This summer, retail banks across Britain put up posters highlighting their customer satisfaction scores. But this was no marketing stunt. Instead, the posters displayed both their scores and those of their competitors, reflecting the answer given by thousands of current account customers to the simple question: Would you recommend this service to another person?
It is an initiative driven by the Competition and Markets Authority (CMA) to give greater transparency to customers, but for some banks it has proved something of an embarrassment. Good or bad, the scores must be on the walls.
While First Direct topped the charts with 85 per cent satisfaction, 30 percentage points higher than its owner HSBC, closely followed by Metro Bank at 83 per cent, RBS and Clydesdale languished at the bottom with just 49 per cent apiece.
The CMA has ruled that banks must display the results, which will be updated every six months, in every branch and online. Until now, most banks have carried out their own customer satisfaction research, but using different methods to collect data and asking different questions about different criteria.
Adam Land, senior director at the CMA, explains: ‘For the first time, people will now be able to easily compare banks on the quality of the service they provide, and so judge if they’re getting the most for their money or could do better elsewhere.
‘This is one of the many measures – including Open Banking and overdraft text alerts – that we put in place to make banks work harder for their customers and help people shop around to find the best deals for them.’
The research agencies involved in collecting the data – GfK for personal banks accounts and BVA-BDRC for business accounts – use the Net Promoter Score system, devised in 2003 and now widely adopted across all industries, to determine the rankings. Customers are asked how likely they would be to recommend their bank for a set of different services on a scale of one to ten.
Those scoring between one and six are considered ‘detractors’, those scoring seven or eight are ‘passive’, while those scoring nine and ten are ‘promoters’.
The NPS is determined by subtracting the percentage of detractors from the percentage of promoters, while the passives are ignored. The sample of customers consulted by the research agencies is provided by each bank but must reflect a pre-agreed profile of their customer base, explains Shiona Davies, director of BVA-BDRC, which polls business customers.
‘The purpose of the survey is to give customers a means of comparing their bank with others and not just getting something about customers from their bank which is not independent,’ she says. ‘With this, all banks are held to the same benchmark. It is about transparency as it is very easy to see where your bank ranks.’
Others also praise the system. Martin Wright, director of agency Customer Journey, says: ‘The rationale for using NPS is that it sets a higher bar than a bank doing its own customer satisfaction research using its own, preferred, criteria. Also, people are much less likely to recommend a service to a friend if they are dissatisfied with it. NPS has value if you are trying to grow and attract more customers.’
Tony Langham, director of public relations firm Lansons, which also carries out surveys on behalf of clients, adds: ‘I like NPS. It is simple and normative, easy to understand. It can be very useful for organisations to pinpoint difficulties within – for example, by comparing NPS of different branches or service centres. If one has a low score compared to others, you know there is a problem there.’
As to why the results are so different for different banks, Langham says this is consistent with most other customer satisfaction surveys of the banking sector. Which?, for example, carried out its own NPS study of banking customers this year and also gives First Direct 84 per cent although RBS scores significantly higher at 60 per cent as does Clydesdale Bank at 59 per cent.
Langham says: ‘I would say the results are consistent with all other customer satisfaction findings in the banking sector. First Direct pretty much always comes first. A lot of customer dissatisfaction is linked to removal of services – for example bank branch closures, so it is no surprise that Metro Bank has such a high NPS as it is radically increasing the services its customers can get as well as opening branches.’
Wright adds: ‘The reason First Direct always does so well is they have a relatively simple product offering and do what they do well. Their staff are well trained, it’s easy to get through on the phones, the brand is simple and consistent. For most companies it is still a struggle to get these basic things right consistently.’
Organisations which have lower scores, he explains, typically have spikes in times when it is hard to get through on the phone. Training is also generally not great, so staff are uncertain as to where a customer’s query should be directed.
‘As soon as anything gets complex, an automated process doesn’t work well and customers are forced to explain their problem multiple times to different people.’ Another issue is systems.
‘If there is a problem, as there was with TSB earlier this year, it instantly affects a large number of people. Lots of organisations suffer from poor systems, which are not intuitive for customers to use, or they have to work far too hard to sort out a simple problem,’ says Wright. ‘RBS is a sprawling business with lots of different brands and lots of systems trying to integrate with each other.’
Despite this, some ‘customer journey’ professionals do not believe the NPS method of polling customers’ views is reliable and is, indeed, deeply flawed. Christopher Brooks, director of the Lexden Group, which provides advice on customer experience, is one such professional who has undertaken research into this area.
Knowing whether a customer would recommend a company or service to others is of little value, he claims, adding: ‘We know through research that only five per cent of people who say they would recommend a service actually go on to do so. And, even if someone did recommend a service to another person, there are 99 other things influencing that person’s choice.’
Brooks points to research carried out by Phil Klaus, professor of marketing and customer experience at the International University of Monaco, who has found that there is a lower-than-one per cent correlation between a high NPS score and the profitability of a business.
It is like throwing a bucket of water over a car and saying the brakes work well
His research has further found that there are some 25 indicators which impact 90 per cent of a person’s decision-making, with customer satisfaction being just one. Another criticism of the NPS method is that it measures a customer’s feeling about a business at just one point in time.
As Jennifer Winter, author of the blog usertesting.com, explains: ‘Imagine that a company sent out a NPS survey immediately following a customer’s purchase. The purchase experience was good, so the customer gave the company a high score. But, a few days later, when the customer received the product, it wasn’t what they ordered. But the return process was the polar opposite of the checkout process. The customer is now frustrated, upset and has vowed to never make another purchase. If another NPS survey were sent out at this time, chances are this customer would be a vocal detractor.
‘NPS captures just one point in time with a customer, and the customer’s response will depend heavily on their most recent experience. Focusing solely on NPS as a measure of overall customer experience is a dangerous habit that could eventually turn loyal promoters into detractors.’
Brooks adds: ‘One would like to think that the same proportion of different types of customers have been asked the same questions at exactly the same point in their customer journeys, but it is unlikely.’ So, the timing of the survey can skew results. This can have a heavy impact on a company which suffers, for example, a one-off system failure, such as TSB earlier this year when nearly two million customers were locked out of their accounts.
Customers who might normally feel very satisfied with their service provider but are asked the question in the weeks following an event like this are more likely to be detractors at that time. Similarly, businesses trying out more innovative ways to serve their customers may fall foul of the NPS method if not every one of its new ideas goes to plan.
Brooks adds a bank can even suffer a low NPS score for being too efficient. ‘If you are a business which works really hard to take the friction points out of the customer journey, you may still get a lower score,’ he says. ‘For example, lots of banks send a text message if you have gone overdrawn, then you phone in a panic and they say Don’t worry at all, we will do x, y, z. If you ask that customer how satisfied they are, they will say Very.
‘But if you are a bank with a more innovative design – perhaps to take funds from a different account if your main account is overdrawn – then there may be no need for that text and, therefore, no need to interact with the customer. The customer may be unaware there was any problem at all and, therefore, not feel actively satisfied.’
NPS is too simplistic to consider all the variables, says Brooks. ‘It is a very blunt instrument and it is not a useful measure. It is like throwing a bucket of water over a car and saying the brakes work well.’
And, while the CMA initiative has endeavoured to ensure that differing demographics are covered in the survey, that is impossible to guarantee, he says. ‘There are so many permutations here, it is impossible to incorporate them all.’ Finally, the main problem with NPS is that it does not provide context.
Wright explains: ‘NPS is a useful indicator of a problem but it doesn’t necessarily tell you what that problem is. Often organisations go around fixing the wrong problems. Getting it right can be very difficult. Often staff designing systems – such as IT departments – are too far removed from the everyday lives of their customers. They need to understand these better to get their products, systems and services right.’
For this, any NPS survey needs to be accompanied by context – for example where problems have occurred outside a company’s control – and by high quality user research. Langham believes banks already do this research but are not joining the dots.
He says: ‘NPS is fantastic at telling you if your customer service is good, but it does not give insight for a solution, so you have to do the extra work. ‘Most banks have huge research departments and, therefore, insight into their customers. They have an issue with using that insight effectively. They don’t join up management decisions with the insights they already have.’
NPS is a useful indicator of a problem but it doesn’t necessarily tell you what that problem is
Insight is everything, says Brooks. You may know the car has broken down, but until you raise the bonnet and examine it, you don’t know why. Businesses can often be mistaken about what is driving customer satisfaction.
‘We did a study with a banking client on customer satisfaction with their current accounts and asked our client what mattered most to their customers. They said customers loved the loyalty programme and had told them they would recommend it. So, we asked the customers if they would buy more products from that bank because of the loyalty programme, and they said No. We asked them if they would move bank if there was no loyalty programme and, again, they said No. So, what is the point of the loyalty programme?’
But even if customers are satisfied with a provider and would recommend it to their friends, this will not prevent them moving to a new provider if a better deal or rate is to be found. Therefore, NPS tells very little about how well the provider retains customers.
‘The NPS score is very basic,’ says Brooks. ‘I can get a score, but not know what aspects to change or improve unless you get verbatim from enough customers. Only then can you begin to understand what you really need to do to get a better overall score.’
