Some of the biggest and best-known financial services firms in America scored the lowest in Forrester Research Inc.’s (Nasdaq: FORR) third annual customer advocacy rankings. Based on a survey of nearly 5,000 consumers, the rankings rate 32 leading US financial services firms according to the key driver of customer loyalty. The scorecard was released today at Forrester’s Finance Forum 2006 in New York.
Customer advocacy is the perception on the part of consumers that their financial services firm does what’s best for its customers, not just the firm’s own bottom line. For the third consecutive year, USAA retained the top spot in Forrester’s rankings, followed by credit unions, GEICO, AAA, State Farm, and Vanguard. Bank of America, Morgan Stanley, National City, Citibank, and JP Morgan Chase, round out the bottom of this year’s list.
“Our research continues to point to customer advocacy as the strongest indicator of future purchase intent,” said Bill Doyle, vice president and principal analyst at Forrester Research. “We believe that firms with high organic growth — like those at the top of the customer advocacy rankings — are best positioned to grow in the coming years as intense competition forces firms to focus on selling more to their existing customers, rather than growing by merger and acquisition.”
Highlights from the Forrester report:
- Familiar faces continue to dominate. USAA, credit unions, AAA, State Farm, Vanguard, and Edward Jones have consistently landed at the top of the rankings for the past three years. All of these customer-owned or partner-owned firms have been able to grow revenues organically, a testament to the favorable economics of customer advocacy.
- Insurance companies cluster near the top. As a sector, property and casualty insurers rate highest, with GEICO, Safeco, and MetLife all improving their rankings significantly over last year. GEICO and Progressive go so far as to promote rate comparisons, one of the best ways to demonstrate customer advocacy.
- Full-service brokerages tumble. Smith Barney, Merrill Lynch, and Morgan Stanley are now in the bottom third of all firms. The full-service brokerage model is under assault from direct-to-consumer firms like E*Trade, which rose significantly in the rankings this year. E*Trade has made rate and fee transparency a priority — part of a concerted effort to improve the firm’s customer advocacy.
“Customer Advocacy 2006: How Consumers Rate Their Banks, Brokerages, And Insurers” is available to WholeView 2™ clients and can be found at www.forrester.com.