will.
So what are the implications for researching in this space?
1. We know that NPS is present on many corporate scorecards. That’s fine. But failing to measure what is done, rather than what is said, leaves a massive hole in understanding customer behaviour;
2. What’s the opportunity to amplify the voice of those ‘passive’ promoters (those who stay silent) – are there incentives that can encourage customers to speak more openly and positively about their banks?;
3. Listen harder to detractors. They can often be louder and more persuasive than their promoting cousins. Take detraction seriously and concentrate on closing the loop;
4. Go beyond the metrics and look at the unstructured data, whether that’s in your NPS programme or on Trustpilot (or both). Go beyond creating a code frame, use Natural Language Processing to get a real handle on what customers are actually saying.
By remembering that the real test isn’t how customers feel, it’s what they do, banks can get a much better handle on how customer experience can fuel growth for their brand.
In short, don’t mistake research ‘politeness’ for true advocacy.
