Small businesses that use community-based financial institutions are typically more loyal—and exhibit higher levels of satisfaction—than those that use larger national banks, according to Raddon Research Insights data. While many small businesses that use community-based institutions are likely to recommend their institution to others, mega-banks still dominate the small business market. Communication of capabilities is one way community banks and credit unions can help boost future market share.
Word of Mouth Potential
Raddon recently surveyed 1,200 small businesses and found that those using a community bank or a credit union as their primary financial institution are more likely to remain with their institution when compared to their big bank counterparts. When presented with a 10-point scale to rank the likelihood of recommending their primary financial institution to family members or friends, 60 percent of small business owners that utilize a community bank selected “9” or “10”—indicating they are a promoter of their bank—and only 18 percent selected less than “7”—indicating they are a detractor. This gives community banks an overall “promoter” score of 37 among small business customers. Small businesses that use a credit union had an even higher percentage of promoters, resulting in a promoter score of 49.
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