Tuesday, 25 September 2012

“Big traditional banks worst on customer satisfaction” or should that be “Comparing apples and pears” ?

It was interesting to see the production of a league table of Banks in the latest Which? magazine which ran with the headline “High-street banks failing on customer satisfaction: Consumer views of the big banks remains low”.

But as an ex-bank employee, and analyst/statistician this got me thinking …

Is customer satisfaction really that poor for these “Big high-street banks” ?

Is the position of First Direct, Santander, or Saga misleading ?

Is the league table spreading doom and gloom that is unjustified ?

Or, is customer satisfaction even worse for some banks than that shown in the league table ?

Don’t get me wrong, I am not defending any of these banks and I am not knocking Which? for highlighting the issue (I have had experience of poor customer service). I just want to say that the picture isn’t as straight forward as the league table suggests and I will (hopefully) explain why.

Here goes … Any particular bank in the league table will offer different products, and have different customers, to any other bank in the list – after all, they need to do this to suit their customers and to gain competitive advantage through niche products. But I believe this product offering, to different customers, has the impact that the age and gender make-up of customers at some banks will be different to the age and gender make-up of customers at other banks. THEY ARE LIKE APPLES AND PEARS.

Statisticians refer to the different make up of customers as “case mix” and they would also say that it should be “controlled for”. For a real example, here is a quote “Saga [bank] offer a range of competitive finance products exclusively for the over 50s”. I wouldn’t have thought that this particular quote would be applicable for some of the other banks, they will possibly have fewer customers aged over 50.

And this is where things get even more complicated … ideally if you want to compare customer satisfaction per se, you have to remove the “case mix” – you “control for” any differences that are due to age, gender and other factors.

So what I am saying is that the Which? League table may be slightly misleading. If you really want to compare on customer satisfaction itself you should do it AFTER “CONTROLLING FOR” THE CASE MIX.

This could produce an unwanted result, and the table may look completely different to the one published (e.g. Santander may be in the middle of the table, or First Direct may be way off the top etc). But, at least you wouldn’t be comparing apples and pears, YOU WOULD BE ADDRESSING CUSTOMER SATISFACTION ITSELF.