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The Role of Loyalty in Financial Services - US - May 2015

“Loyalty efforts should not be kept a secret. FS providers can be up front and ask consumers about their loyalty, especially if these firms are providing great customer experiences. Customers who are given the opportunity to make a recommendation will be more likely to do so. Addressing consumers’ concerns by providing solutions to issues (security and technology) helps create a foundation to a loyal relationship.”
– Monica Staco, Financial Services Manager

This report answers the following key questions:

  • How can FS firms convert loyalty into referrals and repeat business? 
  • How can FS providers increase loyalty among parents? 
  • How can providers deal with issues regarding trust and security?

Loyal customers are the best customers to keep a business thriving. In financial services, loyal customers are the most likely to keep their business with the same provider, purchase additional products, and even make recommendations to their network. Loyalty does not develop overnight, however; financial service providers need to make smart efforts to win the loyalty of their customers. Readers of this report will learn what it takes to develop customer loyalty and what it might mean to keep it, as well as what others in the industry are doing to accomplish the same goal.

The concept of loyalty is discussed from a different perspective than previous Mintel’s reports. Loyalty is defined beyond rewards programs and looks at key consumers’ behaviors and attitudes that inform their views on their providers, which then impact their loyalty. Factors correlated to loyalty, such as satisfaction with the provider and its representatives, likelihood to recommend, past purchasing behaviors, are addressed in this report.

In addition, the loyalty index included in this report is a formula that measures loyalty to primary banking provider. The loyalty score is built upon metrics such as satisfaction rating with overall experience and representatives from primary banking provider, likelihood to recommend any financial services provider, actual recommendations to family and friends, and lastly past purchasing behaviors.

Loyalty does not develop overnight, and it goes beyond a rewards program. FS providers that create a great customer experience will lay the foundation for strong customer loyalty. A great experience means more than just excellent customer service; FS providers need to emphasize trust, integrity, and an understanding of their own customer’s needs. In addition, loyalty-building efforts should be implemented across all channels. Electronic communication and in-person conversations can be used together to support the same experiences of trust and service to lead to loyalty. Customers that are satisfied with their experiences and become loyal can reward FS providers with long-lasting relationships, repeat business, and even recommendations to their social and professional network.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Consumer qualitative research
              • Direct marketing creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                        • The market
                          • Banking industry increasingly concentrated
                            • Strengthening economy leads to new opportunities
                              • The consumer
                                • In many FS sectors, majority of customers unsatisfied
                                  • Financial service providers seeking referrals should just ask
                                    • Loyalty built by customer experience, trust, and relevant services
                                      • Parents are engaged consumers
                                        • Older consumers more loyal, show higher satisfaction
                                          • 25-44 year-olds more likely to make recommendations
                                            • More affluent consumers most loyal
                                              • What we think
                                              • Issues and Insights

                                                  • How can FS firms convert loyalty into referrals and repeat business?
                                                    • The issues
                                                      • The implications
                                                        • How can FS providers increase loyalty among parents?
                                                          • The issues
                                                            • The implications
                                                              • How can providers deal with issues regarding trust and security?
                                                                • The issues
                                                                  • The implications
                                                                  • Trend Application

                                                                      • Trend: Experience is All
                                                                        • Trend: Make it Mine
                                                                          • Trend: Prove it
                                                                          • Market Drivers

                                                                            • Key points
                                                                              • Number of banks falling
                                                                                • Figure 1: Number of FDIC-insured banks and credit unions, 1995-2014*
                                                                              • With more handheld devices, online banking becomes paramount
                                                                                  • Figure 2: US mobile phone sales and forecast, 2012-17
                                                                                • Unemployment falls below six percent
                                                                                  • Figure 3: US unemployment rate March 2013-March 2015
                                                                                • With improved economy comes positive outlook
                                                                                  • Figure 4: Personal financial outlook, July 2012-September 2014
                                                                                • Women playing more prominent financial role
                                                                                  • Figure 5: Individuals with annual income of $150,000 or more, by gender, 2003-13
                                                                                • Millennials face challenge of hefty student debt
                                                                                  • Figure 6: Share of debt for consumers aged 20-29, 2005 and 2014
                                                                              • Leading Companies

                                                                                • Key points
                                                                                  • American Express, Discover lead credit card companies in satisfaction
                                                                                    • Midsized banks face new technology challenges
                                                                                        • Figure 7: J.D. Power customer satisfaction index Rankings, retail banks – Mid-Atlantic Region, 2014
                                                                                    • Innovations and Innovators

                                                                                      • Citi®Double Cash Card rewards consumers for making payments
                                                                                        • Figure 8: Citi®Double Cash Card banner ad, 2015
                                                                                      • Apple Pay looks to shake up payment industry
                                                                                        • Figure 9: First National Bank of Omaha ApplePay ad, 2015
                                                                                      • Betterment, Wealthfront offer “Robo-Advisor” investment guidance
                                                                                        • Figure 10: Betterment online ad, 2015
                                                                                    • Marketing Strategies

                                                                                        • Incentive-based referral strategies are popular
                                                                                          • Figure 11: Kroger 1-2-3 Rewards® Visa® refer a friend offer email, 2015
                                                                                          • Figure 12: Chase email, 2015
                                                                                          • Figure 13: Chase travel rewards email, 2015
                                                                                        • Fraud and security protection can put customers at ease
                                                                                          • Figure 14: Bank of America website, 2015
                                                                                          • Figure 15: Wells Fargo customer email, 2015
                                                                                        • Excellent customer service includes in-person check-ins
                                                                                          • Figure 16: Merrill Lynch Retirement Check-up email, 2015
                                                                                          • Figure 17: Geico customer satisfaction survey, 2015
                                                                                          • Figure 18: Allstate Payment confirmation email, 2015
                                                                                        • Discover card offers free credit score as consumer perk
                                                                                          • Figure 19: Discover Card account statement, 2015
                                                                                      • Level of Customer Satisfaction

                                                                                        • Key points
                                                                                          • Respondents are satisfied with primary banking provider
                                                                                            • Customer satisfaction is not strong in many financial sectors
                                                                                              • Figure 20: Current satisfaction level, January 2015
                                                                                            • Satisfaction with financial services providers increases with age
                                                                                              • Figure 21: Current level of satisfaction – Any satisfied, by generation, January 2015
                                                                                            • Opportunity to reach young women via personal bankers
                                                                                              • Figure 22: Current level of satisfaction – Satisfied, by gender and age, January 2015
                                                                                            • Satisfaction with provider increases with household income
                                                                                              • Figure 23: Current level of satisfaction – Satisfied, by household income, January 2015
                                                                                            • Several financial services sectors are doing well with parents
                                                                                              • Figure 24: Current level of satisfaction – Satisfied, by demographics, January 2015
                                                                                            • Black consumers least satisfied
                                                                                              • Figure 25: Current level of satisfaction – Satisfied, by demographics, January 2015
                                                                                          • Likelihood to Recommend

                                                                                            • Key points
                                                                                              • Consumers not always following through on desire to recommend
                                                                                                • Figure 26: Likelihood to recommend, January 2015
                                                                                              • Men aged 18-34 likely to recommend several financial sectors
                                                                                                • Figure 27: Likelihood to recommend, by gender and age, January 2015
                                                                                              • Opportunity for primary banking providers to connect with less affluent
                                                                                                • Figure 28: Likelihood to recommend, by household income, January 2015
                                                                                              • Majority of social media users are likely to recommend FS providers
                                                                                                • Figure 29: Likelihood to recommend, by social media use, January 2015
                                                                                              • Hispanics far more likely to recommend
                                                                                                • Figure 30: Likelihood to recommend – Likely, by demographics, January 2015
                                                                                            • Incidence of Recommendation

                                                                                              • Key points
                                                                                                • Majority of respondents don’t recommend
                                                                                                  • Figure 31: Actual recommendations, January 2015
                                                                                                • Millennials and Gen Xers more likely to make recommendations
                                                                                                  • Figure 32: Actual recommendations, by demographics, January 2015
                                                                                                • Men aged 18-34 most likely to recommend
                                                                                                  • Figure 33: Actual recommendations, by demographics, January 2015
                                                                                                • Recommendations happening on social media
                                                                                                  • Figure 34: Actual recommendations, by demographics, January 2015
                                                                                              • Reasons for not Recommending

                                                                                                • Key points
                                                                                                  • Consumers need more opportunities to make recommendations
                                                                                                    • Figure 35: Reasons for not recommending, January 2015
                                                                                                • Purchasing Behaviors

                                                                                                  • Key points
                                                                                                    • Most consumers don’t purchase additional services from providers
                                                                                                      • Figure 36: Financial services products purchased, January 2015
                                                                                                    • Consumers aged 55+ are least likely to purchase additional financial services
                                                                                                      • Figure 37: Financial services products purchased, by demographics, January 2015
                                                                                                    • Parents two times more likely to purchase additional products
                                                                                                      • Figure 38: Financial services products purchased, by demographics, January 2015
                                                                                                    • Opportunity to cross-sell products to Hispanics
                                                                                                      • Figure 39: Financial services products purchased, by demographics, January 2015
                                                                                                  • Type of Financial Services Products Purchased

                                                                                                    • Key points
                                                                                                      • Credit cards the financial product acquired most frequently
                                                                                                        • Figure 40: Types of financial services products purchased, by demographics, January 2015
                                                                                                      • Men more likely to purchase additional financial products
                                                                                                        • Figure 41: Types of financial services products purchased, by gender, January 2015
                                                                                                      • Consumers aged 45+interested in new investment products
                                                                                                        • Figure 42: Types of financial services products purchased, by demographics, January 2015
                                                                                                      • Millennials with mid-level income purchase most additional products
                                                                                                        • Figure 43: Types of financial services products purchased, by age and household income, January 2015
                                                                                                    • Likelihood for Repeat Business

                                                                                                      • Key points
                                                                                                        • Customer loss is a potential issue for most financial sectors
                                                                                                          • Figure 44: Likelihood for repeat business, January 2015
                                                                                                        • Loyalty builds with age
                                                                                                          • Figure 45: Likelihood for repeat business – Likely, by age, January 2015
                                                                                                        • Social media users more loyal
                                                                                                          • Figure 46: Likelihood for repeat business – Likely, by social media user, January 2015
                                                                                                        • Loyalty increases with household income
                                                                                                          • Figure 47: Likelihood for repeat business – Likely, by household income, January 2015
                                                                                                      • Consumer Attitudes toward Loyalty

                                                                                                        • Key points
                                                                                                          • Loyalty built by customer experience, trust, and relevant services
                                                                                                              • Figure 48: Consumers' attitudes toward loyalty, any agree, January 2015
                                                                                                            • Consumers associate loyalty to dedication and commitment
                                                                                                              • Figure 49: Collage of Qualboard quotes and images of consumers’ definition of loyalty, February 2015
                                                                                                            • Males 18-34 one demographic group whose loyalty may be influenced
                                                                                                                • Figure 50: Consumers' attitudes toward loyalty – Agree, by gender and age, January 2015
                                                                                                              • Those with high household income value pillars of loyalty
                                                                                                                • Figure 51: Consumers' attitudes toward loyalty – Agree, by household income, January 2015
                                                                                                              • Majority of parents feel they are being taken for granted
                                                                                                                • Figure 52: Consumers' attitudes toward loyalty – Agree, by children in household, January 2015
                                                                                                            • Loyalty Index

                                                                                                              • Key points
                                                                                                                • Satisfied customers are loyal customers
                                                                                                                  • Figure 53: Current level of satisfaction – Satisfied, by loyalty index January 2015
                                                                                                                • Loyal customers very likely to recommend services to network
                                                                                                                  • Figure 54: Likelihood to recommend – Likely, by demographics, January 2015
                                                                                                                • Loyal customers very likely to repeat business
                                                                                                                  • Figure 55: Likelihood for repeat business – Likely, by demographics, January 2015
                                                                                                              • Appendix – Trade Associations

                                                                                                                  • American Bankers Association (ABA)
                                                                                                                    • American Financial Services Association (AFSA)
                                                                                                                      • Consumer Bankers Association (CBA)
                                                                                                                        • Credit Union National Association
                                                                                                                          • Independent Community Bankers of America (ICBA)
                                                                                                                            • Mortgage Bankers Association (MBA)
                                                                                                                              • National Credit Union Association (NCUA)

                                                                                                                              Companies Covered

                                                                                                                              • Allstate Corporation (The)
                                                                                                                              • Amazon.com Inc
                                                                                                                              • American Express Company (The)
                                                                                                                              • American Finance Association
                                                                                                                              • Apple, Inc
                                                                                                                              • Bank of America Corporation
                                                                                                                              • Capital One Financial Corporation
                                                                                                                              • CBA
                                                                                                                              • Charles Schwab Corporation
                                                                                                                              • Citibank
                                                                                                                              • Consumer Bankers Association
                                                                                                                              • Credit Union National Association
                                                                                                                              • Discover Financial Services Inc.
                                                                                                                              • Experian
                                                                                                                              • Facebook, Inc.
                                                                                                                              • Federal Deposit Insurance Corporation
                                                                                                                              • Flickr
                                                                                                                              • Foursquare
                                                                                                                              • Gilt
                                                                                                                              • Google, Inc.
                                                                                                                              • Groupon, Inc.
                                                                                                                              • Hilton Hotels Corporation
                                                                                                                              • HSBC USA Inc.
                                                                                                                              • Intuit Inc.
                                                                                                                              • Investment Company Institute
                                                                                                                              • J.D. Power and Associates
                                                                                                                              • JPMorgan Chase & Co
                                                                                                                              • MasterCard Incorporated
                                                                                                                              • Merrill Lynch & Co. Inc
                                                                                                                              • Mortgage Bankers Association (MBA)
                                                                                                                              • National Credit Union Administration
                                                                                                                              • Rabobank Group
                                                                                                                              • Skype Technologies S.A.
                                                                                                                              • Starwood Hotels & Resorts Worldwide, Inc.
                                                                                                                              • SunTrust Banks Inc.
                                                                                                                              • Target Corporation
                                                                                                                              • TD Ameritrade Holding Corporation
                                                                                                                              • The American Bankers Association
                                                                                                                              • The Kroger Co.
                                                                                                                              • The PNC Financial Services Group
                                                                                                                              • TripAdvisor LLC
                                                                                                                              • Twitter, Inc.
                                                                                                                              • U.S. Bureau of Labor Statistics
                                                                                                                              • U.S. Bureau of the Census
                                                                                                                              • USA Today
                                                                                                                              • Visa International
                                                                                                                              • Wells Fargo & Company
                                                                                                                              • Yahoo! Inc
                                                                                                                              • Yelp Inc.
                                                                                                                              • YouTube, Inc.
                                                                                                                              • Zappos.com Inc.

                                                                                                                              The Role of Loyalty in Financial Services - US - May 2015

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