Problem resolution: The quality service hurdle

Most banks today have solid strategies in place for selling their services and providing high levels of customer service prior to each sale. Some institutions have even taken major initiatives to ensure quality service after a sale during typical customer transactions. There is, however, an evident lack of focus on the quality of service provided when a customer problem arises.

ath Power’s 2011 Ideal Banking Study found that problem resolution is not being adequately addressed by the majority of financial institutions. Additionally, data and qualitative insights indicate that banks and credit unions do not fully understand the impact of seemingly minor items that, if left unaddressed, can turn into escalating problems that damage relationship loyalty and reduce relationship growth opportunities.

Approximately one out of every five banking customers has experienced a problem in the last three months with their primary banking institution, according to the study and, for those who attempt to get them rectified, nearly 70% received either an unsatisfactory resolution or none at all (similar in 2010 and 2009 studies). This is an outrageous statistic. The types of problems most regularly reported in the 2011 study were: additional fees charged to account; account errors; trust/fraud issues; service requests not handled in timely manner; and poor customer service.

These lingering issues create discontent with the overall relationship. The ongoing negative attitudes displayed by customers require additional marketing and customer service resources to overcome, if they can be at all.

Interestingly, one of every 10 problems is never even addressed by the customer, which may mean that customers are resigned to facing ongoing issues and/or apathy with their banking relationship. Of the others who do attempt to contact their bank in an effort to have a problem solved, a quarter of them had to contact the bank three or more times in order to get a response – not a solution, just a response. Furthermore, when a customer experiences a problem that is not resolved, they are four times more likely to change banks than if the problem is resolved.

Training and Coaching

So how can banks improve in this area? Focusing frontline activities around “getting it right the first time” and proactive information-sharing remain elusive for most organizations. We have seen marked improvement by clients who shine a spotlight on improving employee knowledge by training correctly and consistently and by simplifying processes in order to minimize problems – making it easier to diagnose and fix a variety of issues.

When a problem does ultimately arise, most have some version of a resolution model to rely on. The disconnect occurs when employees are not adequately trained on how to execute the defined steps in that model. Properly coached employees who can effectively handle customer problems many times can not only prevent a customer from leaving, but can turn an issue into an opportunity to deepen the customer relationship. Here are some basic guidelines to follow:

Respond in a Timely Manner. One of the most common customer complaints in our survey is that banks did not respond in a timely manner to service requests or help with a problem – and some did not respond at all. Problems are not resolved as quickly as the majority of customers want them to be, even when the problem is a mistake made by the bank. Moreover, many customers who didn’t receive a timely response to their issue also complained that the bank did not provide a satisfactory explanation of why the problem occurred or a pledge that it would not happen again. Timeliness of response is paramount in setting customer expectations and relates to the care and concern one needs to project to quickly resolve a problem.

Keep the Customer Informed. Timely communication is a key advocacy driver and a highly correlated variable in customer satisfaction assessment. Customers do not like to be kept in the dark, especially when it comes to their finances. If you know it is going to take time to rectify a particular problem, call and inform the customer throughout the week to keep them updated on the progress in reaching a resolution – even if there is no progress at all. Actively working with the customer to solve the issue to satisfaction salvages the relationship and restores trust. One final thing: did you remember to ask if the customer was actually happy with the resolution you presented? Remember, every contact with a customer is an opportunity to build loyalty.

Be Knowledgeable and Listen to Customers. Nearly half of consumers rate “employee knowledge” as a must have requirement that customers seek in their primary banking relationship – and another 42% list it as making a banking relationship “ideal.” Problem resolution is a direct yield of the employee knowledge dynamic. So, listen to your customers and inform your employees. Post-close research and analysis provides the systemic answers to what is truly causing customer dissatisfaction and attrition – way beyond fee issues. Pinpoint the key drivers of account closure and then do something about them. On average, between 18% and 23% of closures can be saved by having an informed front-line employee ask the customer to stay and then engage in a conversation as to the situation.

Take advantage of the information provided by customers with issues to consistently improve the customer experience at your institution and ultimately increase customer retention. This will allow banks to successfully overcome the problem resolution hurdle.

Mr. Aloi is president and CEO of ath Power Consulting, which is based in Boston and Washington, D.C. and is a full service marketing research firm providing demand-side research to banking and financial institutions. He can be reached at [email protected].