Research firm Aite Group has introduced a new metric to help banks and credit unions gauge customer loyalty by analyzing what customers do, rather than what they say they plan to do. The new “referral performance score” tracks the percentage of bank customers who actually refer the bank to their family and friends.

The new score is an improvement over the widely used “net promoter score,” which captures the intentions of a financial institution’s customers to refer the company, according to Aite Group.

It’s a “ridiculous measure,” Ron Shevlin, an analyst at Aite Group, said of the net promoter score because it looks at consumer’s intentions “without following up on what they actually do.”

The new client loyalty score also incorporates the percentage of bank customers who grow their relationship with the bank by increasing account balances and adding new accounts.

“By combining relationship growth and referral behavior, banks and credit unions can calculate a metric that more accurately captures client loyalty,” Shevlin said in an announcement.

Of the 1,115 U.S. consumers Aite surveyed, only 5% both referred their financial institutions and grew their relationship with them in the year ending March 2012, according to the Aite Group. 

How did credit unions fare? Almost half of their customers (47%) referred the credit unions to their family and friends, besting large banks, which had only 32% of their clients doing so. However, only 7.5% of the credit union customers who referred the savings institution grew their assets with the bank, giving credit unions a referral performance score of 353.  Aite Group calculates the score by multiplying 47% by 7.5%.

The referral performance score can technically range from 0 (no customers referred the bank and grew their relationship with it) to 10,000 (all customers referred the bank and grew their relationship), Shevlin explained in a telephone interview.

Community banks had a referral performance score of 269 with 34% of customers referring the banks and 7.9% growing their relationship.  The retail banking industry as a whole had a score of 353. 

Customers “most actively and deeply engaged in the management of their financial lives” are most likely to refer their banks and grow their relationship, Shevlin said. By getting customers engaged through mobile banking capabilities and personal financial management tools, banks stand a much greater chance of strengthening client loyalty score, he explained.

Aite Group found that consumers who refer their financial institutions and grow their relationships share behaviors and attitudes that distinguish them from other customers. They are significantly more likely to own smartphones and tablets and tend to be avid users of personal financial management tools and technologies. They are also more inclined to own debit cards and are more likely than other consumers to want digital wallets to replace their payment cards, according to Aite Group’s research.

The findings have ramifications for financial advisors interested in tracking client loyalty, Shevlin said. Financial advisors should look at both the referral behavior of their customers as well as whether they’re growing their relationships. To drive client loyalty, they need to look for ways to engage the client, he emphasized. They should ask themselves, ‘How frequently am I interacting with customers in a meaningful way?’ he urged advisors.