Aite Group has introduced a new metric to help banks and credit unions uncover drivers of customer loyalty and referrals.
The new metric, Referral Performance Score, more accurately captures customer loyalty compared to Net Promoter Score, the Boston-based research and advisory firm said in a statement outlining the report released Tuesday.
NPS, a metric used for decades by many industries including financial services, measures the intentions of customers to refer a company. However, a Harvard Business Review study found that among consumers who intended to refer their bank to friends and families, two-thirds didn't follow through, Aite Group said.
What's more, the Boston-based think firm reports only one in 10 consumers grew their relationship with their bank by increasing account balances or adding new accounts.
The report's author, Aite Senior Analyst Ron Shevlin, said RPS is a superior metric because it tracks consumer behavior instead of their intentions.
“By combining relationship growth and behavior, banks and credit unions can calculate a metric that more accurately captures customer loyalty and, more importantly, helps make actionable management decisions,” Shevlin said.
Additionally, Aite said its new metric reveals four factors that drive customer relationship and referral growth: Engagement with one's financial life, satisfaction with debit card rewards program, mobile channel affinity and social media connections.
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