RETAIL BANKING INDUSTRY REPORT

The Real Reasons Why Bank Customers Churn

Attensity 2011. All rights reserved.

RETAIL BANKING INDUSTRY REPORT

Contents Overview Banking Industry Key Business Drivers Buzz Analytics Social Media Awareness for Retail Banks The Buzz Report Summary Understanding Customer Sentiment Sentiment by Topic Root Causes of Sentiment Cross Channel Analytics Hotspotting: detecting emerging trends Detecting Intent to Churn Automatically Discover New Topics of Conversation Monitoring the Success of New Offerings Understanding the Impact of Marketing Campaigns Survey Analytics Analyzing the Competition Customer Behavior Profiles Engagement Response Queues Summary 3 3 4 4 4 4 5 5 6 6 7 8 8 9
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Overview
Driven by the recession and increasing media coverage of bank industry fraud, todays banking customers are more aware and selective about their banking choices. At the same time, regulatory changes such as the DoddFrank bill (Wall Street Reform and Consumer Protection Act) and the Credit Card Act combined with dwindling profits among Retail banks are resulting in industry developments such as: Introduction of Checking Fees for certain customer segments Debit card charges and restrictions (to help address mandated lower debit card swipe fees) Monthly charges for paper statements and in-person customer service New annual fees, ranging from $29 to $99, for credit cards Fees for images of canceled checks $10 per transfer to use a savings account for overdraft protection New or increased ATM fees for non-customers Reduction or cancelation of Reward Programs

As a result, there is increased scrutiny and speculation regarding the threat of higher customer attrition levels. For example: In an investors day presentation, Chase Bank estimated that 15% of its customers will no longer be able to qualify for free checking, and stated that, Based on current attrition rates, we expect 50% to 60% of these customers to leave Chase within the next year. In a national survey conducted by Bankrate, released March 2011, an overwhelming majority of Americans would consider moving their checking accounts rather than pay a fee increase. Yet another survey, conducted by J. D. Powers and Associates, also released in March 2011, found that customers are switching banks more and choosing new ones based mainly on advertising, convenience and customer experience rather than fees or interest rates. Which leads us to the question, what are the real reasons customers switch banks? To find out, Attensity conducted an analysis of online customer conversations across millions of sites taking place in social media on sites like Twitter and Facebook, and on review sites such as ePinions and Yelp. The unstructured text of customer conversations offers a rich source of business intelligence for companies that are able to mine it. Whether banking customers are comparing account fees, responding to a promotion or applying for a new credit card, they are sharing their experiences in conversations every day. In the past, when these conversations were limited to direct interactions with a company, the bank could respond in its own time, directly and one on one with the customer. Response times could be anywhere from minutes to days, depending on the question or issue. Today, a major shift is occurring in the way customers interact with their banks. Driven by the widespread adoption of mobile devices and social media, customer conversations are multiplying; they are often shared publicly and can quickly go viral. Attensity, a leading provider of text analytics solutions for customer experience management, is at the forefront of this trend. In this analysis, Attensity captured a snapshot of customer intelligence from publicly available online sources, including social media, where customers were having conversations about their experiences with leading U.S. retail banking providers. The following report provides an overview of the types of customer intelligence and key business drivers that these banks can access using advanced text analytics from Attensity.

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Buzz Analytics
If you are a retail bank selling consumer banking products and services, your brand is being discussed online every day. In an analysis lasting approximately 60 days, thousands of posts were discovered mentioning retail banking leaders in North America. These posts included customer sentiment about new products, opinions of offerings, customer service complaints, discussions about switching and more. The first set of reports show the sheer volume of discussions about these leading companies and their competitors:

Overview of social media coverage of top U.S. banks. Utilizing a buzz monitoring report like the one on the previous page, banks can get a real-time snapshot of the volume of coverage by any variable they specify, including brand name, campaign name and more. For example, the above report shows the number of comments by company name, as well as the impact and engagement assessment of the buzz about the brand. In this report, Wells Fargo had the most buzz with over 43,000 mentions in just 30 days. Note that this data represents a specific slice of time and will change depending on the market forces at work. That may seem an obvious conclusion. A better question might be: what specifically are these customers talking about?

Understanding Customer Sentiment

Do your customers like you? Do they prefer your competition? Are your marketing messages resonating? If so, why? If not, what are their issues? Sentiment analysis helps organizations understand what customers think about their brand and offerings. The ability to track customer sentiment gives banks the insight they need to determine where and how to prioritize change. Knowing whether customers feel positively or negatively about their brand, offerings and services gives banks a high-level view of the health of the business. But what are the issues that are driving that sentiment? These are the key details banks need to know to make needed changes and drive their business forward.

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This dashboard shows how sentiment varies by topic.

Getting to the Why Behind the Sentiment

Some of the most impactful insights that organizations can get from analyzing online customer conversations is an early view into service issues. The ability to understand the impact of and get early warning of those issues is a significant area of opportunity to save costs and improve the customer experience. Learning about issues early and tracking them over time to improve customer service and, ultimately, the banks offerings, can result in significant cost savings. However, since the detail about these issues is usually hidden in textual feedback, identifying them and understanding their magnitude can be challenging.

Banks can identify specific issues affecting customer sentiment overtime.

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Cross-channel Analytics
While social media channels such as Twitter provide a real-time view of customer conversations, its important to remember that customers communicate with their banks in a variety of ways, and analyzing customer conversations across all communication channels is important for any bank that wants a complete and accurate picture of the customer experience.

Identify sentiment across channels to get an accurate picture of the customer.

In fact, social media itself encompasses several channels, such as Twitter and Facebook. There are also community forums, blogs, review sites, and video sites like YouTube. And finally, there are direct channels such as the banks web site, customer emails, surveys and call logs.

Spotting Emerging Issues

Todays empowered customers often turn to the Internet when they encounter a problem. The companys web site is a critical tool for communicating with customers, while keeping support costs low. The following report shows the impact an inaccessible web site is having on customers:

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Using advanced analytics, banks can identify these types of issues or hot spots as theyre emerging. By tracking issues over time, banks can get a sense of both emerging issues and those that have gone from a normal level of complaint to a serious or hot level. Armed with this knowledge, the bank can take action to prevent a minor issue from spiraling into a customer service or public relations disaster. This might mean augmenting its service team, or providing FAQs and other information on the companys web site to deflect calls and make the information easily accessible to customers.

Detecting Intent to Churn

Understanding and then managing bank customer churn before it happens is critical to the success of any retail bank. New regulations are being introduced and designed to protect consumers. And, the frequent introduction of new offerings, combined with compelling incentives, are encouraging customers to switch. Churn happens in both directions, both to and away from the bank. The ability to identify which customers are getting ready to make a switch, understand why, catch them in the process and connect with them to provide offers to mitigate the change or to encourage a move to your bank provides both opportunities to win new customers and retain existing customers. This ability can thereby drive new revenues and preserve existing relationships. The report here shows publicly available data drawn from social media sources of conversations around intent to churn and the reasons why. These conversations are taking place every day online, yet banks often lack the tools to monitor, analyze and act on them. With advanced text analytics solutions, banks can not only identify and prevent churn, they can spot opportunities to win new business from customers frustrated with the competitions offerings or services.

The report here shows social media sources of conversations around intent to churn and the reasons why. The most challenging part of getting to insight in large volumes of customer conversation data is the great variances in the way people say things. Using advanced text analytics solutions, companies can now automatically identify the many ways consumers discuss leaving and capture those discussions to understand the top reasons why people leave. The software automatically identifies these different variations as relating to churn and aggregates them for easy and fast analysis, to track churn reasons over time and to route customers discussing leaving to agents for action.

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Automatically Discover Topics of Conversation

Banks are increasingly aware that customer conversations are taking place online in social media, on blogs and review sites, in customer forums, etc. Many are taking strides to monitor and search for topics of conversation they know are of interest. But what about those issues they havent identified yet? While traditional search and text analytics systems rely on building exhaustive keyword lists, newer advanced analytics technology gives providers the ability to automatically discover topics of conversation as they are happening. When product issues and service missteps can quickly go viral, the ability to get early warning of issues and spot trends is fast becoming a key competitive differentiator.

Word clouds offer an easy way to see which customer topics are trending at a glance. Word clouds offer an easy way to see which customer topics are trending at a glance. The larger words show the topics with the most number of comments. Easy to use reports and dashboards like this are an essential component of customer analytics systems, and give marketers and customer service organizations an easy way to monitor customer conversations and spot key trends.

Monitoring the Success of a New Offering

In the banking industry, new product and service introductions are expensive, requiring the coordination of multiple front end and back end systems, marketing campaign development, and training for contact center agents, to name just a few factors. Leveraging customer data throughout these processes is critical to success, but marketers have to wade through long research cycles that include panels, focus groups and surveys. Even then, success is anything but certain. Using advanced text analytics, providers and manufacturers can now get fast feedback on new product introductions directly from the market, and use that intelligence to adjust their launch strategies to the realities of the market. Near real time feedback can help organizations course correct, making changes to aspects of the offering that can make the critical difference between a launch that falls flat and one that is a major hit. Understanding customer opinion early in the process gives providers the insight they need to anticipate demand and even make changes to inventory and campaigns based on customer feedback. Included here are just a few examples of the kinds of analysis providers and manufacturers can conduct around new product introductions.

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Marketers can use advanced customer analytics to monitor the success of new product launches.

Understanding the Impact of Marketing Campaigns

Retail banks spend millions to market their products and services, and to drive traffic to their web sites and into their stores. Other than waiting for the sales reports, how can they tell if it is working? Surveys and other market research methods only tell half the story. The detailed feedback found in social media from customer opinions and ideas around a new marketing campaign can be strikingand providers can use this feedback to mold future campaigns or second and third waves of an existing campaign.

By monitoring customer conversations, marketers can use feedback to fine-tune campaigns.

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Survey Analytics
Surveys are an important tool that many banks use to track customer feedback over time. Using survey metrics like customer satisfaction or Net Promoter scores enables the business to track changes in customer satisfaction over time. Along with survey questions, it is critical to also provide detail behind the scores. Why does in-branch service at one branch continually score lower than average? Why are some customers not inclined to recommend a particular bank?

Using survey metrics like customer satisfaction or Net Promoter scores enables the business to track changes in customer satisfaction over time.

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Analyzing the Competition

Before the advent of advanced text analytics, competitive analysis was typically carried out by consultants paid to pick around in the competitors garbage can, website or stores. Or they might send out a survey to their customers to find out more about their pricing, marketing, products and customer opinion. While those tactics can produce some very interesting insights, leveraging social media to get a real view into what the market thinks presents an enormous opportunity.

Competitive analysis among the top U.S. banks. Customer Behavior and Preference Profiles The verbatim of customer conversations about specific products and services can be quite revealing in terms of the detail customers provide about themselves, the reasons they buy, who they buy for and more. While demographic and behavioral data is telling, customer conversations often deliver a degree of granularity that can be used to better segment and market to customers.

Banking industry leaders are using advanced customer analytics to profile customer behavior and preferences.

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Customer Engagement Response Queues

While analyzing customer conversations is critical, it is just the first step. The ability to drive action based on these insights and on established business processes is critical to success in todays competitive financial market. Many companies are struggling with how to engage with their customers in social media. It can be a daunting challenge, yet for todays hyper-connected customers, the ability to engage through social media is quickly moving from a novelty to an expected piece of the customer experience. Companies that dont actively engage with customers through these channels will soon find themselves at a disadvantage.

The ability to engage through social media is quickly moving from a novelty to an expected piece of the customer experience.

By routing customer conversations into different queues from any channel, including social media, different stakeholders throughout the enterprise can engage customers proactively, while the system tracks interaction history.

Using customer analytics to drive proactive response is a key capability retail banks need to turn insight into action. Todays advanced customer analytics and engagement platforms allow providers to transform customer conversations into action.

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Summary
There is a wealth of user-generated content in social media, email, CRM notes, surveys and more being created every day about your company, your products, and your competition. Too often, this vital information goes underutilized and virtually untapped as a valuable asset. However, through the power of todays advanced text analytics solutions, retail banking leaders can now conduct deep analytics and use those insights to drive key business decisions, deliver proactive service, and formulate competitive business strategies. The key to unlocking this wealth of information lies in a deep understanding of languagethe ability to accurately pull out sentiment, key issues, and relationshipsand in the ability to express those insights in easy-to-use business oriented applications. This report is just a small glimpse into the kind of analytics and engagement capabilities that banks can achieve. For more information on this report, Attensitys text analytics solutions or to get a private demonstration, please contact sales@attensity.com, or visit us online: Website: www.attensity.com Blog: http://blog.attensity.com/ Twitter: twitter.com/Attensity Facebook: http://www.facebook.com/attensity

About Attensity
Attensity helps the worlds leading brands leverage customer conversations as a business asset. Using Attensitys integrated suite of customer analytics and response applications, organizations can tap the wealth of data stored in both internal and online sources, and use that information to improve the customer experience with their brands. Attensitys award-winning Customer Experience Management (CEM) solutions are built on a massively scalable text analytics platform that enables organizations to listen, analyze, relate and act on customer conversations, no matter where they take place. From its headquarters in Palo Alto, Calif., and Kaiserslautern, Germany, Attensity is powering the customer experience strategies of companies such as Charles Schwab, Citigroup, HP, JetBlue, Lloyds Banking Group, Siemens, Starwood Resorts, Travelocity and Whirlpool. 2011 Attensity. All rights reserved. Attensity, First Person Intelligence and Exhaustive Extraction are trademarks of Attensity Group in the United States and/or other countries. Other brand and product names are trademarks or registered trademarks of their respective holders. Information is subject to change without notice.

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