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Best practices make perfect: Customer perspectives on sales and financial services


If you follow the headlines about aggressive sales practices in the financial services industry, you might think our nation’s retail banks and investment advisory offices have become sales-obsessed pressure cookers focused solely on moving new product. Fallout from the Wells Fargo scandal and rhetoric surrounding the Department of Labor’s Fiduciary Rule have done much to support that negative image. 

But it’s not really true.

According to J.D. Power data, retail banks, primary investment firms and primary mortgage originators have achieved record levels of customer satisfaction and customer loyalty. They show steady year-over-year improvement in both metrics since the end of the financial crisis in 2009. But that doesn’t mean financial services firms have nothing to worry about.

The recent spate of negative news about the industry has raised questions about customer faith in financial institutions and shines a spotlight on weaknesses that, if left unchecked, could erode customer trust. We dug into this issue in a new special report that took the pulse of retail banking customers in the immediate aftermath of the Wells Fargo crisis and explored the phenomenon of cross-selling in the financial services industry to isolate and understand those weak points.

We found that when financial services customers feel excessive sales pressure, trust disappears quickly, taking customer loyalty and advocacy along with it.  This pressure can manifest itself in seemingly benign outcomes, such as unwanted products or services being offered by a customer service representative—or in far more damaging experiences, such as an unknown or unwanted account being opened without the customer’s knowledge.  All of these occur in the current marketplace.

In fact, when we asked customers whether they had ever had an account opened or funds transferred without their knowledge, 14 percent said yes.

That result is surprising when you consider that only 4 percent of customers believe their bank does not act ethically. Upon further questioning, it became clear that few of these were cases of fraud by bank employees. Many customers reported the following: having accounts that they did not realize were part of bundled deals including additional products; identity theft by a third party; cards or accounts opened to replace existing ones for various legitimate reasons; bank errors; or simple misunderstandings.

This tells us that banks are confronting a much more pervasive problem than fraud. A number of customers come away from their interactions feeling confused, unclear of the details of their accounts and—in many cases—pressured into products or services they didn’t want or need.

As we peeled back the layers of this customer experience further, we found that 10 percent said they felt pressured to open a new bank account and 12 percent were surprised by fees or charges that they didn’t remember being told about when they opened the account.  The impact to customer satisfaction is severe when customers do not understand their accounts.

In fact, our data shows that among retail bank customers who say they were surprised by fees, 46 percent said they “definitely will” switch banks—versus just 6 percent among those who were not surprised.

This data reveals a real challenge for retail banks. While they cannot afford to simply abandon their sales efforts, they do need to refine the process so customers don’t feel like they are being pressured.  It’s a delicate balance.

Ultimately, our data shows that for banks, the surest path to striking that balance is to focus on providing tailored advice rather than overt sales pitches. Specifically, we’ve found that customers who believe their bank operates in their best interests and works with them to find the right products are more than twice as loyal than those less assured of their bank’s intentions.

Getting this right requires a laser focus on the part of banks to position themselves as problem solvers for their customers. This changes everything: from routine customer service to onboarding of new customers to maintenance of ongoing relationships. Banks that focus on better helping their customers will create the kind of good will that also increases sales.  And to that end, as they make headway, they also experience far fewer headaches. 

Jim Miller is the senior director of banking at J.D. Power, where he is responsible for syndicated and proprietary customer experience studies in the banking industry.