Just recently, I had an interesting customer experience — or, to be more precise, my daughter had it, as it involved her laptop computer from one of the top international Internet PC vendors. It was only a little defect — more an annoyance than a real fault. Since we bought “next business day service,” it should have gotten fixed right away. It played out differently in real life.

Eight years ago, Forrester set out to find the corporate trait that does the most to create loyalty among financial services consumers. Loyalty, of course, is about more than simply retaining customers: Loyal customers are willing to buy more, borrow more, save more, and invest more with the firms they already use. We tested dozens of variables, including the length of the customer’s relationship with the firm, the quality of the firm’s customer service, and the firm’s money management skills. One trait emerged above all others: the perception on the part of customers that the firm does what’s best for them, not just what’s best for the firm’s own bottom line. We call it customer advocacy.

Our research continues to show that customers who rate their firm highest on customer advocacy are most likely to stay at and do more business with the firms they use. In the just-published “Customer Advocacy 2011: How Customers Rate US Banks, Investment Firms, and Insurers,” we show which firms are ranked highest by their customers – and which ones bring up the rear. 

The Big US banks dominate the bottom of our rankings of 47 firms. Thirteen of the bottom 14 firms are banks, including all of the nation’s 10 largest banks. Fewer than one-in-four customers of Citibank and Capital One Bank believe that the firm has their best interests at heart.  Small banking institutions, on the other hand, are among the customer advocacy leaders – and are winning market share in the process. Two-thirds of the customers of credit unions and well over half of the customers of regional and local banks rate their firms high on customer advocacy.

To assess the state of customer experience in 2011, Forrester asked more than 7,700 US consumers in our Technographics© survey about their interactions with a variety of companies. Based on their responses, we calculated Customer Experience Index (CxPi) scores for 154 brands in 13 industries (for a detailed explanation on how the index works, read this post).

The most important finding was that for almost two-thirds of the brands in our study, their customer experience ranges from just “OK” to “very poor”. In fact, 35% of scores fell into the undifferentiated “OK” range — our most heavily populated bracket and not a good place to be if you want your brand to stand out from competitors. Only 6% of firms ended up in the “excellent” category, down from 10% of the brands in last year’s report.

What this tells us is that mediocre-to-bad customer experience is the norm, and great customer experience is really hard to find. But why does this matter? Because the old adage “A customer who gets good service will tell one person, yet a customer who gets bad service will tell 10 people” is very true. Another Forrester study shows that about one in three financial customers with a bad experience tells her friends, about one in five recommends that her friends avoid that given company, and one in 10 reduces their value of her accounts.

For some time there have been rumors about Deutsche Banking having selected TCS BaNCS for some or all of its international subsidiaries. Today, both Deutsche Bankand Tata Consultancy Services (TCS)published a press release announcing that Deutsche Bank will implement TCS BaNCS Core Banking as its new core banking platform for Global Transaction Banking (GTB). The first international subsidiary, which is located in Abu Dhabi, went live three days ago. I discussed the deal with N. Ganapathy Subramaniam (NGS), the president of TCS Financial Solutions.