2008 KPMG Nigeria Banking Industry Customer Satisfaction Survey

2008 KPMG Nigeria Banking Industry Customer Satisfaction Survey

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  2008 Banking Industry Recognising Nigeria’s ForemostCustomer-Focused Banks March 2008 02
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  Foreword 3 Scope andMethodology 4 Rethinking Service 6 The Customer Verdict 10 Conclusion 15 Banking Survey Contents The views and opinions expressed in Section 4 of this survey report are those of the survey respondents and do not necessarily represent the views and opinions of KPMG Professional Services. Unless otherwise stated in this publication, we have not sought to establish the reliability of the information obtained from sources outside of KPMG. We therefore cannot provide any assurances or guarantees that the survey findings represent an accurate view of the banking industry.There may be material differences between the findings of the survey and the actual state of the industry. No one should act upon the survey results or other information contained in this publication without appropriate professional advice after a thorough examination of the particular situation. KPMG accepts no liability or responsibility from the reliance of any party on the contents of this publication. KPMG Professional Services, a partnership registered in Nigeria, is a member of KPMG International, a Swiss cooperative. © 2008. All rights reserved. Designed & printed in Nigeria by the Marketing, Knowledge & Communications unit.
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  Foreword 1 © 2008 KPMGProfessional Services. All rights reserved I welcome you to the 2008 edition of the KPMG Nigerian Banking Industry Customer Satisfaction Survey. Between last year and now, most banks have aggressively sought to gain scale, scope and market share. According toThe Banker (December 2007), 19 Nigerian banks rank among the first 30 in the Top 100 Sub-Saharan African Banks. The race to maximise market share and, ultimately shareholder value, has intensified as the industry becomes more competitive. In the quest to achieve the pole position in the market place and profitability, Nigerian banks are realising that satisfied and loyal customers have a crucial role to play. This year, the survey has been expanded to achieve a more national coverage and to incorporate feedback from the retail segment; in addition to the corporate customers on which the 2007 edition was focused. The survey canvassed the opinions of about 5,000 individuals and 260 businesses on the quality of service delivery by Nigerian banks. This report highlights the key findings of the survey, identifying the important customer satisfaction and loyalty considerations for Nigerian banks.This year, service quality displaced financial stability as the most important factor in the choice of a bank by Nigerian customers. According to Peter Drucker,“Quality in a service…is not what you put into it. It is what the client or customer gets out of it. ” We hope this initiative will continue to spur Nigerian banks on the journey towards service excellence. Adebisi Lamikanra Partner and Head, Business Advisory Services Page three Banking Survey Issue 2
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  The 2008 BankingIndustry Customer Satisfaction Survey (BICSS) continues to focus on assessing the performance of the Nigerian banks in providing value and satisfying their customers. The scope of this edition of the survey has been expanded to include both the retail and corporate banking customer segments.The survey solicited the opinions of about 5,000 and 260 retail and corporate respondents respectively over a period of seven (7) weeks in January and February 2008. 2 Scope and Methodology Figure 1 - Analysis of Retail Respondents by Category Other 8% Civil/Public Servant 20% Professional 22% Student 22% Self-Employed 28% Figure 3 - Analysis of Corporate Respondents by Industry 28 15 17 20 21 21 26 46 47 5 15 25 35 45 55 1 Others Embassy/Multilateral Organisations/NGOs Media & Publishing Real Estate & Construction Logistics & Automobiles Conglomerate Food, Beverages &Tobacco ICT & T elecoms Airlines & Hospitality Manufacturing Oil & Gas Rating Frequency 1 Others include companies engaged in Agriculture (5), Engineering Services (7), Healthcare (6), Packaging (3), Security Services (2), Professional Services (2), Retailing (1), Leasing (1), andTextile (1) © 2008 KPMG Professional Services. All rights reserved Banking Survey Issue 2 Page two Figure 2 - Analysis of Corporate Respondents byTurnover Page four Less than N200m 17% N200m-N1b 31% N1b-N5b 20% N5b-N10b 20% Greater than N10b 12% 8 13
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  The survey wasconducted in eight (8) locations across the country: Aba, Abuja, Calabar, Ibadan, Kano, Kaduna, Lagos and Port Harcourt. Retail customers were randomly selected in each location, while corporate customers were sampled from the 2007/08 edition of the Top 500 Companies in Nigeria (GoldStar Publications). A deliberate attempt was made to ensure that the corporate respondents included the biggest companies in each sector of the Nigerian economy. Feedback was received through interviews with each organisation's Chief Finance Officer (CFO), Financial Director (FD),Treasurer or other personnel playing a major role in the banking relationship interface. Figure 4 - Analysis of Retail Respondents by Location Figure 5 - Analysis of Retail Respondents by Age 21-40 78% 41-50 13% Above 50 5% Under 20 4% The methodology used in the calculation of the customer satisfaction index for all the 24 Nigerian banks is as illustrated below. Figure 6 - Methodology for Calculating Customer Satisfaction Index (CSI) Page five Banking Survey Issue 2 Overall Score CSI Perceived Value Ratings - Satisfaction (S) & Importance (I) S I (S x I)/ I Customer Service Factors Customer Care Measures interaction of bank staff with customers Product/Service Offering Measures product range & appropriateness to customers’ needs Transaction Methods & Systems Measures customer support processes/ systems & turnaround time Convenience Measures accessibility & quality of service from delivery channels Pricing Measures fees, charges and rates on product Weighted Score Abuja 9% Kaduna 8% Kano 8% Calabar 8% Ibadan 8% Aba 8% Lagos 44% Port-Harcourt 7% © 2008 KPMG Professional Services. All rights reserved
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  Rethinking Service: From CustomerSatisfaction to Customer Loyalty Moving customers from the satisfaction zone to the loyalty zone Organisations that not only satisfy their customers, but also consistently exceed their expectations, reap the loyalty dividend. Loyalty is the result, while satisfaction is the means. Nigerian banks must engender customer loyalty to gain a greater share of the customer's wallet, pursuing the same objectives as other successful organisations around the world.The greater loyalty an organisation inspires among its customers, the greater its profit potential. Recent research by Bain & Company reveals that companies that put customer loyalty at the centre of their business model experienced growth that came from increased purchases over time, willingness to pay premiums for additional service, and 1 referrals . Customer loyalty embraces a range of customer attitudes and behaviours. When we identify with someone or something, one of the ways we reinforce the credibility of our beliefs is by forming loyalties to them. So we give them repeat business and tell our friends about them. If a company serves its customers well and consistently exceeds their expectations, then some natural loyalty will result. The organisation must start with the One thing is clearly not in doubt: Nigerian banks have begun to recognise the bottom-line advantage of deepening their customer focus. Exceptional service delivery has now been identified as a potentially effective means to gain strategic advantage in the highly competitive financial services industry, where banks not only compete with one another, but also with other financial institutions. Banks can no longer compete only on size or product superiority. Quality service delivery has become a new battleground.The goal is to satisfy the customer by providing superior service. However, is customer satisfaction a guarantee of customer loyalty? Evidently not. Banks remain vulnerable when competitors provide better service, even if slight, especially where there exists minimal switching barriers. Hence, customers continue to purchase products from banks other than their primary bank. While the service may satisfy them at one bank, they are still not satisfied enough for them to remain totally committed to that bank. © 2008 KPMG Professional Services. All rights reserved 1 The Real Meaning of Loyalty- the Key to Growth,Frederick F Reichheld and Philip J. Deane, Customer Management (Vol. 12 Issue 1) 2 The Three“Ds” of Customer Experience, James Allen, Frederick F . Reichheld and Barney Hamilton, Harvard Management Update 3 The Branded Customer Experience, Richard Gonzalez, AMICUS Group Whitepapers No. 5 belief that the customer is its most valuable asset and that the organisation will do everything in its power to forge an emotional bond with the customer. According to Bain & Company, the leaders of a few organisations, identified by customers as providing superior customer experience, pursue three imperatives (theThree “Ds” of Customer Experience) simultaneously in 2 delighting their customers : Ž Design of offers and experiences for the right customers; Ž Delivery by focusing the entire organisation on these propositions, with an emphasis on cross functional collaboration; and Ž Developing organisational capabilities to please customers again and again. Customers are much more likely to become and remain loyal if they identify with an organisation's brand, if they have positive experiences every time they come into contact with it, and if they build positive relationships with those who represent that brand. A few organisations have been able to create genuine interest, excitement and loyalty in the marketplace. Power brands such as Southwest Airlines, Starbucks and Harley-Davidson have continued to deliver visionary and well conceived customer “experiences” . They have reinvented otherwise intangible, commodity products and services. They have mastered the art of imaging, packaging and merchandising 3 themselves as experiences . The total customer experience Page six Banking Survey Issue 2
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  Harley-Davidson manages for customerexperience and value Focusing the entire organisation on the value proposition Harley-Davidson is an outstanding example of a company that has created loyalty through a pattern of steadfast interactions with its customers. The company created a platform built around its focus on relationships and has repeatedly asked the question “How do we create more value for our customers so that they willingly buy more of our products and services?” The company identified the needs of the typical Harley customer: Harley owners don't just want transportation to get from one place to another.They want a riding experience which, according to Harley-Davidson, is the sum total of the Harley `Look,' 'Sound' and 'Feel'. Harley-Davidson went from supplying motorcycles to one of the most creative and innovative strategies that has helped create the experience of this product. The company started to organize rallies to strengthen the relationship between its members, dealers, and employees, while also promoting the Harley experience to potential customers. The H.O.G. became immensely popular and is the largest factory-sponsored motorcycle organization in the world, with membership upwards of one million and more than 1,400 chapters worldwide as 4 at 2007 . Branding the experience, not just the product, has allowed the company to expand how it captures value, including a line of clothing, a parts and accessories business, and Harley- Davidson Visa card. By 2004, the company had delivered 20 consecutive years of record earnings and revenues and sold more bikes in this period than 5 at any other time in its history . Studies have also shown that about 75 percent of Harley customers make repeat purchases. The company that seeks customer loyalty must establish a highly integrated business model that combines a superior product or service selling a lifestyle. The company created a community that valued the experience of riding a Harley more than the product itself.The sponsorship of a "Harley Owners' Group" (H.O.G.) has been © 2008 KPMG Professional Services. All rights reserved 4 www.harley-davidson.com 5 Customer Experience Management Plus: Harley-Davidson, Shaun Smith, www.customerthink.com 6,8 The Luxury T ouch, Robert Reppa and Evan Hirch, Booz Allen Hamilton 7 The Malcolm Baldridge National Quality Awards is a United States government-sponsored citation for rigorous attention to quality with outstanding sales and service quality, driving strong growth and profitability in the process. The entire organisation must be fully geared to deliver on the promised customer experience. Employees must be equipped with the knowledge, skills and tools needed to deliver the customer experience and then reinforce this through their personal actions. Four key principles have been observed to be common to customer-centric 6 organisations focused on delivering the total customer experience : Ž They create a customer-centred culture that identifies, nurtures, and reinforces service as a primary value; Ž They use a rigorous selection process to populate the organisation with superior sales and support staff; Ž They constantly retrain employees to perpetuate organisational values and to help them attain greater mastery of products and procedures; and Ž They systematically measure and reward customer-centric behaviour and excellence in sales and service to enforce high standards and reinforce expectations. The Ritz-Carlton Hotel Company provides an excellent example of the execution of these principles. The company manages about 70 luxury hotels worldwide and competes against nearly 10 hotel groups in the “luxury” and “upscale, deluxe” categories in the industry.The hotel has received the top rankings for its unsurpassed level of service from J.D. Power and Associates, as well as two 7 Malcolm Baldridge National Quality Awards . The Ritz-Carlton strategy is to achieve 100 percent customer loyalty. In its operations, the company set the target of “defect-free” experiences for guests, implementing a measurement system to chart progress toward elimination of all customer problems, no matter how minor. Page seven Banking Survey Issue 2
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  Hire right, andinvest in employees The Ritz-Carlton guarantees service that goes the extra mile because they have programmed the organisation to foster customer-centred behaviour in its 32,000 employees worldwide, at all levels. Ritz-Carlton uses a rigorous process in selecting its employees. A profile is created for each job, and only people who match the profile are hired using scientific, behaviour-based assessment tools. 8 Recent research show that, “[Ritz-Carlton] employees are constantly schooled in company lore and values spelled out in a credo that the company calls its 'Gold Standards', printed out on a card that employees carry at all times…They are the basis for all employee training and reward programs, and they are discussed in daily 'lineups' - 15-minute sessions at the start of each employee shift during which managers reinforce company values and review service techniques” . The average Ritz-Carlton employee receives about 232 hours of training per year, almost four times the average of their counterparts at peer hospitality companies. The training covers new products and sales procedures as well as constant reinforcement of the company values and heritage. The Ritz-Carlton has also established elaborate procedures to measure customer and employee satisfaction, and rewards high-performing staff with extra recognition and superior compensation. Flawless execution: It's all in the detail At every level,The Ritz-Carlton is detail-oriented. Steps for all quality-improvement and problem-solving procedures are documented, methods of data collection and analysis are reviewed by third-party experts, and standards are established for all processes. Key processes are also dissected to identify points at which errors may occur. For example, to meet its goal of total elimination of problems in the 1990s,The Ritz- Carlton determined there were 970 potential instances for a problem to arise during interactions with overnight guests and 1,071 such instances during interactions with meeting event planners. The Ritz-Carlton has instituted an approach of“customer customization, ” which relies on extensive data gathering and capitalises on the capabilities of advanced information technology, to cultivate customer loyalty. Information gathered during various types of customer contacts, such as responses to service requests by overnight guests or post-event reviews conducted with meeting planners, are systematically entered into a database. Accessible to all Ritz-Carlton hotels worldwide, the database enables hotel staff to anticipate needs of returning guests and to initiate steps that will help to ensure a high-quality experience. “Are you allocating resources where you want to be investing in 9 relationships?” Investment in product-oriented programmes that result in mere satisfaction, such as those that reward customers for using a particular product or service or maintaining a minimum amount in deposit, are like “straightening chairs on the Titanic” . The focus is on products and not on relationships. As competition reaches new heights in the Nigerian banking industry, it is becoming easier for the average customer to jump ship as the products on offer are now highly substitutable.The merely satisfied customer is unlikely to stick around when the image of his/ her interaction with the bank is elusive or vague.The challenge for banks is to rise above merely satisfying the customer and establish a consistent, repeatable process to start delighting them. What is the difference between customer satisfaction and loyalty? It is largely on the emotional level. In order to create true differentiation and gain loyalty, the customer-centric bank needs to engage the mind and the heart of its customer. The customer must be able to 'connect' with the unique experience of interacting with the brand and build a relationship with those that represent the brand. Loyalty stems from relationship. The whole organisation must be focused on delivering on this promise. Page eight Banking Survey Issue 2 9 The Definitive Drucker, Elizabeth Haas Edersheim “Quality is never an accident; it is always the result of high intension, sincere effort, intelligent direction and skilful execution; it represents the wise choice of many alternatives” - William A. Foster © 2008 KPMG Professional Services. All rights reserved
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  In banking, meetingthe customer challenge depends on the relentless pursuit of innovation across products, services and processes. The key to customer loyalty and retention is ultimately the delivery of quality service. KPMG believes that the most successful banks will be those that implement structured innovation management around their service delivery frameworks. www.ng.kpmg.com © 2008 KPMG Professional Services, the Nigerian member firm of KPMG Internationa, a Swiss Cooperative. All right reserved.
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  Which banks providethe most consistent, satisfying service experience to their customers?This year, over 5,000 retail and corporate customers provided insight into their general perception of service quality among Nigerian banks. Please note that while all banks were rated during the survey, not all the banks were ranked eventually, due to inadequate sample sizes generated.This was necessary to avoid making inferences that were less likely to be representative of the actual customer experience in such banks. GTBank leads the way in Retail GTBank came tops in the retail customer segment, with a CSI of 80.03. In second and third positions were Zenith Bank and Intercontinental Bank, with CSI of 78.56 and 76.72 respectively. The survey showed that while respondents expressed a generally good level of satisfaction with the banks, there was minimal differentiation in ratings below the top two positions.This represents an opportunity for banks in that band to break away by seeking ways to further improve their existing service delivery frameworks and providing a ground-breaking experience. The Customer Verdict 4 GTBank is Nigeria's most customer-focused retail bank Figure 7 – Most Customer-Focused Banks by Location: Retail First Inland Bank Port Harcourt GTBank Lagos Zenith Bank Kano FCMB Kaduna Zenith Bank Ibadan FCMB Calabar GTBank Abuja Diamond Bank Aba Bank Location First Inland Bank Port Harcourt GTBank Lagos Zenith Bank Kano FCMB Kaduna Zenith Bank Ibadan FCMB Calabar GTBank Abuja Diamond Bank Aba Bank Location Figure 8 - T op T en Customer Focused Banks: Retail The Customer Verdict © 2008 KPMG Professional Services. All rights reserved Page ten Banking Survey Issue 2 GTBank Zenith Bank Intercontinental Bank Diamond Bank Bank PHB Access Bank Oceanic Bank ETB Stanbic-IBTC Bank FCMB Customer Satisfaction Index (CSI) 74 76 78 80
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  Diamond Bank Zenith Bank GTBank TransactionMethods & Systems Intercontinental Bank Zenith Bank GTBank Convenience Bank PHB GTBank Diamond Bank Pricing Diamond Bank Bank PHB ETB Product/ Service Offering Diamond Bank Zenith Bank GTBank Customer Care 3 2 1 Ranking Customer Service Factor (Retail) Diamond Bank Zenith Bank GTBank Transaction Methods & Systems Intercontinental Bank Zenith Bank GTBank Convenience Bank PHB GTBank Diamond Bank Pricing Diamond Bank Bank PHB ETB Product/ Service Offering Diamond Bank Zenith Bank GTBank Customer Care 3 2 1 Ranking Customer Service Factor (Retail) Zenith Bank remains tops in Corporate Zenith Bank held tenaciously to its position as the most customer-focused bank for the corporate banking segment, with a CSI of 79.96. Following closely in the second position was GTBank with a CSI of 79.43 and a new entry in the third position, Stanbic- IBTC Bank with a CSI of 78.64. Despite the fact that corporate banking customers generally expressed above average satisfaction (about half of the banks obtained a rating of 75% and above), corporate customers appeared slightly less enthused this year. It was observed that there was a general drop in the satisfaction ratings among the top ten customer-focused banks in this segment compared with last year's figures. Figure 10 -TopTen Customer Focused Banks: Corporate GTBank, Zenith Bank and Diamond Bank dominant across key retail customer service areas GTBank was ahead of the other banks, coming first in three (3) categories, with Zenith Bank following closely behind. Diamond Bank, on the other hand, was first in one (1) category and third in three (3) other categories. © 2008 KPMG Professional Services. All rights reserved Zenith Bank maintains its top position as the most customer-focused bank for the corporate segment GTBank, Zenith Bank and Diamond Bank dominate the rankings in key customer service categories Figure 9 - Ranking of Banks by Customer Service Factors: Retail Banking Survey Issue 2 Page eleven 71 73 77 81 79 75 Zenith Bank GTBank Stanbic-IBTC Bank Diamond Bank Citibank Fidelity Bank Oceanic Bank Skye Bank First Bank Intercontinental Bank Customer Satisfaction Index (CSI)
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  Customer satisfaction acrossbusiness sectors remains good Customer satisfaction scores across many of the sectors was above the overall banking industry average for corporate customers (the median CSI for the banking industry stood at 75.86). The Airline and Hospitality industry expressed the most satisfaction with the quality of service of Nigerian banks, while the ICT & Telecoms sector was the least satisfied. Figure 12 - Customer Satisfaction Ratings by Industry Banks performed above average in satisfying their corporate banking customers in the various industries Zenith Bank also stands out across key customer service areas in Corporate Zenith Bank's corporate customers rated the bank best in two customer service areas (transaction methods & systems and convenience), where the bank took the lead position. In addition, the bank came second in two other categories (customer care and product/service offerings). Three other banks, GTBank, Diamond Bank and Afribank, took the first position in the customer care, product/service offering and pricing categories respectively. Figure 11 - Ranking of Banks by Customer Service Factors: Corporate Diamond Bank GTBank Zenith Bank Transaction Methods & Systems Diamond Bank GTBank Zenith Bank Convenience Fidelity Bank Stanbic-IBTC Bank Afribank Pricing Citibank Zenith Bank Diamond Bank Product/ Service Offering Stanbic-IBTC Bank Zenith Bank GTBank Customer Care 3 2 1 Ranking Customer Service Factor (Corporate) Diamond Bank GTBank Zenith Bank Transaction Methods & Systems Diamond Bank GTBank Zenith Bank Convenience Fidelity Bank Stanbic-IBTC Bank Afribank Pricing Citibank Zenith Bank Diamond Bank Product/ Service Offering Stanbic-IBTC Bank Zenith Bank GTBank Customer Care 3 2 1 Ranking Customer Service Factor (Corporate) © 2008 KPMG Professional Services. All rights reserved Banking Survey Issue 2 Page twelve Airlines & Hospitality Logistic & Automobiles Manufacturing Food, Beverages &Tobacco Real Estate & Construction Embassy/Multilaterals/NGOs Conglomerate Media & Publishing Oil & Gas ICT & T elecoms Customer Satisfaction Index (CSI) 70 72 76 80 70 74 79.02 79.01 78.20 77.75 77.39 77.05 75.17 73.86 73.53 72.66
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  © 2008 KPMGProfessional Services. All rights reserved Figure 13 – Frequently Rated Banks by Location: Retail Ranking UBA UBA UBA GTBank GTBank UBA UBA UBA 1 FirstBank GTBank GTBank UBA UBA Oceanic Bank GTBank FirstBank 2 Ecobank Port Harcourt FirstBank Lagos Oceanic Bank Kano FirstBank Kaduna Skye Bank Ibadan Intercontinental Bank Calabar Oceanic Bank Abuja Diamond Bank Aba 3 Location (Retail) Ranking UBA UBA UBA GTBank GTBank UBA UBA UBA 1 FirstBank GTBank GTBank UBA UBA Oceanic Bank GTBank FirstBank 2 Ecobank Port Harcourt FirstBank Lagos Oceanic Bank Kano FirstBank Kaduna Skye Bank Ibadan Intercontinental Bank Calabar Oceanic Bank Abuja Diamond Bank Aba 3 Location (Retail) Ratings per Bank The survey was designed to ensure that all the 24 banks were covered across the selected locations. The results reflected the extent to which each bank has relatively implanted its footprint, especially within the retail segment. It is also broadly indicative of the relative market share of the banks in both segments. Figure 13 -TopTen Frequently Rated Banks: Corporate Figure 15 -TopTen Frequently Rated Banks: Retail Banking Survey Issue 2 Page thirteen “Being on par in terms of price and quality only gets you into the game. Service wins the game” -Tony Alessandra 20 40 60 80 100 120 140 123 116 107 Zenith Bank First Bank GTBank UBA Intercontinental Bank Diamond Bank Citibank Union Bank Oceanic Bank Access Bank Rating Frequency 79 57 54 51 49 48 43 UBA GTBank First Bank Oceanic Bank Intercontinental Bank Zenith Bank Skye Bank Union Bank Diamond Bank Ecobank Rating Frequency 200 400 600 800 1000 1200 1,054 941 673 656 630 478 446 324 320 281
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  2 Adapted from Heskett,Jones, Loveman, Sasser, & Schlessinger How loyal is the Nigerian banking customer? This year, the survey was also designed to measure the loyalty levels of banking customers. While customers have expressed above average satisfaction with banking products and services, the results show that retail and corporate customers are generally still in the so-called 'zone of indifference'.The 'zone of indifference' represents customers who are yet to translate satisfaction into loyalty, and are vulnerable to competitors who may provide more satisfying conditions. The 'zone of indifference' presents a clear opportunity for Nigerian banks, as relatively small improvements in the service encounter can intensify the customer's satisfaction and move the 'at-risk' customer towards the 'zone of affection'. ZONE OF INDIFFERENCE ZONE OF AFFECTION ZONE OF DEFECTION 1 2 3 4 5 SATISFACTION Definitely Will Not Sometimes Will Often Will Definitely Will 3.79 LOYALTY (RETENTION) Very Dissatisfied Dissatisfied Indifferent Satisfied Very Satisfied ZONE OF AFFECTION ZONE OF DEFECTION 1 2 3 4 5 SATISFACTION Definitely Will Not Sometimes Will Often Will Definitely Will 3.79 LOYALTY (RETENTION) Very Dissatisfied Dissatisfied Indifferent Satisfied Very Satisfied ZONE OF INDIFFERENCE ZONE OF AFFECTION ZONE OF DEFECTION 1 2 3 4 5 SATISFACTION Definitely Will Not Sometimes Will Often Will Definitely Will 3.67 LOYALTY (RETENTION) Very Dissatisfied Dissatisfied Indifferent Satisfied Very Satisfied ZONE OF INDIFFERENCE ZONE OF AFFECTION ZONE OF DEFECTION 1 2 3 4 5 SATISFACTION Definitely Will Not Sometimes Will Often Will Definitely Will 3.67 LOYALTY (RETENTION) Very Dissatisfied Dissatisfied Indifferent Satisfied Very Satisfied 2 Figure 17 - The Loyalty -Satisfaction Grid : Corporate 2 Figure 18 -The Loyalty -Satisfaction Grid : Retail Starting a banking relationship:What is the most important factor? This year, service quality emerged as the most important factor considered by individuals and businesses in making a decision regarding the choice of a bank. Financial stability, which was the most important factor last year, came in third behind referrals. This result is indicative of the increased expectations of customers, who are becoming generally more sophisticated in their demands, rather than being primarily concerned only about the safety of their funds. Figure 16 - Key Considerations in Selecting a Bank The survey results show that Nigerian banking customers fall in the 'zone of indifference' - they are yet to translate their satisfaction into loyalty. Banking Survey Issue 2 Page fourteen © 2008 KPMG Professional Services. All rights reserved Service Quality Referral Financial stability Accessibility to delivery channels Image and reputation Access to credit Pricing of products and services 29% 23% 17% 13% 12% 30% 3% 3% 20% 10% 0% ZONE OF INDIFFERENCE
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  It's in theservice experience The competitive environment is placing increasing demands on Nigerian banks. Without a doubt, a highly differentiated customer experience is becoming a source of competitive advantage as banks strive to maximise shareholder value. However, driving customer satisfaction alone may not just be enough.To consistently achieve the desired superior returns, banks must transform that satisfaction into ensuring customer loyalty.This is the critical challenge for Nigerian banks. From our findings, service quality has emerged as the most important factor that influences the customer's choice of a bank. A key implication, validated by the survey results, is that banks which satisfy and provide value to their customers are more likely to move such customers into the 'zone of affection' (i.e. make them loyal), if they exploit key areas of opportunity in service delivery. Through the customers' eyes For the corporate banking segment, the survey results this year is not necessarily cheery news for the Nigerian banking industry.There was a slight decline in satisfaction ratings compared to last year's figures. A possible reason is the execution of aggressive expansion plans by banks over the past year that may have negatively impacted service consistency across channels, thereby compromising the customer experience. The survey results reveal that banks need to focus on two important areas to engender greater customer value: ! Accessibility and ease of use of the banks' diverse range of channels; and ! Availability of robust customer support infrastructure to enable service adoption and usage. The survey highlights that the potential exists for banks to further satisfy their customers and provide thrilling encounters. Customers are relatively satisfied with the range of products available, but appear to be experiencing challenges in purchasing and accessing support in using these products.This could possibly be attributed to inadequacies in current internal processes and supporting infrastructure. Tracking the customer loyalty needle In conclusion, Nigerian banking customers remain in the 'zone of indifference'. Focus on the customer is not sharp enough to point the loyalty needle towards affection.This indicates that banks are yet to tap into the service delivery potential that maximises life-time customer value. Research has shown that it costs about five times as much to acquire a new customer as it does to keep an existing one. It is therefore necessary for banks to deliver a consistent, sufficiently rich experience to keep the customer coming back, bringing their friends along. According to Maurice Franks,“Loyalty cannot be blueprinted. ….It is a force which leaps into being only when conditions are exactly right for it... ” This is unlikely to happen by accident. Going forward, the smart bank will consciously focus effort and resources on providing the right conditions for creating customer loyalty - the Holy Grail of all successful organisations. Our business is about technology, yes. But it's also about … customer relationships. - Michael Dell Figure 19 - Overall Banking Industry Customer Satisfaction: Corporate Banking Segment Conclusion Contacts: Seyi Bickersteth 234 1 462 0045 [email protected] Bisi Lamikanra 234 1 461 3405 [email protected] Kunle Elebute 234 1 271 0534 [email protected] Yomi Sanni 234 1 463 0177 [email protected] Ayo Othihiwa 234 1 269 5970 [email protected] Dimeji Salaudeen 234 1 463 0297 [email protected] Banking Survey Issue 2 Page fifteen 5 Customer Satisfaction Index (CSI) 78 76 74 72 2007 2008 76.47 75.86
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  © 2008 KPMGProfessional Services, the Nigerian member firm of KPMG Internationa, a Swiss Cooperative. All right reserved. Banks are asking: ! “How do we build enduring value propositions for our customer segments?” ! “How do we align the entire organization to consistently deliver superior customer value?” Truly customer-centric organizations manage themselves in a fundamentally different way. KPMG can assist you to unmask the key organizational barriers that undermine service quality, helping to establish the strategic linkage between effective customer management and strong bottomline financial performance. www.ng.kpmg.com