With external growth prospects clouded by regulatory fee restrictions and a sluggish economy, bankers are focused on increasing revenue from existing customers. The appeal of this strategy is virtually a no-brainer: it’s far less costly than deriving revenue from new customers and between 25% and 35% of current customers have only one or two accounts with their bank.
Despite the potential, many bankers are not clear how to go about building customer relationships and increasing retention in a way that’s fast, easy-to-implement and cost effective. We contend the answer is simple: listen to your customers and respond to what they’re saying. That’s because when asked, customers will tell you what they need and want. When you respond, you earn their loyalty and more of their business.
There are numerous ways to access and respond to customer feedback. The following is a list of the principal alternatives with their pros and cons. Which one is right for your bank will depend on the size of your institution and the type of feedback you’re looking for.
Comment cards, report cards and mystery shops. These traditional approaches are easily customizable to include specific questions, simple to set up and relatively inexpensive. Nevertheless, they take time to compile and report results. Considerable effort is required to get customers to respond quickly. Since these methods are usually conducted in an ad hoc manner, reliable trend information is unavailable. And, since there are no standard questions, benchmarking your institution’s results against others is impossible.
Branch intercept and phone surveys (by live operators). These are widely used by banks and enable customized questions to be included. However, results often take weeks to report. Since these types of surveys are typically channel-specific – branch-intercepts, for example, focus on the branch experience while phone surveys assess the caliber of phone service – comparing performance betweenchannels is difficult and does not include feedback from customers who frequent your website.
When well-designed, branch and phone surveys can secure useful customer ratings and comments. But like other traditional approaches, they’re not set up to help staff respond. Also, they tend to be relatively expensive. This means they’re usually administered only occasionally so getting good trend information is unlikely.
Do-it-yourself electronic surveys. These have recently become popular. They’re available online with technology that delivers results almost immediately. Some of these survey tools include the capability to add custom questions. And they’re relatively inexpensive so that, with some effort, surveys can be conducted regularly and reliable trend data obtained.
Despite these advantages, most do-it-yourself surveys employ generic templates, which make it challenging to construct a questionnaire that deals with bank-related issues, unless you’re willing to utilize outside research expertise, which can prove costly. Also, they’re usually designed to get information from one, rather than all channels. And because they’re individually designed, you can’t benchmark your results against other institutions.
Enterprise Feedback Management (EFM) systems. Also becoming more popular recently, EFMs encourage customers to submit surveys on-line or on the phone. This customer feedback is immediately available to management and staff through a suite of on-line reports that includes reliable trend information. In addition, reports can identify contact information for customers who wish to be called back, as well as those who are highly dissatisfied – both important retention tools. There are two types of EFM systems:
Custom EFM systems are, as the name suggests, custom-designed for one institution. This means that a bank can incorporate special questions they find especially pertinent. On the other hand, results cannot be benchmarked against other banks. The major disadvantage, however, is cost: they are expensive to set up.
Standardized EFM systems are typically set up for a single industry, such as retail banks, rather than a single entity. This has the key advantage of substantially reducing the cost for each participating institution, while utilizing the sophisticated technology inherent in these systems. And although most questions are generic, there may be opportunity to include a few custom questions. In addition, because standardized EFM systems are set up in advance, they can be implemented quickly, easily and quite inexpensively.
For most retail banks, the key consideration in selecting a customer feedback approach is size. With just one or two branches, you may want to put in place a simple system of offering customers comment cards. Why? First, because it will help you appreciate the value of customer feedback and because it’s inexpensive – despite being a manual process. You can always switch to a more sophisticated approach later.
At the other extreme, if you’re a larger regional bank – with, say, over 35 branches – a Custom EFM system may prove most advantageous. You can cost-justify the set-up expense and ensure the system delivers exactly the information you specify (except comparisons with other institutions). And, if you’re a much larger institution, chances are you already have a Custom EFM system in place.
But if you’re a community bank with more than one or two and up to a few dozen branches, your best bet may be a Standardized EFM system developed especially for retail banking institutions. You’ll get all the advantages that EFM technology offers – immediate customer feedback, ability to respond quickly and efficiently and reliable trend data – as well as the added benefits of a Standardized EFM system: industry benchmarks, quick-and-easy implementation and very affordable costs.
Yet, no matter how many branches your bank has, we strongly recommend one final guideline: do something to listen and respond to customer feedback. This is much more than an interesting and informative activity. It’s an essential way to build customer satisfaction, which in turn builds customer retention levels. And that, in turn, builds revenue so crucial to meeting today’s challenges.
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