(10 August 2004 – Australia) It’s a well established fact that regardless of how much advertising and marketing a business does, the most effective way of reaching prospective customers is through referrals and advocacy from existing customers.
East & Partners recently asked corporate CFOs which information sources they
relied on when choosing whether or not to engage a certain service provider.
More than 70 percent said colleague and peer “word of mouth” was a key
determinant in making decisions.
One high profile bank chief executive recently highlighted the strong
correlation between strength of relationship and customer retention/acquisition.
He said the strength of relationship score indicated the degree to which a
customer would become an advocate of the bank based on the service they were
receiving.
To test the level of feeling displayed towards their banks by CFOs, East added
the following questions to the most recent round of SME, Commercial and Top 500
Corporate banking research releases: Have you ever recommended your primary bank
to business associates/colleagues? Do you and your bank enjoy an empathetic or
antagonistic relationship? Did you “inherit” your primary bank or did you choose
to engage the relationship?
Of the three market segments, the SME sector had the most jaundiced view towards
its banking service providers with 62.4 percent of interviewees saying they
never recommended their bank to colleagues and 70.9 percent saying they had an
antagonistic relationship with their bank. Some 44 percent of Commercial
enterprises said they never recommended their banks, while 54.4 percent said
their relationship with their banks could be both empathetic and antagonistic.
Corporate companies are demonstrably more positive about their bankers with 38.6
percent indicating they regularly recommend their banks to peers and associates
and 37.1 percent saying they enjoy an empathetic relationship with their bank.
However, 52.6 percent said the relationship they had with their primary bank was
tempestuous.
Responses to the final question posed to CFOs offer much food for thought for
banks looking to retain and engage customers. The vast majority of Commercial
and Corporate CFOs inherited their banking service providers when they took over
the financial reins. But almost one fifth of Commercial CFOs and 44.3 percent of
Corporate CFOs said they chose their current service providers, suggesting that
as CFOs move and change, so also are large portions of their corporate
employers’ banking relationships.
CFO ADVOCACY OF THEIR BANKERS TO COLLEAGUES
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