Tiered Service Levels May Lift Customer Satisfaction
BY KATHLEEN KHIRALLAH
Differentiating service is consistent with being customer-centric.
Banks trail the pizza parlor in average customer satisfaction. Offering explicitly different levels of service would help focus.
Providing service to customers has been the cornerstone of daily activity in banking for hundreds of years. So why is service still the stepchild of the industry — and what can be done to improve service?
For the past decade, banks have been obsessed with developing customer-centric strategies. While Customer Relationship Management (CRM) went in and out of style, focusing on customers has been a consistent theme. But most bankers overlooked a critical issue: how is it possible to be customer-centric while still offering all customers (and noncustomers) the same level of service? Is a commitment to first-in, first-out attention consistent with being customer-centric?
Granted, there are banks that have been able to distinguish themselves in the industry by offering a higher overall standard of service quality. But much of this effort goes to waste as many of their customers receive enhanced service without requesting it or acknowledging its value.
A better approach is to provide enhanced service levels to those who will pay for it — in other words, create categories of service and let customers choose the level that is right for them. This would entail making explicit promises regarding the quality of service (timeliness, level of personalization, etc.) that customers would or would not receive through each of the bank’s channels.
Not every channel lends itself to a service promise, but most do. For instance, differentiated service is ex-tremely difficult to execute against in a branch, but is easy in the online channel. The challenge is to unambiguously define the channels in-volved in a service offering and the associated standards.
A few banks provide a tepid form of differentiated service. Digging into the call routing capabilities of bank call centers, for example, reveals that banks habitually route their “best” customers to the head of a wait queue or to their most experienced representatives. It’s a paternalistic approach — and one that customers typically have no knowledge of. Whether a bank’s efforts are noticed, appreciated or are valued in any way, is unknown.
If a bank goes to the trouble of differentiating service, why not explain what it entails, make it avail-able to all and charge appropriately as part of the institution’s value proposition?
There is room for improvement in bank customer service. According to the American Customer Satisfaction Index produced by the University of Michigan’s Ross School of Business, the average customer satisfaction score for the banking industry is 75, not much better than the U.S. Postal Service’s 73, and trailing other providers such as Papa John’s Pizza (78), the Social Security Administration of the U.S. Government (81) and Federal Express (84).
Deliberately choosing to compete on service and creating tiered service levels should increase overall satisfaction and strengthen the bank’s image, making it a winning strategy for most institutions.
Creating multiple service levels and inviting customers to choose the plan that is right for them is no silver bullet imbued with magical properties. Significant staff training is required, and service failures are bound to occur. But for the banks that purport to be customer-centric, it makes sense to run a pilot and experiment with taking their game to a higher level.
Questions or comments about this article? Post them at the Banking Strategies blog.
Ms. Khirallah is research director, retail banking, with Needham, Mass.-based TowerGroup Inc., an advisory research and consulting firm focused on the global financial services industry.