A thought paper from 22squared on brand advocacy in Retail Banking.

1. igniting advocacy in
retail banking
How acting more like friends
than foes is the key to growth.

2. table of contents
01 introduction: igniting advocacy
in retail banking
02 about our research
03 brand advocacy is a predictor of
business growth
05 the advocacy gap: retail banks have
few friends
08 running with the wrong crowd
10 back to basics
12 retail banking trends
are eroding friendships
19 benefits of friendship: top-line growth
23 breaking the codes of traditional
retail banking
24 conclusion: three ways to improve the
customer experience
25 about 22squared

3. introduction: igniting
advocacy in retail banking
“I would rather keep This is an all-too-familiar sentiment in the world of retail banking.
my money under the And while we chose to keep the name of the bank anonymous,
mattress than bank the comment is indicative of the state of relationships between
customers and their banks. In fact, retail banks have some of
with these thieves!
the worst and most contentious relationships with their
I have been with Bank customers among the 35 categories and over 180 brands we’ve
X for 6 months and studied in the past two years. Now that consumers have
they have used every platforms to instantaneously share and rate their experiences
way possible to collect on everything from eco-friendly cleaning products to vacation
fees from us!” destinations, customer relationships are even more important.
Source: Rate it all.com In the Web 2.0 world of social media networks and online
communities, consumers join groups that identify with and
advocate for the brands with which they hold close relationships.
Likewise, critics who are extremely disappointed with brand
experiences use these stages to warn others about entering
into relationships that do not live up to their promises. These
information-active consumers, whether they’re advocates or
critics, hold some serious power.
01

4. about our research
The 22squared Friendship Model Research is a tool that:
1) Measures advocacy levels and ratios within a brand’s
customer base
2) Evaluates the health and nature of the brand’s
customer relationships
3) Assesses brand performance on actions that drive advocacy
4) Predicts changes in advocacy levels in accordance with
changes in performance
We measure advocacy in a unique way that takes into account
both the customer’s behavior (recommendations or critiques)
and the customer’s attitude (commitment to the brand’s success
or failure). In partnership with Karl Schmidt, founder of the
research firm Consumer Insights Inc., we’ve studied more than
180 brands in 35 categories with over 20,000 customers. The
research has helped us identify a set of brand behaviors that are
shown to drive advocacy across categories. These behaviors
are rooted in social psychology and the behaviors people exhibit
in developing meaningful friendships.
We interview only customers and recent customers of the brand,
via an online methodology. For retail banks, we interviewed
those who are current customers or were customers within the
past two years. There are no in-category comparisons across
attributes; instead the research provides a detailed assessment
of the relationship between the customer and the brand, and
the customer’s influence on others. We then compare brands
within their own categories, along with analyzing the data
within the context of our normative database. Brands and
categories researched included durable goods, packaged goods,
retailers, and service providers.
Our research on retail banks was conducted in March of 2008
and included Bank of America, Citibank, Wachovia, Washington
Mutual, Umpqua, and ING Direct.
02

5. brand advocacy is a predictor
of positive business growth
The Breck shampoo advertising of the 1970s touted the power
of advocacy with the “She Told Two Friends Who Told Two
Friends” advertisement. Online or offline, savvy consumers enter
into new brand relationships after first seeking the opinions—
negative or positive — of those who have experience with those
brands. Insights from 22squared’s quantitative study on brand
advocacy, 2008 Friendship Model Research, reveal that brands
perceived to act on their customer’s behalf have 32% more
Brands perceived advocates.1 The study’s overall True Advocacy™ scores — the
to act on their metric that predicts the number of consumers actively endorsing
customer’s behalf have the brand in the marketplace —demonstrate a positive correlation
32% more advocates. between business growth and customer advocacy.
true advocacy = % advocates - % critics
Each customer is classified into an advocacy segment based on relationship
and level of commitment to advocating the brand to others. The critics are
subtracted from the advocates, while the ambivalent buyers are left out of the
calculation, to reveal the true number of advocates effectively sharing the
brand with others.
SHAREHOLDER
EVANGELIST
RECOMMENDER
REPEAT SATISFIED
ADVOCATE BUYER CRITIC
MARGINAL
BUYER
DISSATISFIED
BUYER ACTIVELY
AGAINST
03

6. True Advocacy is a predictor of customer endorsement
beyond repeat buyers or satisfied customers. It is a measure
of the commitment level of high-involvement customer
types—shareholders, evangelists, and recommenders—
and is, therefore, a good forecaster of annual sales growth.
Those brands with stronger customer relationships receive
higher True Advocacy scores and reap the rewards of
positive business growth.
true advocacy and financial growth
50%
ING Direct
40%
30%
deposit growth
7
= .62
nt
20% Bank of cie
America effi
co
Umpqua ion
10% e lat
Wachovia rr
CitiBank co
s on
ar
0% pe
Bubble size = Q208
-10%
WaMu 210,719 interest bearing
deposits, in millions
-20%
-30%
-20% -10% -10% 0% 10% 20% 30% 40% 50% 60%
true advocacy
Growth in deposits from Q107 to Q208. *ING Direct reports changes in number of
clients for the US market instead of deposit growth (a reasonable comparison).
04

7. the advocacy gap:
retail banks have few friends
For retail banks — a category2 bubbling over with negative
sentiment associated with a witches’ brew of consumer
complaints, including a perception that banks’ actions are
irresponsible and self-serving—recovery requires taking
action to heal damaged consumer relationships. The
Friendship Model Research reveals that the average True
Advocacy score [True Advocacy = % advocates - % critics]
for the retail bank category is 9%, significantly lower than
the multi-category norm of 21%.1 With the overwhelmingly
negative reverberations from industry consolidation, a
weak residential housing market, and predatory creditors,
consumers have grown mistrustful and weary of their retail
bank relationships. A recent study by IBM found that “Fifty
percent of customers harbor an adversarial relationship
with their retail banking brand.” 3 Contrary to the passionate
evangelists of the Apple, JetBlue, and Target brands who
proclaim their brand relationship at the most aspirational
of levels — “soulmate” and “close friend”— consumers’
endorsements of retail banks overall are weak, and they
are even weaker for the larger traditional banks. Indeed,
rather than endorsing these brands, consumers are
more likely to be passionate about their dislike for their
traditional retail bank.
retail banks have the most critics
advocate
34% bank mean
The average True cross category mean
36%
Advocacy score for the
retail bank category is 41%
buyer
9 percent, significantly 49%
lower than the multi-
category norm of 21%.1 25%
critic
15%
While retail banks have an average number of advocates
compared with our cross-category mean, they have the
highest number of critics of any category measured.
05

8. In the Friendship Model Research, Bank of America and Citibank
received negative True Advocacy scores, -12% and -9%,
respectively, representative of their weak customer relationships.
Although the smaller, regional banks, Wachovia and Washington
Mutual (WaMu), have shifted from product-focused to customer-
focused strategies, inconsistent practices toward customers
have led to comparatively low advocacy scores, 5% and 9%,
respectively. Detracting from top-line growth, their negative
momentum scores indicate that a higher percentage of current
customers are moving away from the brand than toward it.
With advocates barely outweighing critics, there is little reason
to “whoo hoo.”
advocacy rates
true
[true advocacy = % advocates - % critics] advocacy
ING 58% 31% 10% 48%
Umpqua 39% 33% 28% 11%
Washington Mutual 31% 48% 22% 9%
Wachovia 30% 45% 25% 5%
Bank of America 24% 40% 36% -12%
Citibank 22% 47% 31% -9%
advocate buyer crItIc
06

9. In contrast, a new style of banking, responsive to consumer
preferences, is wooing customers. Taking the True Advocacy
and True Momentum [True Momentum = % moving toward -
% moving away] scores together, ING is the only bank in the
study claiming both positive True Advocacy and positive True
Momentum. ING may be sluggish in Europe, but in the
U.S. it is the category exception, claiming the highest True
Advocacy score in the category, 48%. Not surprisingly, ING also
has the highest annual growth, 39%. Also staying ahead of the
curve, Umpqua is generating buzz with its lifestyle approach
to retail banking. While lagging behind ING, Umpqua, a small
community-focused bank, stands out, claiming the second
highest True Advocacy score of 11% but fails to create positive
True Momentum, 2%.
Despite the millions of dollars in fees Bank of America collects
from overdraft and ATM usage, it hasn’t been able to propel
positive annual growth. In contrast to ING, Bank of America
received a negative True Advocacy score, -12%, and a negative
True Momentum score, -31%, explaining its negative annual
growth of -0.7%.
true momentum
true
[true momentum = % moving toward - % moving away] momeNtum
ING 39% 48% 13% 26%
Umpqua 26% 46% 28% -2%
Washington Mutual 22% 50% 28% -6%
Wachovia 15% 53% 32% -17%
Bank of America 12% 45% 43% -31%
Citibank 11% 52% 37% -26%
movING toward stable movING away
07

10. running with
the wrong crowd
Smart brands befriend consumers and enter into relationships
representative of those between friends, such as “acquaintance”
or “close friend.” Reaching the status of close friend means
a consumer identifies with your brand and is willing to endorse
it. Such a relationship requires maintenance, however.
relationship types
soul mate unique connection, can’t live without
close frIeNd inner-circle, depend on, always there
NIche frIeNd familiar in a narrow context
New frIeNd on the road to becoming closer
acquaINtaNce ambivalent, no expectations
famIly frIeNd by association or inheritance
default lack of options, proximity, avoidance
flING short-time experiment
forced no choice, feel trapped, wish to escape
08

11. Five of the six retail banks in our Friendship Model Research
have fostered few or no close friends, preferring to cultivate
low-involvement, low-commitment relationships.1 These
weak friendships —“forced,” “default,” and “fling”— are not the
advocate-building types, such as “soulmate” or “close friend,”
Five of the six retail that Apple, JetBlue, and Verizon have successfully fostered.
banks in our Friendship In the case of Verizon, it has carved out an exception for itself
by successfully fostering strong relationships within a category
Model Research have
in which many of the relationships are perceived as forced.
fostered few or no close
Banks that engage their customers in “forced” friendships are
friends, preferring to maintaining stagnant customer relationships, ones that are
cultivate low-involve- teetering precariously close to the stage at which change is
ment, low-commitment sought by the customer, ending the relationship. After all,
relationships.1 close friends take care of each other.
types of friendships being
forced cultivated by retail banks
relationship
family
relationship
close friend
default
relationship
new friend
fling
niche friend soul mate
acquaintance
graph explains 59% of variance seen across brands
09

12. back to basics
All I need to know I learned in kindergarten is the quintessential
how-to guide on respecting and befriending others. In order
to turn around fledgling operations, banks need to reevaluate
how they perform and interact with consumers at the most
rudimentary of levels. Every point of contact a brand has with
a customer is an opportunity to deepen or ruin the relationship.
The Friendship Model Research assesses brand performance
across ten actions (tenets of friendship), quantifying their
impact on creating positive customer experiences and driving
advocacy. The higher the scores, the more likely a consumer
is to recommend a brand to someone else. These 10 actions
together transform the role a brand plays in a customer’s life,
providing the customer with more than a mere product or service.
What is evident across the multiple verticals included in the
survey— wireless, airlines, retailers, electronics, personal care,
and retail banks— is that four of the tenets represent the most
basic of consumer expectations:
Honest and True | Authentic | Supports Me | Understands Me
They are the foundation on which to build advocacy, to create
brand momentum, and ultimately to propel business growth.
actions that drive advocacy:
the 10 tenets of friendship
be autheNtIc | original, real, and distinctly meaningful
be hoNest | transparent, make intentions clear
be empathetIc | understand their needs, desires, and lives
support them | be helpful; act on their behalf
speNd qt | provide positive, immersive experiences
share a pov | common lifestyle, belief system, or attitude
be excItING | create a visceral spark or gut reaction
GIve more | provide value beyond the purchase
stay IN touch | build anticipation, add value, communicate
keep It fresh | surprise and delight
10

13. Absent from or weak within retail customer relationship are
the above-mentioned four core tenets. In the latest wave of
“I can’t say enough about
Friendship Model Research, we asked more than 10,000
how much I enjoy banking consumers about 52 brands across six categories. Retail banks
with ING Direct. Their call scored below average, 100 being the average, on performing
center is always open and basic behaviors. This score narrowly surpasses the expected
you speak with a person weak performance of brands within the wireless category. For
in a matter of seconds. the most part, consumers rated retail banks below average on
each of the four tenets — Honest and True (88), Authentic (88),
The products they offer are
Supports Me (97), and Understands Me (91).
great and are very easy to
manage, either over the
phone or online. I wish all
banks were like ING.
They are great!”
Source: Reviewcenter.com
Honest and True Authentic Supports Me Understands Me
Overall, the absence of these attributes presents an opportunity
for retail banks to recalibrate their customers’ experiences. The
one dramatic exception is ING, perceived as the gold standard
within the category for the best customer experience practices
across vital touchpoints. ING’s advocates value their relationships.
11

14. retail banking trends
are eroding friendships
For better or worse, the following trends influence consumer
perceptions, behaviors, and expectations of retail banks.
Reevaluating these approaches may provide insight into how
banks can demonstrate their friendship potential to consumers.
treNd 1:
web 2.0 INNovatIoNs dIstaNce the customer relatIoNshIp
While the banks’ recent The manner in which traditional banks are innovating is not
shift to digital customer building positive relationships with customers, but may be
distancing their relationships with customers. While the banks’
interactions allows for
recent shift to digital customer interactions allows for self-service
self-service and ease of and ease of use for even complex transactions, it further
use for even complex distances customers from the banks by degrading their already
transactions, it further weak “forced” relationships. Further contributing to the demise
distances customers from of the customer relationship is the subpar customer support
the banks by degrading provided by the bigger banks, calls that are often answered by
their already weak an offshore call center representative, most likely unfamiliar
with and insensitive to home market conditions.
“forced” relationships.
Over 50% of internet users, approximately 97.5 million, now
engage in online banking, coupling an on-demand culture with
the convergence of technology.4 Retail banks’ new product
and service extensions that enable online and mobile banking
reflect this lifestyle change. Bank of America leads the way with
online chat and e-alert initiatives that increase functionality and
enable real-time communication with customers. Historically,
many banking customers have reported that they are unable to
complete their business with a single phone call, so diversifying
communications channels is certainly a move in the right
direction, but not enough to cultivate advocates. Citi MobileSM
supports the now indispensable mobile banking service, but falls
short of garnering positive momentum for the company.
12

15. In 2000, ING pioneered direct online banking; the other banks
Supports Me:
have followed suit, contributing to the internet’s emergence as
This brand is the primary distribution channel. Even though ING has focused
helpful to me and on making banking simple and achieved operational efficiency
acts on my behalf. with a business model that services customers online, the
company is also responding to what customers want from their
banking relationship — an easy, straightforward, and transparent
122 ING banking experience, combined with low cost and excellent
service. This finely tuned model has proven a compelling
combination and a clear differentiator for ING. It is not surprising
then, that ING leads the category in the area of support with
a Supports Me score of 122, far exceeding the retail banking
106 Umpqua
category mean. The only brands within our study that rival ING’s
score are Apple (140) and Sony (124). In contrast, although
101 WaMu Bank of America and Citibank provide leading online banking
100 Cross-category mean applications, they received the lowest Supports Me scores,
97 Retail bank average 76 and 87, respectively, falling well below the category mean.
This suggests a lack of the requisite service and support
92 Wachovia expected at every customer touchpoint.
87 Citibank Indeed, ING’s case highlights that the successful rollout of new
products and services is contingent upon the existence of core
advocacy tenets. Without these, consumers will hesitate to
explore deeper relationships or move toward the higher echelons
76 Bank of America of the information-active “recommenders” or “evangelists.”
13

16. treNd 2:
qualIty over quaNtIty
The rise of online banking provides fewer reasons to walk
into a retail branch, yet over the past decade the total number
of retail bank branches has increased nationally by 29%.5
Additionally, banks are extending service hours into the
weekend and offering supermarket and in-store locations.
There is a negative
Bank of America and Wachovia continue to grow their retail
correlation between footprints, providing consumers with increased convenience,
strength of customer a leading reason for switching banks.6 However, our findings
relationship and the suggest that there is a negative correlation between strength
size of the bank.4 of customer relationship and the size of the bank.
60%
the bigger the bank
the more critics 50%
4 40%
79
=.
|R
ient
30%
true advocacy score
ef fic
co
n
tio
rela
cor 20%
on
a rs
pe
10%
0%
-10%
-20%
6000 5000 4000 3000 2000 1000 0
physical retail outlets
Source: Annual Reports and Web Sites
14

17. In other words, the larger the bank, the lower its advocacy score
and the lower its rate of business growth. Indeed, the largest banks
in our study, Bank of America and Citibank, have annual growth
By creating a service- rates that are low to negative, at -0.7 % and -6.38%, respectively.
Not surprisingly, our study found that Bank of America has
oriented culture, versus
negative momentum, indicative of an unstable relationship, one
a sales-oriented culture,
in which consumers are moving away from the brand.
and integrating
customer experience at Two banks are keeping retail banking relevant and fresh, taking
such a vital touchpoint innovation beyond products, services, and digital interactions,
as the local branch, it is and giving the larger traditional banks a run for their money.
not surprising that both ING and Umpqua are challenging the codes of retail banking
and the customer experience through branch innovation.
ING and Umpqua are
ING Cafés create an atmosphere of friendship and partnership,
befriending consumers.
providing education on products and services through financial
literacy workshops. The company’s customer experience strategy
is more closely aligned with the hip, educational environment of
Apple stores and the café experience of Starbucks. Embedded
within neighborhoods, Umpqua is part internet café and part
community center. Its branches have even been compared to
stylish hotel lobbies where customers are tempted to hang out.
“Daily Specials” highlight neighborhood events and resources,
as well as bank products and services. Umpqua’s Discover Local
Music initiative supports community initiatives with an online
music store, Umpquamusic.com, that features local indie artists.7
By creating a service-oriented culture, versus a sales-oriented
culture, and integrating customer experience at such a vital
touchpoint as the local branch, it is not surprising that both
ING Café in Philadelphia ING and Umpqua are befriending consumers.
15

18. By consistently meeting and exceeding consumer expectations,
ING is building trust and nurturing relationships and is in
a position to deepen customer relationships by introducing
and converting customers to new products and services. As a
result, both ING and Umpqua banks are experiencing positive
True Advocacy and positive annual growth of 39% and 6.9%,
“Umpqua is an amazing respectively. Wachovia is responding by updating the older
place. I have rarely teller counters with concierge-style kiosks, and WaMu is
focusing on experience versus product, evidenced by their
gone to a fund-raiser
current “Whoo Hoo” advertising campaign that attempts to
that didn’t have
invigorate their banking experience. In the wake of negative
Umpqua Bank there, sentiment over the mortgage crisis, both these banks are
helping and serving treading water, exhibiting virtually no positive momentum
every community they along with flat advocacy scores.
exist within.”
Source: InsiderPages.com ING and Umpqua, the two nontraditional players, interact with
consumers in a truly authentic manner. As a result, both banks
scored high on acting with Authenticity, ING at 111 and Umpqua
barely below average at 98. Umpqua has embraced its role
as a community-focused bank. This is best expressed by an
advocate posting on Insiderpages.com: “Umpqua is an amazing
place. I have rarely gone to a fund-raiser that didn’t have
Umpqua Bank there, helping and serving every community they
exist within.” The Friendship Model Research points out that
the traditional branch model is not driving customer advocacy.
By breaking the codes of traditional retail banking and deploying
an integrated customer experience strategy, ING and Umpqua
are propelling positive growth.
16

19. treNd 3:
keepING secrets aNd provIdING uNwaNted surprIses creates crItIcs
With a total of 2,030 mergers among FDIC institutions, 2001
heralded an era of consolidation.5 This has provided both
opportunities and challenges for large traditional banks. Bank
of America, which is nearing the government-mandated limit
of holding 10% of total outstanding deposits, is seeing its
revenue growth limited by its inability to acquire new business.
This pressure has led the bank to move toward alternative
Today, over $20 billion,
revenue streams that extract more money out of existing
close to 50% of the customers. Today, over $20 billion, close to 50% of the industry’s
industry’s annual annual revenue, is generated from “nuisance fees.”8 These
revenue, is generated hidden fees are resulting in a backlash by consumers who are
from “nuisance fees.” 8 migrating in droves to banks they consider more transparent.
Bank of America is notorious for its lack of transparency for
“Bank of America is the such things as overdrafts and late payment fees. These practices
fall short of creating positive customer experiences. Rather,
worst bank that I have
they are deemed by consumers as self-serving, and as a result,
had. I have never been consumers perceive Bank of America to be the least Honest
so mistreated by any and True in the category based on their tenet index of 65,
customer service as I 35 points below the category average and a whopping 43
have by them. They do points below ING. The advocates are outnumbered by the
NOT work for the critics, whose harsh words depict their acrimonious relationships
customer, they work for on Rateitall.com: “Bank of America is the worst bank that I
have had. I have never been so mistreated by any customer
themselves to put money
service as I have by them. They do NOT work for the customer,
in their own pockets.” they work for themselves to put money in their own pockets.”
Source: Rate it all.com It leads us to believe that Bank of America is not following
through on its branding campaign, “Bank of Opportunity.”
Wachovia scores low, too, at 81. They engage in collecting
nuisance fees, not to mention accepting fees based on trans-
actions conducted by companies using the bank’s account to
engage in fraudulent activities. These activities stole as much
as $400 million from unsuspecting victims.9 Wachovia looked
the other way while collecting fees on the fraudulent transactions
that were conducted.
17

20. The perniciousness of Wachovia’s nuisance fees is illustrated
by the comments of a Senior Attorney from the Consumers
Union in San Francisco. “I have consumers tell me that they
used their own debit card three times in one day and they got
hit with three thirty dollar ($30) overdraft charges.”10 It’s no
wonder that pursuing lower account fees is the third highest
motivator for switching banks.6 Such hidden fees erode trust
and detract from other customer-oriented initiatives such as
the bank’s “Who Would You Thank Campaign?” which is meant
to celebrate National Customer Service Week.11 Overall, these
practices, common among the larger banks, are not befriending
consumers nor setting the tone for future cross-sells or up-sells,
but rather destabilizing their customer relationships. Indeed
their negative True Momentum scores suggest that their
customers are moving on: Bank of America, -31%; Citi, -26%;
WaMu, -6%; and Wachovia, -17%.
“I have consumers tell me that they used
their own debit card three times in one day
and they got hit with three thirty dollar
($30) overdraft charges.”10
18

21. ING was first to roll out an online, high-yield savings account
with no minimum balance and no monthly fees. Their cash-
based referral program generates customer leads and rewards
loyal customers. With an absence of traditional branches and
just six ING Cafés, the company’s operational savings are passed
on to consumers in the form of more competitive interest
rates— the number one reason consumers switch banks.6
118 ING
Consumers banking with ING should feel safe and secure, since
the bank takes security so seriously. A 2006 University of
California at Berkeley study analyzed the estimated annual
incidents of identity theft per $1 billion in deposits and found
100 Umpqua banking with ING is the safest (.085).12 Seeking better security
to protect personal information and funds is the number four
91 WaMu reason consumers switch banks.6 It should come as no surprise
that consumers perceive ING as performing above average in
the area of honesty, with an Honest and True score of 118.
81 Wachovia
72 Citibank benefits of friendship:
65 Bank of America increasing true advocacy
will impact top-line growth
Honest and True:
The brand exhibits
Advocacy and its positive correlation to business growth
transparency and underline the power of consumer relationships for the retail
clear intentions. banking industry. The stronger the relationship, the more
willing consumers are to embrace it and act on it. The following
What if scenarios explore actions for increasing consumer
advocacy. The increase in percentage of advocates is derived
by increasing the index of the tenets to the multi-category
average of 100.
19

22. buIldING trust throuGh traNspareNcy
The greatest opportunity for improvement exists with the
traditional banking behemoths, Bank of America and Citi, with
which many consumers have “forced” relationships. Across
the four tenets that measure performance of the basics, Honest
and True, Authentic, Supports Me, and Understands Me, all
scored significantly below each tenet’s average score specific
to the category. These scores suggest an emptiness in Citi’s
latest consumer-oriented “Let’s Get It Done” campaign.
Demonstrating empathy toward consumers’ frustrations with
nuisance fees and providing relief from them would be a trust-
building initiative. Overall, listening and responding to consumers’
needs help shift their impersonal, fee-collecting persona to a
more positive one. The power of reciprocity in this industry is not
to be underestimated. In fact, it would help instill confidence in
the relationship, one without surprises or self-serving practices.
Elevating their customer experience by focusing on these four
tenets would raise the percentage of Bank of America’s
advocates by 6% and increase the percentage of Citibank’s
advocates by 4%.
Cross Category Average: Average performance of brands across
durable goods, packaged goods, service, and retail brands
bank of america and citibank
cross
category
average
closing the gap:
20

23. GIvING Is better thaN receIvING
Wachovia, positioned as a community bank, communicates
effectively and is perceived to support its customers well.
Even so, it scores below average across most friendship tenets,
particularly three of the four tenets essential to moving retail
bank consumers toward the brand — Honest and True, Authentic,
and Understands Me. These mediocre scores suggest that this
smaller bank behaves more like the large, impersonal banks.
Not surprisingly, it has no positive momentum.
In order to befriend more consumers and increase momentum,
we suggest that Wachovia refine their performance of the
basics — the same remedy required by the traditional big banks.
Providing value to customers without expecting anything in
return will elevate their profile. We applaud Wachovia’s rollout
of one of the more innovative products to date, Way2Save.10
This product is designed to deduct from checking the cost
of the purchase plus a dollar. Presumably, the dollar goes to
a savings account with a higher interest rate. Their referral
program offers a $25 Visa gift card to customers who refer
a friend who then enrolls — the friend receives a card, as well.
We believe both of these initiatives provide incremental value
and help Americans save, which is an ever-increasing need
in our current economy. Closing the gaps on performing the
basics well could impact their advocacy with a 3% increase.
130
120
110
100 cross
category
average
90
80
70
Honest and True Authentic Understands Me
21

24. keep the relatIoNshIp fresh
Umpqua and WaMu, both regional banks, post respectable
scores for performing the fundamentals of a service-based
relationship. WaMu has long been known for its commitment
to quality customer service, and certainly, both of these banks
perform at a higher level than the bigger banks with whom
they effectively compete. In 2007, BusinessWeek presented
WaMu with “A Top 25 Service Champ” award, the only bank on
the list. Regardless, WaMu, along with Umpqua, is losing ground
in terms of being attractive and exciting and, consequently,
momentum. We believe WaMu’s branding campaign takes a
step in this direction by attempting to generate excitement while
emphasizing the banking experience over products. Beyond
trying to infuse excitement into the experience, providing
products that meet consumers’ multiple life stage needs will,
we believe, keep the relationship fresh. Their segmented product
offers will rejuvenate and bring attraction and excitement to
the offerings. By increasing performance on the basics and
providing some unexpected value to the customer, WaMu and
Umpqua could increase their advocates by 2%.
Cross Category Average: Average performance of brands across
washington mutual and umpqua
durable goods, packaged goods, service and retail brands
cross
category
average
closing the gap:
Quality time Something Attractive Keeps Get more
in common and exciting relationship than I give
fresh
22

25. breaking the codes of
traditional retail banking
Drawing on 22squared’s research, True Advocacy is a predictor
of annual revenue growth. We believe the Friendship Model
and the insight it provides allow retail banks to monitor the
ten tenets of friendship for continual improvement in building
advocacy. A break from the traditional codes of retail banking,
the adoption of this model will facilitate the shift toward listening
and responding to consumers’ needs and expectations, as well
as the move away from forced relationships. The model allows
for the continual optimization of the customer experience by
identifying areas in need of improvement, increasing advocacy,
and generating value. Monitoring the pulse of the customer
experience will be essential if retail banks are to stay competitive
as they improve their performance. Leveraging the power and
value of an advocate, who may either tell a friend who tells
a friend or be connected to hundreds of thousands of peers
through online communities growing exponentially daily, should
not be dismissed.
23

26. conclusion:
three areas for improving
customer experience
Three areas to consider for immediate
improvement are: providing transparency,
providing value, and aligning with
non-industry causes.
Now is the time for
banks to shift toward The changing demographics of the U.S. will require simplicity,
the perception of giving whether from the young tech-savvy’s need for on-demand
more than they receive, access to accounts or from the aging baby boomer’s changing
to stop looking at their needs. Different segments will require and demand transparency;
those banks that provide uncomplicated banking will gain the
customers for their
consumer’s trust. Oil prices continue to inflate the cost of
worth, and start looking goods and services, forcing consumers to seek out products
at them as their next that deliver higher value for the dollar. Now is the time for
10 customers. banks to shift toward the perception of giving more than they
receive, to stop looking at their customers for their worth and
start looking at them as their next 10 customers. Banks perceived
to provide the most value to their customers will reap rewards
through increased receptivity to cross-sells and through tapping
into a network of advocates. Emergence of issues bigger than
the individual and larger than the leading asset-rich organiza-
tions will entail organizations adopting causes outside their
core strengths. As climate change and the concerns surrounding
it gain mainstream attention, the choices consumers make will
further reflect their values, beliefs, and lifestyles.
24

27. 22squared, one of the largest independent advertising agencies (we use
the term loosely) in the U.S., provides strategic and creative advertising
services across multiple business verticals. It offers an empirical approach
to building brand advocacy and specializes in communications that
drive business growth by building strong relationships with customers.
The number 222 represents the exponential power of brand advocacy
as well as the average number of friends a person makes throughout his
or her life. 22squared is located in Atlanta, GA and Tampa, FL. For more
information, visit 22squared.com.
about 22squared
Consumer Insights Inc. is an independent research firm that specializes
in custom quantitative consumer research. They have experience study-
ing many types of industries, including automotive, package goods,
financial services, government entities, health care, hospitality and
tourism, retail, services and utilities.
Research conducted by Consumer Insights Inc., Troy Michigan.
Paper prepared by 22squared. Contributors to this paper include
Brandon Murphy, Margery Nabors, and Carolyn Kopf.
References:
1
Friendship Model Research: A Quantitative Study on Brand Advocacy, 22squared, March 2007 – March 2008.
2
The retail bank category defined by the 2007 Friendship Model Research includes the following banks: Citibank, Bank of America,
Wachovia, Washington Mutual, Umpqua, and ING.
3
Heffernan, Robert and Scott Lieberman. “Unlocking customer advocacy in retail banking: The customer focused enterprise.” IBM Global
Business Services. October 26, 2006. http://www935.ibm.com/services/us/index.wss/ibvstudy/gbs/a1025930?cntxt=a1005261
4
Mintel’s forecast of adults who use online banking services, reviewed in its Online Banking — U.S. Report, June 2006.
5
“Trends and factors driving retail banking.” Retail Banking U.S. October 2007. Mintel. www.Mintel.com
6
Online Survey: Preferences of large bank customers — switching behavior, Mintel/Greenfield, August 2007.
7
“New Marketing – Umpqua: the coolest bank just got cooler.” Bank Marketing International May 25, 2006: Pg. 6.
8
Estimated Fee Based Overdraft Loan Fees Paid By Consumers, 2004 and 2006. Center for Responsible Lending. “Trends and factors
driving retail banking.” Retail Banking U.S. October 2007. Mintel. www.Mintel.com
9
Duhigg, Charles. “In telemarketing fraud case, papers show Wachovia knew of theft.” The International Herald Tribune February 7, 2008,
Thursday Finance: Section; Pg. 19.
10
Kristof, Kathy M. “Wachovia’s savings program ups the ante; Enrolled customers automatically sock away $1 per debit. But there are
pitfalls.” Los Angeles Times February 24, 2008, Sunday Home Edition: Part C; Pg. 3.
11
“Wachovia launches ‘Who would you thank?’ contest.” Wachovia Press Release September 17, 2007. www.wachovia.com
http://www.wachovia.com/inside/page/0,,134_307%5E1656,00.html
12
Chris Hoofnagle, “Measuring Identity Theft at Top Banks (Version 1.0)” (February 26, 2008). Berkeley Center for Law and Technology.
Law and Technology Scholarship (Selected by the Berkeley Center for Law & Technology). Paper 44. http://repositories.cdlib.org/bclt/lts/44
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