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8/3/2019 Market Probe in MRB Survey 090710 (2) (2)

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Analysis of Customers withBank-Managed

nvestable Assets

In May, Market Probe conducted a groundbreak-ing National Retail Bank Customer AdvocacyStudy among 7,000 retail banking customers.These 7,000 retail banking customers represent-ed the consumer segment with the highest po-tential for near-term revenue growth for bankingservices: consumers between 30 and 55 yearsold with household incomes of $50,000 or more.

With such a large sample of consumers, MarketProbe was able to target and prole a particularly

lucrative segment for the banking sector: thosecustomers who use their primary bank to managetheir investable assets. Market Probes SHARE+Customer Advocacy management framework waskey in identifying these customers.

Dr. Tom Fusso

Senior Vice President

Head of Financial Services

.

NEWSLETTER

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The core of the SHARE+ framework is thedetermination of customer advocacy levelsbased on (a) the emotional/rational favor-ability toward, and (b) the downstream com-

munication about their primary bank. The addition ofrecent actual behavior such as positive and negativecomments to other consumers based on personal

brand experience and an emphasis on the emotionaldrivers toward their primary bank produces a custom-er metric that represents a substantial advancementto the customer management metrics currently foundin the market. Consulting rms such as McKinsey

have determined that word-of-mouth drives 20% to50% of customer decision-making, so Market ProbesSHARE+ represents a valuable, contemporary tech-nique for evaluating the impact of transactions as wellas strategic brand strength.

The initial conclusion that spurred this analysis is thatcustomer advocacy monetizes at a stronger and moreconsistent rate than other key customer researchmeasures in active use among retail banking custom-ers. We rst segmented the market into four seg-ments dened as their level of advocacy toward their

primary bank. We found that retail banking customerswho were advocates of their primary bank are sub-stantially more likely to continue their relationship withtheir bank, had recently opened additional accounts

at their primary bank, and had made positive com-ments about their primary bank to friends, relativesand colleagues.

This substantial predictive power of customer ad-vocacy is also reected when we asked these bank

customers the size of their investable assets (IA) andif any of these IAs are currently managed by their pri-mary bank. We dened bank management as held in

accounts at their primary bank, managed by a PrivateBanking/Trust division of their primary bank, or man-aged by a brokerage that is owned by their primarybank.

The size of investable assets varies widely across the30-55 year/$50k household income customers. Fivepercent (5%) had no assets, while 3% had $1 millionor more. The largest segment (56%) has assets thatranged from $1K -100K. But, as expected, levels ofadvocacy and investable assets had little correlation.

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Customers also varied in the percentages oftheir assets that were managed by their pri-mary bank. A quarter (25%) did not allow theirprimary bank to manage any of their assets.The majority (57%) of customers invested 20%or less of their IAs with their primary bank. Themost lucrative customer group invested 40%or more of their assets with their primary bank

and made up 27% of the customers in thisstudy. Signicant differences were found be-tween Advocates and Alienated in the percent-ages of bank-managed assets.

One of the denitions of a good segmenta-tion is the identication of a higher worth seg-ment adequately sized to merit pursuit, and wefound one when we crossed asset size withpercentage managed by their bank at a cus-

tomer level. Those customers with $50,000 ormore invested with their primary bank made up

24% of our customer sample. Advocates weremore likely to be found among that $50K bank-managed asset segment, while the Alienatedsegment disproportionately composed the nofunds managed by bank segment.

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This $50K+ bank-managed asset s

lows most bankers knowledge of

$50K+ bank-managed asset segme

likely to be married and has highe

Both the wealth and business divis

lucrative and worthy of pursuit tha

$50,000 or more managed by their

ployed, operate a business and we

ness account.

When asked to check a variety of p

using bank asset management, the

ingly similar to the total, but with

bank messaging to resonate with a

better products elsewhere with hig

access to professional advisors.

While Market Probe has found tha

bank have substantially higher lev

survey information indicates they

management of their investable as

banks. The Customer Advocacy fr

revenues. Market Probe will be rel

later this fall.

Dr. Thomas Fusso

Senior Vice President

As Senior Vice President and Head of the Financial Services practice at MarketProbe, Tom manages a team of experienced researchers dedicated to the in-vestment/brokerage, banking and insurance industries. With 17 years of experi-ence on the client side, most recently as a SVP of Research/Database for USBank, Tom understands the deliverables required to drive organizational change.

Tom directs all aspects of a project, including questionnaire design, samplingissues, reporting design and providing insightful conclusions and recommenda-tions. His doctorate focused on survey design and advanced statistics, and he iscomfortable with the most current advanced statistical techniques.

Tom 2003SynoNorthWellsMBN

Tom receiNevaProb

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adily identied, and intuitively fol-

Compared to the total sample, this

has higher household incomes, is more

l levels.

bank should nd this segment more

e retail customer. Customers with

nk were more likely to be self-em-

more likely to have a separate busi-

iers that would demotivate them from

k-managed asset segment was surpris-

arization. This similarity will allow

ntial customers. The barriers involved

return, the reputation of the rm and

who are Advocates of their primary

als, repurchase and retention, this

e likely to use their primary bank for

ng and protable revenue source for

ovides a strategic path to grow those

detailed ndings about this segment

or Market Probe for seven years after rejoining the rm ino 2003, he directed the U.S. Financial Services Practice fory Market Facts). His clients included Merrill Lynch, UBS,ual, Charles Schwab, State Farm Insurance, Bank of America,ons Bank, BB&T, National City Bank, Goldman-Sachs and

S in Psychology with Honors from the University of Iowa. Hen the joint Social-Psychology program at the University of

He resides in Vancouver, Washington and heads the Markett location.

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September 2010

market probe in mrb survey 090710 (2) (2)

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