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Customer service in financial services todayBy Brady Walen and Jim Perry - May 2007 Customer Service - the identifiable, but sometimes intangible, Customer service is perhaps the most overused term in the financial services industry, and as a result it is often one of the most misunderstood. Its overuse has contributed greatly to a loss in meaning and impact; and, it continues to be misdirected in institutions’ efforts to position themselves, differentiate from the competition and communicate value. So what exactly is customer service? The definition listed above is the classic approach, but perhaps it is even more than that. Most people will say they know it when they see it or experience it. They know it when they wait in a teller line for more than five minutes. They experience it when a drive-through teller thanks them by name. They feel it when a loan officer fails to return their call within 24 hours. We would go so far as to say that customer service exists whenever there is any contact, active or passive, between a customer and a financial institution that causes the customer to have a positive or negative perception of the institution. That perception will ultimately be determined by the customer’s expectations of the contact having been met, exceeded or disappointed. So while the term customer service is misunderstood and overused, customer service can not be ignored. Financial services executives must understand how the role of customer service has shifted and what implications these shifts and customer expectations have on their strategies; the importance of supporting customer-service focused value propositions with meaningful action; and the common pitfalls in deploying a customer service-based strategy. The Role of “Customer Service” The role of customer service in financial services has shifted dramatically over the years, and it continues to change. Where their parents and grandparents viewed a banking relationship as a privilege, today’s consumers view it as a right and they demand value for their business or they are out the door on their way to your competitor. Perhaps the most challenging issue relative to the term customer service is the fact that the term has lost much of its meaning due to overuse and misuse. Bankers must realize in today’s aggressive marketplace that actions do indeed speak louder than words and that value propositions must be more than lip-service; if a certain level of customer service is promised to your customers, you must deliver. Customer service today is as much about managing expectations as it is about delivering your value proposition - and doing it all consistently across the board. It seems as though many bank executives think the term customer service needs to make its way into their institution’s value proposition in one way or another. A quick scan of the websites of many banks would reveal that their “About Us” section usually attempts to set themselves apart from their competition by proclaiming their commitment to customer service. And this is just one practice that has contributed to the term’s overuse and loss of meaning. Today, good customer service can not simply be talked about in marketing collateral, advertisements and clever taglines – it has to come to life. Your customers need to experience what customer service means to you, and how that in turn adds value to their relationship with you. Make it True There is no doubt that customer service is still an essential element of retail banking, but it must become more than a buzz word in your value proposition. If your value proposition promises things like outstanding, extraordinary or superior customer service, you must link the promise of great service and the proof necessary for customers to realize that these propositions are indeed true. Unfortunately, claims of great customer service are often times ignored by customers because there is no tangible proof to make these claims true. Make it true is about bringing your value proposition to life; it’s about turning lip-service into a real customer experience that is obviously and completely true to each of your customers every time they interact with your institution. Moreover, stop trying to promise a better level of customer service than the competition. Today’s successful institutions have realized that providing a different level of service, not necessarily better, can be a more viable approach to target today’s discerning consumer. For example, Mountain 1st Bank and Trust in North Carolina has made a commitment to proving a different level of customer service from its competition. They are one of the most rapidly growing community banks in the Southeast, and the proof of their customer service pledge comes in their commitment to “warm smiles, warm cookies and fresh coffee” for their customers. This level of customer service works for Mountain 1st and their customer demographic. It isn’t necessarily better service than what its competition offers; however, it is different and The Bank has made their value proposition a consistent reality for its customers and prospective customers. The first step to making it true is to define what customer service looks like at your institution, and making sure that customer service leads to customer satisfaction. Customer service could mean greeting each customer by first name every time he or she walks into your branch; it could mean committing to a “customer is always right” policy; or it could mean that you make banking more convenient with enhanced online banking and a larger ATM network. Jay Freeman, Executive Vice President, regional banking sales, service and development with Wells Fargo & Co., notes that for their institution “minimal wait time and enthusiastic welcoming are two important leading indicators that are going to start that value chain, which ultimately develops the depth of relationship.” Mr. Freeman is quick to point out that Wells Fargo takes the time and effort to understand what their customers expect. They do 50,000 customer surveys every month and they act on the results they receive. In a survey of consumer satisfaction conducted by the University of Michigan's American Customer Satisfaction Index, Wachovia and Bank of America join Wells Fargo in achieving high marks for customer satisfaction. Within the industry, customer service generally suffers in the wake of mergers. But both Bank of America and Wachovia have risen above that industry failing during their recent mergers. Attention to customer service was a top priority. Like Wells Fargo, Wachovia deploys researchers each quarter to call 80,000 customers within a day or two after they visit a branch to ask about their service. They have tapped into a major motivator of consumer behavior: customers want to be treated like they’re important. But this is not just the domain of large national and regional banks. It is important for every institution to realize that their customers have a wide range of expectations when it comes to the kind of service and level of interaction they desire – and you won’t know what those expectations are if you don’t ask. There is no longer room in the industry for a one-size fits all approach to customer service. The attitudes of different customer segments clearly impact their expectations of customer service, and therefore on the bank’s bottom line. And many of today’s successful institutions have claimed ownership of what customer service means to them – and in turn, have attracted those customers that are looking for a specific kind or style of service. Customer service does not just happen face-to-face. Look at Chase’s recent use of available ATM technology to personalize a customer’s ATM experience. A customer can program a “Quick Choice” option that allows them to set the amount they normally withdraw and customize their receipt printing option. This feature saves the customer time and creates a positive perception of the institution. Furthermore, customer service must not only be reflected in every delivery channel, it must fit into the institution’s big picture and overall strategy. The customer service you provide has a great impact in creating perceptions of your brand in the eyes of your customer. While defining your customer service standards is the first step, those standards must reflect the overall direction of your strategy and should support the messages you are attempting to communicate. It is important to remember that customer service can impact the visual, verbal and experiential elements of your brand and therefore deserves careful and detailed attention. Overall, customer service plays an important role in any institutions’ strategy; however, strategies that focus on making service mean something more to customers than traditional definitions and that go beyond expectations will begin to contribute to a differentiated experience, and ultimately start to support a viable differentiation strategy. Defining what customer service means at your institution, developing standards and ensuring that those standards reflect your brand, messages and customer expectations will provide more focused direction in incorporating service into your strategy. Common Pitfalls As already indicated, the greatest pitfall regarding customer service comes with the lack of a clear definition. Because of the various meanings, institutions can no longer rely on traditional and mixed definitions of the term to shape their value propositions. Instead, executives must be proactive in defining what customer service means to their institution. In addition to the lack of a clear definition, there are some other common pitfalls that bankers should be aware of relative to customer service. First of all, customers expect a baseline level of customer service. As a result, many customers will ignore generic value propositions like outstanding, extraordinary, or superior customer service. Because of this, your marketing efforts must communicate value beyond what is expected; and if you are using the term customer service, you must make it mean something to your customers – and make it true in their experiences with you. Secondly, move beyond the ordinary. Frequently we invite our clients to make a list of the “usual ways” they offer customer service. Then we press them to think of totally different ways they could surprise or delight their customers. Your customers will have a wide range of customer service preferences. Some may prefer to talk to your tellers about the various happenings at your institution while others prefer the speed and convenience of the ATM; whatever the case, bankers must realize that customers want a personalized experience, and tailoring your service to meet those demands is important. In addition, you may want to find out what bothers your customers and then find innovative ways to address those issues. Conclusion Customer service has great implications on an institution’s marketing efforts, positioning strategy and customer experience. As a result, it demands careful attention in order for institutions to stay relevant and compete in today’s dynamic and aggressive marketplace. No longer can traditional definitions of customer service be taken for face-value. Institutions must understand how customer service is shifting in the industry, that the term needs to be clearly defined and reflected in tangible proof, and that there are pitfalls to avoid when creating customer service standards. While financial products and traditional services continue to be easily replicable, clearly defining what customer service means at your institution (and what it doesn’t mean) will begin to inform a strategy that will impact customer perceptions and your brand. Don’t be fooled - attention to customer service may not produce the immediate sales or retention lift that you may desire. Instead it must be seen as a long-term investment in remaining viable and relevant. It’s time for financial executives to learn from other successful institutions, retail companies and service establishments as these organizations have tremendous impact in shaping customer expectations and, as a result, on customer service requirements for the financial services industry.
Freeman, Jay, “Improving—and Systematizing —the Customer Experience” , n.d., http://www.bai.org/bankingstrategies/2007-mar-apr/ImprovingSystematizing/ (1 May 2007)
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