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Customer Retention: To Switch or Not to Switch - IrelandProduct Type: Market Research ReportPublished by: Mintel International Group Ltd. Published: January 2006 Product Code: R560-1858 Description In response to increasing demand for data concerning the dynamic economy and growth markets of Northern Ireland and The Republic of Ireland, Mintel has developed a series of reports covering a wide variety of sectors within both of these dynamic regions. Each one provides detailed coverage of key drivers as well as providing the very latest volume and value data. Also included are assessments of emerging trends, the activities of existing market players, brand ownership details, supply structures, future scenarios and statistical forecasts.
The Irish Series is segmented according to Mintel’s existing report definitions, namely Finance, Leisure, Market, Retail and ‘Specials’. This provides unparalleled coverage and will be a must for all companies who are either already active in this region, or will be looking to enter these distinct marketplaces in the future. Table of Contents IntroductionGeographical, national and regional definitions Conversion factors Population Exchange rates BMRB Target Group Index sample sizes Abbreviations Executive Summary Switching is limited among RoI and NI consumers - for now Market is controlled by small number of players, North and South Back to basics for the banks as service is the top factor in RoI and NI Different account features and incentives appeal to specific consumer groups Opportunities for new providers? Permanent TSB customers least likely to move in RoI, while in NI it is Bank of Ireland customers Market Background The rules have been changed to make switching easier The economy Figure 1: Health of the economy, percentage growth, RoI and NI, 2002-06 Low interest rates promote higher levels of borrowing Figure 2: Eurozone short-term interest rates, 1999-2004 Interest rates in NI pick up somewhat Figure 3: Bank of England base rates, 1999-2005 Increasing choice of providers threatens the status quo The savvy consumer Internet has changed the nature of the game Figure 4: Internet usage, RoI and NI, 2001 and 2005 Choice of providers has increased Retention and Switching: the GB Perspective Overdrafts and credit balance interest rates used as key incentives to switch… …but some concentrate on a cash incentive Providers aim to make the switching process easier Targeting and advertising Figure 5: Advertising expenditure on current accounts, by organisation, April 2003-March 2004 and April 2004-March 2005 Direct marketing and CRM becoming increasingly important Customer retention and acquisition often go hand-in-hand The GB consumer Customer Retention and Switching on the Home Front Permanent TSB aiming to challenge the dominance of the ‘Big Two’ in RoI Other providers following Permanent TSB’s lead Bank of Ireland responds with a focus on customer service Competition is heating up amongst the ‘Big Four’ in NI The Consumer Penetration of current accounts Figure 6: Penetration of current accounts, by gender, age, socio-economic status, marital status and presence of children, RoI and NI, June 2005 Higher employment drives account ownership Figure 7: Penetration of current accounts, by working status and region, RoI and NI, June 2005 Breakdown of current account providers ‘Big Two’ account for around two thirds of primary current accounts in RoI… Figure 8: Breakdown of main current account providers, RoI and NI, June 2005 …while the NI market is similarly dominated by the four indigenous banks who control three quarters of primary current accounts RoI bank profiles Figure 9: Bank customer profiles, by gender, age and socio-economic status, RoI, June 2005 AIB customer profile leans towards younger consumers while Ulster Bank has an older age profile Ulster Bank has a higher share of the top earners It’s a family affair for Bank of Ireland and Permanent TSB Figure 10: Bank customer profiles, by marital status, presence of chldren, working status and region, RoI, June 2005 Work profile underlines potential for direct banking at AIB Permanent TSB and Ulster Bank lack the national profile of the ‘Big Two’ NI bank profiles First Trust and Northern Bank have a lower percentage of young consumers Figure 11: Bank customer profiles, by gender, age and socio-economic status, NI, June 2005 Little difference in the socio-economic status of the NI customer profiles With an older customer base, First Trust and Northern Bank are also less likely to have customers with dependent children A younger customer base means that Bank of Ireland has a higher percentage of students Figure 12: Bank customer profiles, by marital status, presence of chldren, working status and region, NI, June 2005 Two thirds of Halifax customers are based in Belfast Switching behaviour Switching behaviour limited among RoI and NI consumers… Figure 13: Switching behaviour, RoI and NI, June 2005 …but there is potential for future switching behaviour Inertia grows with age for RoI current account holders Figure 14: Switching behaviour by all adults, age and socio-economic status, RoI, June 2005 Moves to automate benefit payments impacting switching behaviour of less affluent? Low instance of switching among AB consumers, but they could be on the verge Again, switching appears to be an age issue in RoI Figure 15: Switching behaviour, by marital status, presence of children, working status and region, RoI, June 2005 Dubliners are the happiest bankers? Differences in switching intentions among NI men and women Figure 16: Switching behaviour, by gender, age and socio-economic status, NI, June 2005 Younger NI account holders show similarities to their RoI counterparts Are C1 consumers in NI feeling left out? Younger parents in RoI and NI more receptive to switching Figure 17: Switching behaviour, by marital status, presence of children, working status and region, NI, June 2005 Current account features Service is top factor in RoI and NI Figure 18: Factors rated as important from a current account provider, RoI and NI, June 2005 In RoI, 35-44s appear most rate-driven/price conscious Figure 19: Factors rated as important from a current account provider, by gender, age and socio-economic status, RoI, June 2005 Direct banking is popular among younger and more affluent… …while the affluent place a high premium on service Figure 20: Factors rated as important from a current account provider, by gender, age and socio-economic status, RoI, June 2005 Young RoI consumers need some advice Figure 21: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, RoI, June 2005 Interest rates more important to married consumers in RoI and those with children Changing circumstances for widowed/separated/divorced to explain interest in discounts on other products? Figure 22: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, RoI, June 2005 Providers need to work harder to keep Dubliners content Younger NI consumers most interested in interest-free overdrafts, in contrast to their Southern counterparts Figure 23: Factors rated as important from a current account provider, by gender, age and socio-economic status, NI, June 2005 Responses in NI show commonalities with RoI consumers Figure 24: Factors rated as important from a current account provider, by gender, age and socio-economic status, NI, June 2005 Direct banking favoured by NI students, while service is less of an issue Figure 25: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, NI, June 2005 Consumers in Derry and Antrim appear to take a keen interest in current accounts Figure 26: Factors rated as important from a current account provider, by marital status, presence of children, working status and region, NI, June 2005 Switching incentives and motivators Poor service a key trigger for switching for both RoI and NI consumers NI consumers show signs of more loyalty Figure 27: Switching motivators and incentives, RoI and NI, June 2005 Rates and fees are key switching incentives for some Poor service less likely to be tolerated by the relatively young and the more affluent in RoI Figure 28: Switching incentives and motivators, by gender, age and socio-economic status, RoI, June 2005 25-34-year-olds in RoI price savvy with regard to rates and fees Figure 29: Switching incentives and motivators, by gender, age and socio-economic status, RoI, June 2005 Cash works best for young, single, RoI students Figure 30: Switching incentives and motivators, by marital status, presence of children, working status and region, RoI, June 2005 Consumers in the rest of Leinster keen to get the best rates Figure 31: Switching incentives and motivators, by marital status, presence of children, working status and region, RoI, June 2005 Further evidence of financial apathy and inertia among consumers in Connacht/Ulster Demand for competitive rates and acceptance of direct banking among young and affluent in NI provides opportunities Figure 32: Switching incentives and motivators, by gender, age and socio-economic status, NI, June 2005 Should providers target switchers among older consumers and less affluent? Figure 33: Switching incentives and motivators, by gender, age and socio-economic status, NI, June 2005 Overdrafts an area of interest for 35-44-year-olds in NI Figure 34: Switching incentives and motivators, by marital status, presence of children, working status and region, NI, June 2005 A quarter of NI students would change provider for an account that offers added benefits and discounted products Figure 35: Switching incentives and motivators, by marital status, presence of children, working status and region, NI, June 2005 Consumers in Antrim show a high loyalty to their provider Analysis of the consumer switching groups Figure 36: Profile of Recent Switchers, Stayers and Possible Movers, by gender, age and socio-economic status, RoI and NI, June 2005 Figure 37: Profile of Recent Switchers, Stayers and Possible Movers, by marital status, presence of children, working status and region, RoI, June 2005 Service is still the key factor for all consumer groups in RoI Direct banking channels to fulfil key role in service delivery Figure 38: Factors rated as important from a current account provider, by consumer switching group, RoI, June 2005 Possible Movers in RoI less interested in reputation and branch location, opening the door for new players Stayers in RoI intend to stay loyal - or do they? Recent Switchers in RoI more outspoken about poor service Figure 39: Switching motivators and incentives, by consumer switching group, RoI, June 2005 Possible Movers in RoI open to offers Interest-free overdraft facility and branch location highly rated by just under half of Recent Switchers in NI Figure 40: Factors rated as important from a current account provider, by consumer switching group, NI, June 2005 Stayers in NI are most interested in service As in RoI, Possible Movers in NI place little stock in reputation and branch location… …but do appear to be price/rate conscious Figure 41: Switching motivators and incentives, by consumer switching group, NI, June 2005 Recent Switchers in NI are least likely to rate service as important but most likely to act on poor service Analysis of bank customer bases Recent Switchers in RoI account for a higher percentage of AIB and Permanent TSB customers Figure 42: Switching behaviour, by current account provider, RoI, June 2005 RoI customers of AIB and Bank of Ireland have itchy feet but Ulster Bank customers are keen to stay where they are Permanent TSB customers demand more from their current account provider Figure 43: Factors rated as important from a current account provider, by current account provider, RoI, June 2005 Figure 44: Factors rated as important from a current account provider, by current account provider, RoI, June 2005 Ulster Bank customers in RoI are particularly keen on better interest rates on credit balances Figure 45: Switching motivators and incentives, by current account provider, RoI, June 2005 A fifth of Permanent TSB customers intend to stay loyal Figure 46: Switching motivators and incentives, by current account provider, RoI, June 2005 In NI, Halifax customer base is more mobile Figure 47: Switching behaviour, by current account provider, NI, June 2005 Lifetime customers of Northern and Ulster Bank are most likely to stay - and most likely to go Halifax customers take more interest in their current accounts Figure 48: Factors rated as important from a current account provider, by current account provider, NI, June 2005 Figure 49: Factors rated as important from a current account provider, by current account provider, NI, June 2005 Halifax customers least likely to tolerate poor service Figure 50: Switching motivators and incentives, by current account provider, RoI, June 2005 Bank of Ireland customers most likely to stay put in NI Figure 51: Switching motivators and incentives, by current account provider, RoI, June 2005 Conclusions and Recommendations Poor service is key motivator to switch - switching still within the locus of control of providers Rewards for switching, but what about rewards for loyalty? Cross-selling or packaged accounts useful tools for customer retention Customer profiles may influence retention/acquisition focus More customers up for grabs in RoI than in NI and GB Opportunities for new current account providers? Age and affluence key to switching intentions The Future Figure 52: Forecast number of current accounts, RoI and NI, 2004-08 Figure 53: Trends in RoI population, by age band, 1999-2009 Figure 54: Trends in NI population, by age band, 1999-2009 |
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