Advocacy the way forward?

(21 February 2011 – Australia) Banking research house East & Partners has added significant new core content to its long running Business Banking Sentiment Index (BBSI) program, now known as The Advocacy Monitor (TAM), as the traditional driver of customer satisfaction can no longer be relied upon as the key predictor of business banking performance measures such as market share, wallet share and cross sell performance independently.

Businesses are now reporting less intention to move from their business bank,
due to credit access and perceived lack of choice, and more intention to
purchase new product, despite satisfaction scores with their banks falling to
new lows. This has created a new paradox not seen before in Australia’s business
banking market.

Advocacy has become a more valuable measure of likely customer engagement and
relationship strength with their banks, especially in combination with other
existing East measures of customer-bank empathy, bank loyalty experiences,
contact frequency, proactiveness of bank engagement, mind share and advertising
recognition.

Paul Dowling, East & Partners’ principal analyst, says that “We have seen much
stronger correlation develop post GFC between the sentiment measures East has
traditionally tracked as a way of predicting buying intentions and customer
advocacy amongst business customers.”

“This enhanced research response is about more closely monitoring the lead
effects that customer sentiments toward their banks have in driving advocacy and
thence to customer engagement and buying. These drivers intuitively connect much
more strongly with what we’re seeing in real world customer behaviour than
whether those customers are ‘satisfied’ or not.”

The first release of the firm’s enhanced Advocacy Monitor shows that the number
of times a bank or relationship manager was actually advocated in the past two
months was, on average only 0.34 times by micro businesses. Businesses in the
mid-corporate segment by contrast reported advocating their bank or RM on
average more than double that of the micro segment.

About East & Partners’ Business Banking Advocacy Monitor

The East & Partners’ Business Banking Advocacy Monitor is a bi-monthly Index of
business customer advocacy and sentiment towards banks, based on interviews
conducted Australia-wide with a structured sample of +/- 775 companies turning
over A$1 to 100 million per annum, some 4,800 direct interviews with business
banking customers annually. The Index provides a monitor of several key drivers
of customer engagement behaviour with their banks including advocacy,
detraction, empathy, satisfaction, loyalty and mind share.

For more information please contact:
Kimberley Burgess
Client Communications
East & Partners
t: 02 9004 7848
m: 0405 250 796
e: kimberley.b@eastandpartners.com

TABLE 1
Average Advocacy Score by Bank

10 (would not recommend) to 100 (would
recommend)
 

TABLE 2
Number of Times Bank or Relationship Manager Advocated in Past Two Months, by
State

Average Score
 

TABLE 3
Most Important Driver Encouraging Advocating Primary Bank – January 2011

% of Respondents
 

Note: Micro Business = $1-5m, SME = $5-20m, Mid-Corporate = $20-100m turnover
enterprises

Source: East & Partners “The Advocacy Monitor” – January 2011