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This study surveyed a nationally representative panel of senior-level executives (decision makers and influencers) charged with purchasing financial services and insurance products for organizations with 50 or more employees.

The study's findings are based on 2,278 observations gathered from 767 questionnaires completed during the second quarter of 2003.

While satisfaction measures specific experiences, only loyalty provides an understanding of the relationship and future customer behaviors.

In addition to finding that 66 percent of executive buyers are not truly loyal - or planning to maintain the provider relationship - the report reveals a critical disconnect between customer satisfaction and customer loyalty.

Specifically, 75 percent of executives indicated some level of satisfaction with their current vendor, but a large percentage are not pleased with the relationship and/or have low intentions of continuing the relationship.

Customers' loyalty levels were split evenly among the following categories:

• 31 percent high risk - having low intentions of continuing and being unhappy with the relationship to date



• 33 percent trapped - likely to continue doing business with the company, but not pleased with the relationship



• 34 percent truly loyal - they both want to and plan to maintain the relationship

Walker Information Group Vice President Jeff Marr, a researcher on this study, explains the business implications of the findings and the problem with merely measuring satisfaction.

"While 75 percent of financial services customers indicate they're satisfied with their existing suppliers, only 34 percent are truly loyal," Marr said. "That's why suppliers who only look at satisfaction are missing key information about customers' attitudes and future behaviors. Only true loyalty can serve as an indicator of future revenue, retention, and growth."

Results from The Walker Loyalty Report demonstrate how loyalty translates into customer behaviors to influence retention and profitability.

One in four (27 percent) are actively searching for alternative suppliers and only slightly more than half (56 percent) of executives are likely to recommend their financial services vendors.

Truly loyal customers are more likely to buy more products, resist competitive offers, and recommend the company's services - all of which lead to significant financial gains and long-term stability.

The research suggests increased customer focus, followed by improvements in quality, brand, and reputation, are all needed for turning trapped and high-risk customers into truly loyal customers.

Other highlights of the study provide insights about the perceived value, quality, and leadership of financial services and insurance providers:

• Less than half (41 percent) view the value offered by companies across the four sectors as "excellent" or "very good".



• Six in ten (61 percent) rate the overall quality of suppliers' products and services as "excellent" or "very good".



• Less than half (49 percent) consider their suppliers to be highly ethical, and only four in ten (42 percent) feel their supplier has strong, capable senior leaders.
  ·Only one-quarter (24 percent) of executives plan for their company to become more self-insured.

Customer loyalty scores differed slightly based on demographics such as organization size and the respondent's industry. Most notably, mid-sized organizations (between 500-5,000 employees) exhibit the highest level of loyalty (41 percent). Respondents in the communications and financial services/insurance industries had the highest level of loyalty (46 and 45 percent, respectively).

Marc Drizin, vice president and loyalty specialist at Walker Information, cites the dynamics of the industry and future trends to support a strong focus on customer service and personal relationships.

"With value rated no higher than fourth as a key driver of loyalty across the four sectors, it's clear customers are focused on more than price," Drizin said. "Commoditization is a big factor in these industries. These findings indicate financial services and insurance companies should become more focused on differentiating themselves through product development and ongoing personal relationships."