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If you're looking for a reason to invest in Wells Fargo , or to confirm your decision to hold its stock, then you may be interested to know that it outranks its megabank peers when it comes to customer satisfaction. In 2015, it ranked first among national banks and was the only one of the four in the category to improve its score compared to the previous year.
The American Customer Satisfaction Index, or ACSI, ranks companies every year based on customer satisfaction. It covers more than 300 companies in 43 different industries, including banking.
The performance of the financial industry on the ACSI has left a lot to be desired ever since the financial crisis made it impossible for many banks to conceal their adversarial treatment of customers. Far from getting better as time passes, moreover, things seem to be getting worse. In 2015, the finance and insurance sector recorded its worst overall performance on the ACSI in a decade.
Big banks fared the worst. The average ACSI score for the entire bank industry last year was 76, with regional and community banks scoring an 80. National banks, by contrast, scored an average of only 72. This includes Wells Fargo, as well as JPMorgan Chase , Bank of America , and Citigroup .
Data source: 2015 ACSI.
"An analysis of industry customer experience benchmarks for banks shows that smaller usually means better service," says the report. "For nearly every benchmark, scores improve as the bank category gets smaller."
But among the biggest banks Wells Fargo is on top. Its score last year was 75. Citigroup came in second with a score of 73, followed by JPMorgan Chase and Bank of America at 71 and 68, respectively.
Data source: 2015 ACSI.
As you can see, Wells Fargo was the only big bank to boost its score last year. Compared to 2014, its score improved by 4%, going from 72 to 75. Scores at all three of the other national banks fell. Citigroup's dropped from 74 to 73, JPMorgan Chase's from 74 to 71, and Bank of America's from 69 to 68.
It's hard to pinpoint precisely what's causing this decline, though the authors of the ACSI point to an erosion of service quality caused by cost cuts. "For banks overall, courtesy and helpfulness of staff and speed of service transactions are the industry's strong points, although these benchmarks have eroded over the last two years as banks continue to cut costs," reads the report.
While banks have long considered themselves somewhat immune to customer dissatisfaction given the difficulty of switching one's banking relationship, it stands to reason that happier customers translate into higher retention rates and cross-selling conversions. Wells Fargo's relative success in this regard thus offers another reason to think that its stock is among the best in the bank industry.
The article 1 Important Way Wells Fargo Is Distancing Itself From Competitors originally appeared on Fool.com.
John Maxfield owns shares of Bank of America and Wells Fargo. The Motley Fool owns shares of and recommends Wells Fargo. The Motley Fool recommends Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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