The study finds that small business owner satisfaction has increased to 720 on a 1,000-point scale in 2008 - up 23 points from the 2007 study. Specifically, banks have exhibited improvement in providing shorter wait times and fewer problems for customers.
"The factors relating to the customer relationship and in-person branch experience are most important to small business customers, as these areas account for 40 percent of the overall experience," said Rockwell Clancy, executive director of financial services at J.D. Power and Associates. "This underscores how critical it is to proficiently execute simple relationship fundamentals, including welcoming customers to the branch, assigning dedicated bankers to their accounts and establishing proactive quality outreach practices. Simply meeting with small business customers at their place of business significantly improves satisfaction, yet it is amazing how rarely this happens."
The study also highlights the bottom-line impact of maintaining and enhancing customer satisfaction for banks. By shifting 5 percent of moderate/low commitment customers to levels of high commitment, banks can potentially increase their incremental revenue among small business customers by more than 4 percent through increased account balances, improved retention and positive word of mouth. This improvement translates to $18 million in additional revenue for every 100,000 small business customers. Additionally, a more aggressive shift of 10 percent can result in an incremental revenue increase of more than 8 percent.
The percentage of small business customers acquiring unsecured loans has decreased slightly to 40 percent in 2008 - down from 44 percent in 2007, according to the study. However, satisfaction with the availability of credit has increased since 2007.
"To a large degree, banks can mitigate the negative effects that the tumultuous lending environment has on satisfaction by proactively giving status updates on accounts or spending adequate time discussing loan options with customers," said Clancy. "Small business customers want to be reassured that their banks are supporting their business endeavors. This is perhaps best shown by having a dedicated representative for each account who understands the customer and provides valuable suggestions as to how they can effectively improve business operations."
For a second consecutive year, Commerce Bank (TD Bank) ranks highest in small business customer satisfaction, receiving an overall score of 751. Branch, Banking & Trust (BB&T) closely follows Commerce Bank with a score of 750, while Bank of the West and Huntington National Bank tie to rank third overall, each receiving a score of 740.
"The achievement of Commerce Bank demonstrates how communicating and delivering on a clear value proposition is critical to attracting and satisfying customers," said Clancy. "Customers rate Commerce Bank much higher on convenience of hours and branch locations, compared with other banks. Commerce Bank customers also cite these reasons for selecting Commerce as their bank much more often than do customers of other financial institutions."
Mergers and acquisitions have a particularly negative impact on overall satisfaction, which declines by an average of 50 index points among customers whose accounts are acquired by a new financial institution. According to the study, those banks undergoing mergers and acquisitions that can deliver a reliable system for conversion, as well as knowledgeable representatives and minimal branch disruptions will likely maintain their market share as opposed to having it diminish.
The 2008 Small Business Banking Satisfaction Study is based on 6,550 responses from financial decision-makers at small businesses with annual revenues from $100,000 to $10 million. The study was fielded between July and August 2008.
