Thursday, June 27, 2013 | Edited by Daniel Moores
||Most Major Banks Viewed Favorably by Their Customers
But Among Noncustomers, Financial Institutions Have Some Work to Do
It's probably not much of a consolation to bankers to know that the financial services industry, which has a poorer reputation than any other major sector of the U.S. economy, still seems to be held in higher esteem than Congress.
But the reprobates on Capitol Hill at least provide an instructive example of how, at the individual level, it is possible to rise above the very negative perceptions people may have about the institution to which you belong.
You know that old saying about how Americans hate Congress but love their congressman? There is a similar dynamic at work in the U.S. banking system. Five years after the financial crisis began, the industry remains deeply unpopular. The foreclosure debacle involving the largest mortgage servicers, the London Whale incident at JPMorgan Chase, the money-laundering probe into HSBC -- all of this has only accentuated the public's mistrust of the banking sector. But ask consumers what they make of their own banks, and the results may pleasantly surprise you.
Nearly half of the 30 major brands studied in this year's American Banker/Reputation Institute Survey of Bank Reputations enjoy a strong reputation with customers. Led by San Francisco-based Union Bank, these institutions scored above 70 on our 100-point scale. (According to Reputation Institute, a reputation management consultancy, a score of 70 or better indicates reputational strength.)
Another large slice of the banks in the survey performed moderately well with customers, leaving only three brands (HSBC, Wells Fargo and Bank of America) with scores below 60, which indicate a weak or vulnerable position.
Scores from noncustomers paint a far more unsettling picture, however.
Here, not one bank managed a score above 70. Only five mustered moderate scores, Charles Schwab and Huntington Bank among them, while 22 of the 30 were in the weak-to-vulnerable category. One bank, BofA, did even worse than that. Its score of 35.1 put it in the "poor" category, the lowest tier on Reputation Institute's reputational hierarchy.
Overall, brands in the survey averaged a score of 69.3 among customers and 55.5 among noncustomers. This nearly 14-point gap is far more significant than is typical of other industries -- and wider than the gap of 7.3 points in last year's survey -- and indicates that banks will be in reputation rebuilding mode for quite a while longer, according to Anthony Johndrow, a managing partner at Reputation Institute.
"These scores with noncustomers don't present much opportunity in the near term," Johndrow says.
Even among their own clients, banks "have a long way to go to shore up customer relationships before they can expect any favors from them." Those favors would include things like recommending a specific bank to friends and family members (or, these days, to anyone following them on social media), purchasing additional products and services that expand the customer relationship or simply giving a brand the benefit of the doubt in times of trouble.
The difference in scores from customers and noncustomers --separated for the first time since the inception of the survey -- tells an interesting story about the state of individual bank reputations.
Citibank, for example, still tends to get lumped together with BofA when consumers think about the poster children for the crisis bailouts and the ongoing too-big-to-fail debate. Citi had a reputation score of 42.4 from noncustomers, barely putting it over the edge that separates weak or vulnerable brands from the brands with the poorest public images. But among customers, Citi had a score of 63.3, which is in the moderate category. The wide gap may indicate that direct interactions with the bank -- which has been ramping up investments recently in its long-neglected U.S. branch operations -- have neutralized some of the bad publicity Citi got in 2008 and 2009.
Meanwhile, Huntington Bank, which had one of the smallest gaps between scores from customers and noncustomers, appears to have made an impression on the public at large. The bank's highly publicized 24-hour grace period on overdrafts and its renewed commitment to free checking, announced just when rivals had started pulling back on such accounts, perhaps helped here.
As in past years, institutions with a heavy online component -- from a direct bank like Ally Bank to more investment-oriented brands such as Charles Schwab and E*Trade -- performed well among consumers.
These nontraditional banks averaged higher scores among customers and noncustomers versus the biggest banks and the regional players. And Schwab swept virtually every key category that figures into the overall impression that consumers form about the banks with which they do business, outscoring the 29 other banks on products, performance, innovation, citizenship and leadership. On two other key components of bank reputation, perceptions about governance and the workplace environment for employees, Schwab ranked second, trailing only Union Bank in these categories. Schwab was nearly as dominant in the rankings based on the survey responses of noncustomers, garnering the highest or second-highest score in each category except workplace and citizenship, where it failed to place in the top five.
Among the big reputation drivers, products and services together make up the largest factor in the development of brand perceptions by a bank's customers, according to Reputation Institute's analysis. (For noncustomers, governance is most important, followed closely by products and services.)
Miles Everson, head of the financial services advisory practice at PwC, says banks have made recent progress on both of these fronts. "Their attention to reputation is as high as I've ever seen it," Everson says. "And they're going beyond just the message on reputation; they're looking at whether they're substantively doing things" that will repair public trust.
In some cases, it is regulation that is driving the improvements, such as the "single point of contact" that servicers were forced to create for troubled homeowners, under the mortgage settlement reached in 2012 with the Justice Department and 49 state attorneys general. But in other cases, Everson says, banks are making smart, voluntary decisions that can help improve perceptions, be it the offering of convenient new services such as remote-deposit capture or a whole shift in mindset as to how to treat customers.
Says Everson, "That's actually the salient question: Are you treating people fairly, first, so you can drive reputation?"
As the public continues to sort out the collateral damage from the most recent financial crisis, it's tough to envision banks approaching the reputational solidness of brands such as Amazon.com, Kraft Foods, UPS and Johnson & Johnson, all perennially strong performers in Reputation Institute's omnibus survey of 150 corporate brands across sectors. (Those companies all had 2013 scores between 79 and 80 in that survey, which covers 150 of the largest U.S. brands. The top two brands, Walt Disney and Intel, crossed the 80-point threshold, putting them in the highest tier on Reputation Institute's 100-point scale.)
But Johndrow says that as recently as 2008, banks had cracked the top 30 in the omnibus study, where the results are based on a mix of scores from customers and noncustomers.
"There is no inherent reason why a bank couldn't top the (broader) list" eventually, Johndrow says. But "being a bank is an automatic penalty now."
So the trick, he says, "would be to either reposition yourself as something other than a bank -- credit unions and local banks are already reaping the benefits of not being seen as big banks -- or dig down deep and give the public a specific, believable reason to believe that your bank is structured to do the right thing for your customers and society."
The latter was the path that Union Bank chose this year when it began its "Doing Right" campaign, with advertisements featuring the actor and activist (and longtime Union Bank customer) Edward James Olmos and the author Maya Angelou, separately reflecting on concepts such as honesty and fairness, trust and integrity. "What we want to do is do right. But you have to say it, you have to show it, and not stop," Angelou says in one of the minimalist-style spots. The campaign, by the advertising agency Eleven, launched in January and ran on the West Coast during high-profile television programs including the Super Bowl, the Grammy Awards and the NCAA Final Four.
"Early research indicates significant gains in awareness of Union Bank," says Pierre Habis, senior executive vice president for retail banking at Union Bank.
"We have received numerous emails and letters from current customers that appreciate our advertising what we stand for and believe in as a financial institution," Habis says. "We also have received very strong feedback about this message from community groups, business leaders, regulators and local politicians."
Union Bank perhaps has the credibility to market itself with a slogan about doing right -- it stayed out of subprime lending, for instance. But Johndrow says most large banks don't have permission yet from the public to talk about themselves in this way.
This doesn't mean banks need only play defense on matters of reputation management, but they might want to consider alternative forms of offense that will prevent them from offending the sensibilities of both customers and noncustomers.
For this, Johndrow says he recommends "activities that engage influencers and communities in a way that adds value and demonstrates the value banks can bring to communities." Banks that can accomplish this, he says, will "build up the ability and permission over time" to tell their story more broadly.
(Source: American Banker, 06/25/13)
||The Most Expensive -- and Cheapest -- States to Get Your Car Repaired
When the dreaded check engine light illuminates on the dashboard, drivers in New Jersey now pay the most in the nation to have it diagnosed and repaired, at an average cost of $392.99, according to CarMD.com Corporation's analysis of more than 160,000 repairs made on vehicles with check engine light problems in 2012.
Indicating a coastal shift from West to East, and rounding out the top five most expensive U.S. states/districts for auto repair were no. 2 District of Columbia, no. 3 California, no. 4 North Carolina and no. 5 Maryland.
Increased frequency of expensive repairs, such as catalytic converter replacement, in those states with higher average repair costs indicates drivers in some areas continue to put off small repairs that spiral into more expensive problems and drive up check engine-related repair costs.
"In 2012, we saw a dramatic shift in the top five most expensive states for average car repairs, as many drivers along the East Coast incurred rising auto repair costs, while they simultaneously contended with Hurricane Sandy’s aftermath," said CarMD.com CEO Ieon C. Chen.
The average cost for check engine light-related repairs in the U.S. in 2012 was $367.84, up 10% from 2011. The Northeast experienced the largest percent increase (11.56%). But the West, historically known for having some of the highest car repair costs, saw only a 6.53% increase in costs. California is the only western state among the top five this year.
From 2011 to 2012, vehicle owners in New Jersey saw a 20.7% increase in labor rates and an 8.2% increase in parts costs, making it the state with the highest average parts cost. New Jersey drivers also paid more than the U.S. average for many repairs, including catalytic converter replacement at $1,112.48 per transaction.
On a more positive note, as hybrid repair costs across the country trend down, New Jersey owners paid the least to replace a hybrid battery at $2,005.05 on average, as compared with Arizona's high of $4,409.94. Some factors that can contribute to repair costs include availability of diagnostic capabilities and technicians trained to service these vehicles, as well as vehicle population mix.
Catalytic converter repairs were the second most common reason the check engine light came on in three of the five states with the highest repair costs. This is a very pricey part that is often the result of extensive vehicle age, or putting off smaller repairs such as spark plugs or oxygen sensors.
Other key findings of the study:
The states that pay the most: The 2011 ranking found all five states with the highest repair costs were from the West. For 2012, three hail from the Southeast, one from the Northeast and California remains the only western state among the five states with the highest repair costs.
The states that pay the least: Two of the five states with the lowest car repair costs are from the Midwest (Iowa and South Dakota) and two are from the South/Southeast (Delaware and West Virginia). Rounding out the most affordable states for auto repair is Vermont, the only Northeastern state to enjoy a drop in average car repair costs in 2012.
- A gap has begun to close between the states/regions with the highest/lowest repair costs (i.e., there was no change in Arizona's average repair cost, yet it dropped in rank from no. 5 to no. 22, with many states from other regions rising).
Year-over-year trends: A majority of states/districts experienced an increase in repair costs in 2012, with the exceptions being Delaware, New Mexico, Utah, Vermont, West Virginia and Wyoming.
Labor charge trends: Drivers in Vermont paid the least in labor at $115.90. While still low, this is up from Vermont's labor rate of $90.85 in 2011. For the second consecutive year, Colorado is the state with the highest labor charge at $150.75 on average.
- D.C. had the largest increase in repair costs, up 20% from 2011 to 2012. This is partially attributed to the type of repairs being made. Time-consuming repairs that cost over $1,000 accounted for nearly 10% of D.C. repairs in 2012, as compared with 7% in 2011, while quick-fix, gas cap-related problems were down five points.
- Wyoming saw the biggest drop with a nearly 17% dip in average repair costs. Some very positive news for Wyoming is catalytic converter replacements have dropped from the second to seventh most common repair, showing drivers in Wyoming are taking better care of their cars and may also be trading in older model vehicles for newer ones.
Parts cost trends: Drivers in Vermont also paid the least for parts at an average of $153.82, with those in New Jersey paying the most ($256.28).
(Source: CarMD.com, 06/11/13)
For a more detailed look at the complete rankings, visit the CarMD.com website.
||Changes in Service Plans Are Impacting the Cellular Business
Imagine for a moment Gordon Gekko from the movie Wall Street, standing on the beach at dawn in his bathrobe, calling in trades in Asia with what now would qualify for inclusion in the cell phone Hall of Fame.
In 1987, the Motorola device Michael Douglas was holding cost $4,000 and was considered cutting edge. Today, a mere 25 years later, it is downright laughable.
While changes and advances in technology will always be a part of the personal communication device business, some industry watchers are saying the next big wave of change won't be about a hot new gadget, but rather sleek new service plans.
"The changes that are happening in cellular price plans are really dynamic right now," says Bill Menezes, principal mobile phone industry analyst at Gartner Research. "Part of it has to do with the contract, but part of it also has to do with the fact that more and more of what people are buying right now is mobile data."
Not only does he expect to see competitive packages developed by AT&T and Verizon Wireless that will acknowledge the no-contract plans now being offered at T-Mobile, but he expects to see the unlimited data plans head to the graveyard.
"The unlimited plans that were so popular at all the carriers a couple years ago, those are going the way of the dodo," Menezes says. "The companies just can't afford to offer them anymore."
Even so-called unlimited plans are often only unlimited up to a point and typically keep the amount of high speed data that can be used under tight wraps. Even T-Mobile's "Simple Choice Plan," which has no contract and costs $50 a month, includes just 500 megabytes of data. After that is used up, your smartphone gets effectively moved into the slow lane for the remainder of the month.
While T-Mobile's no-contract plans boast that "you don't have to serve a two-year sentence," there are lots of restrictions and other considerations, including phone compatibility, access to their network, whether or not you already have a phone, or if you want to bundle in other devices or family members. Connectivity, or the quality of service, is also a factor.
For its part, AT&T calls its plans the "fairest and most flexible" and offers an a la carte menu that allows subscribers to pick how much talk time, texting and data they need. Verizon Wireless touts its "best network" and offers both prepaid and "share everything" plans that can accommodate up to ten devices. No matter which plan you use, be prepared to pay from 6% to 28% per month in different taxes, too, thereby driving the annual cost to well over $1,000.
Speaking of affordability, Gartner's Menezes also points out the emergence of a trend he calls B-Y-O-D, or "Bring Your Own Device." It's something that he says will see more companies giving up on issuing so-called work phones, and instead working out a deal (and the logistics) that allows employees to chose and use their own device.
"Interestingly enough, employee desires are what is driving this phenomenon," he says, noting that companies are also open to the idea since it is "moving more of the cost of the cell phone and the service over to the employee."
(Source: Yahoo! Finance, 06/21/13)
Daily Sales Tip: Increase Your Pre-Call, Pre-Meeting Research
To survive in today's business world, you need to invest time researching your prospects BEFORE you contact them to arrange a meeting or appointment.
Meeting with an executive and saying, "I'd like to take a few minutes to find out exactly what you do and what problems you're facing" will not get you very far.
Corporate executives and key decision-makers are too busy to educate you. They expect you to know AND understand their business and the challenges they are encountering. They don't have time to listen to a self-serving sales pitch that does not address their specific needs.
Conducting pre-call, pre-meeting research is absolutely essential if you want to survive in today's tough economy.
It is the ante. The price to play the game.
If you don't do the homework before contacting a high-quality prospect, you run the risk of losing the business to a competitor who took the time, did some research, and was able to position his or her offering more effectively.
Source: Sales consultant/author Kelley Robertson