This year, consumers' ratings of financial institutions are down across the board, falling to their lowest levels since Forrester began surveying customer advocacy five years ago. Forrester attributes this year's drop in ratings to a broad decline in consumer confidence due to events like the subprime mortgage crisis. The scorecard was released June 23 at Forrester's 2008 Financial Services Forum for marketing and strategy professionals in New York.
Customer advocacy is the perception on the part of customers that the firm does what's best for them, not just the firm's own bottom line. According to the report, customer advocacy drives real loyalty — a willingness to buy, borrow, save, and invest more with a firm a consumer already uses.
"The subprime mortgage crisis, sagging stock markets, and falling rates of return on everything from savings accounts to real estate have left consumers feeling less confident about their financial positions and about the firms they use," said Bill Doyle, vice president and principal analyst at Forrester Research. "Financial companies need to raise the bar on the customer experiences they provide in order to weather this storm and keep customers loyal."
Although consumer ratings fell for nearly all firms this year, the relative ranking of many firms stayed the same. Highlights from the Forrester report include:
* USAA retains top spot. USAA customers continue to give their firm the highest ratings, just as they have for each of the past four years. Other customer-owned organizations continue to score well, including credit unions and Vanguard.
* Property and casualty insurers continue strong showing. Of the top 10 organizations, five are property/casualty companies. Another one of the top 10 is "independent insurance agents."
* A.G. Edwards fell farthest among brokerages. Late last year, A.G. Edwards was absorbed by Wachovia Securities. Investors who identified themselves as A.G. Edwards customers rated the firm lower than Wachovia Securities customers rated their firm. It was the first time in years that A.G. Edwards ranked lower than Wachovia Securities.
* AIG and New York Life Insurance dropped the most among life insurers. Life insurers fared worse than property/casualty insurers, as sluggish stock markets hurt equity-based policies like annuities.
* National City Bank tumbled. Only 31 percent of National City's customers rated the bank high on customer advocacy, compared with 40 percent last year. In the second half of last year, National City emerged as one of the nation's biggest subprime lenders.
Forrester's new report, "Customer Advocacy 2008: How U.S. Consumers Rate Their Banks, Brokerages, and Insurers," is currently available to Forrester RoleView™ clients and can also be purchased directly online.