Small Business Satisfaction with Banks is on the Decline

The J.D. Power and Associates 2010 U.S. Small Business Banking Satisfaction Study show that small business owners are becoming more positive about the economy, but they are not very positive when it comes to their banking business.

For two straight years satisfaction with banks has declined among small business owners. In fact, small business owners report the lowest satisfaction ratings of all industries surveyed. This continued decline in satisfaction has also led to a drop in customer loyalty. More small business owners are interested in moving their banking business. Only 19 percent of small business customers are committed to remain with their current financial institutions.

Small businesses provide banks with more revenue than retail customers do, but small businesses report more problems than retail customers. The account balances of small businesses are, on average, 25 times more than those of retail customers. This yields greater income for the bank, yet small business owners are not pleased with the service that their banks provide. Many banks are not providing small business owners with the attention and service they want and expect.

What Small Business Owners Want

Many banks are simply not living up to the expectations of small business owners. Most banks are providing less credit, even as the economy improves, and using universal standards to determine who receives that credit. The individual circumstances of small business owners are rarely examined. Banks need to partner with small business owners and treat them like individuals instead of numbers.

Banks that establish relationships with small business owners are more likely to have satisfied customers. This requires an account manager who is easily accessible and able to communicate with customers. Providing a personal connection allows small business owners to feel that they are partnering with someone who understands their needs and not simply storing money.

Small business owners report more banking errors than other banking customers. The most common errors that small businesses report are deposits not showing as well as transaction and processing errors.

The number of errors for small businesses is 1.5 times the errors that traditional retail customers report. Reported banking errors for small businesses have increased by two percent from 2009 to 2010. This is a significant problem that greatly contributes to the loss of confidence that small business owners have in their banks. Banks that are interested in ensuring the loyalty of small business owners need to focus on giving service without errors and quickly correcting errors when they do occur.

Small business customers who feel that they have an obvious point of contact at the bank are more likely to be satisfied with the service that they receive. Should a problem arise or an error be made, knowing who to speak with provides customers with a sense of security. Loan officers or bank managers who connect with customers personally improve satisfaction for their small business clients.

Communication will make the difference when it comes to the providing customers satisfaction. Fees are a major source of discontent for small business customers. Fees should be explained to customers carefully so that they are not surprised by charges at the last minute. Banking customers do not necessarily want free service, but it is important to make sure that fees are suitable to the services that people receive. When account managers open accounts it is important to find the most effective account options for small business owners and explain the fees carefully.

Ignoring the needs and expectations of small business owners is not in the best interest of any banking institution. Small business accounts generally have larger account balances, but they are not often provided with greater advantages. Decline in customer loyalty is the product of ignoring the banking needs of small businesses.

Whether they choose the small familial feel of a community bank or the convenience of a national bank, small business owners are becoming increasingly careful about where they put their money. More small businesses are choosing to shop around for better banking options. They prefer to work with people they trust and they feel examine their banking needs to come up with solutions that fit their individual situations. In order for banks to be competitive, they need to address the concerns of small business owners and cultivate their trust.

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