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Not all bad news for ANZ's customer love drive

By Shoeshine

Friday 3rd October 2003

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ANZ Bank may have come last again in the annual Consumer magazine customer satisfaction survey but chief executive Greg Camm can still give himself a quiet pat on the back.

Coming only 10 days before the release of Auckland University's study, Consumer rated ANZ last among the registered banks with a rating of 64%, against top-scoring TSB's 95%.

But that was a 12 percentage point, or 23%, improvement on last year, when only 52% of the bank's customers rated its service as good or very good.

An ACNielsen survey released a year ago showed the number of customers rating its service as excellent or very good had increased 11% since the beginning of 2002.

The Consumer study seems to show the trend is accelerating. Improvement of the same magnitude this year would see the bank rate a distinctly respectable 79%.

Camm took over ANZ's root-and-branch reorganisation from former Treasury supremo Murray Horn, who went on a year ago to a job at ANZ's head office in Australia.

The work has become even more pressing with ANZ's interest in buying the National Bank.

With many groups vocally opposed to Australian ownership of the National Bank of New Zealand, a good showing, or at least a marked improvement, in the popularity rankings will be a considerable booster for the unfavoured bidder.

The hoopla of the National Bank sale has exposed ANZ's ratings to an unwelcome amount of media attention.

Three weeks ago this newspaper reported some of the National Bank's business customers were deserting to other banks in anticipation that ANZ would be the eventual owner.

The article elicited a tart response from ANZ, saying "our research in 2002 in the corporate market showed ANZ had the second-highest customer satisfaction among major banks" and that results from this year's research confirmed "we now lead the New Zealand corporate market in customer satisfaction."

The reply was misleading and probably a touch disingenuous.

The offending article referred to "business customers" in general, the same market the university surveys when it produces its customer satisfaction rankings. The market comprises about 250,000 companies and businesses.

It's true ANZ is strong in the "corporate" submarket, which it defines as businesses with revenues of $10-100 million. But there are, by its own estimate, only 2500-3000 of these to be shared among all the banks.

While this segment is important it is not critical, as the "mass market" of small-to-medium sized businesses and retail customers is.

The university's research last year showed ASB top in business customer satisfaction, with a score out of six of 5.52. Second came the National Bank, with 4.97. ANZ was somewhere among the bottom three.

According to the university's Andrew Parsons, there was little difference in customer satisfaction among those three ­ ANZ, BNZ and Westpac ­ so ANZ is at least not trailing the pack as it has in the retail market.

The success of ANZ's drive for improvement is crucial whether or not it ends up as the new owner of the National Bank.

According to investment bank UBS Warburg, its bid for the National Bank is largely defensive. UBS research showed ANZ's share of New Zealand total banking assets has fallen from 21% five years ago to about 16% now, while ASB's has grown steadily to 12%.

It's fortunate for ANZ that ASB's owner, Commonwealth Bank of Australia, has decided not to bid for the National Bank. A combination of the two most popular banks, with a 32% market share, would have been extremely dangerous.

This year's university satisfaction survey will be the first to capture a full year of ANZ's improvement drive and should show up some interesting results.

A huge change launched in July last year followed a year's study of the preferences of the bank's 650,000 retail customers. The whole existing range of transaction accounts was dumped and replaced by a suite of three choices tailored to the three basic "user types" the bank's research had identified.

A second initiative launched a few days later grouped branches into "shadow franchises" run by a local "chief executive" with the aim of devolving operational control from head office to the frontline staff who actually work with customers.

The important bit to look for in the university survey results will be the degree of improvement these changes and others have generated.

ANZ's overall numbers of satisfied and dissatisfied customers will be more important than its ranking. It's no disgrace to be bottom if you're only a few percentage points behind the top-ranker.

The rate of improvement will be critical if ANZ gets the National Bank.

It plainly can't run with both brands forever, although it will probably use some sort of amalgam for a while as Westpac did with Trust Bank.

With the National Bank being the far larger operation and with its popularity among its customers so much higher, common sense suggests the best way to protect the goodwill ANZ will have paid for will be to keep the National Bank name and drop ANZ.

There's no intrinsic problem with a bank operating under different brands in different countries. After all, that's what Lloyds TSB has done with the National Bank all along.

But ANZ operates just across the ditch and there is obvious value in keeping a common brand given the increasing amounts of business done transtasman. That will be easier to justify if ANZ shows a strong and continuing improvement in its ratings.

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