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Integrated Service Quality for Growth


Well executed service quality programs can have a significant positive impact on revenue and bank earnings. So why do so many banks believe they provide excellent customer service but still experience lackluster customer retention numbers, ho-hum net promoter scores and limited business growth?

The answer just might be that many customer service programs are not fully integrated within the bank’s entire culture. It is often hard for financially-oriented senior managers to quantify the bottom line impact of specific service initiatives and tie them back to revenue performance. As a result, service is emphasized and is important, but remains just one item on a list of multiple priorities.

By contrast, at the most successful institutions, service quality permeates throughout the organization. It is not just a branch or call center program but rather a broad corporate strategy that includes a 360-degree integrated process that ensures overall alignment with organizational objectives.

And it pays off, as can be seen by analyzing the performance of banks with a superior focus on customer service. They outperform peers in customer retention, depth of relationship and, most importantly, growth and profitability that result from deeper and more profitable relationships.

Sparking Improvement

Service industries have a unique challenge because the tangible value of the products they provide cannot be separated from the interactions that fulfill product delivery and provide ongoing service support. And this is especially apparent at those “moments of truth” that occur when there is a transaction with high emotional content, often as a result of a service failure or problem. It is precisely these moments that require flexibility and empowerment to create unique and memorable experiences.

However, organizations need process and procedure to ensure consistency. And, for many, this has resulted in a tendency to over-script the customer experience in order to standardize process (and perhaps reduce cost). Rules and systems are typically built to handle the least complex and easiest to quantify items but tend to fail when confronted with more complex and more unique issues.

But how can financial institutions create the “spark,” or the flexibility to identify and respond to genuine customer needs and still deliver a consistent and controllable experience? A first step is creating metrics based on the way customers define, and value, specific service outcomes. Not every interaction carries the same weight in customers’ minds. Some – a lost debit card, for example – have a higher level of importance and emotional impact than others. Success comes from creating a differentiated experience on the interactions that count most to customers, not the ones that might be easiest to resolve.

Second, set a high standard. Customers with the highest satisfaction scores are 200% to 300% more likely to buy additional products and have a more profitable relationship. The only thing that counts is how your customers assess your performance.

At a leading regional bank with a superior focus on customer service, we found a multi-prong service measurement program conducted every month at every retail branch. Just as importantly, every branch and front-line commercial lender rated the service quality of the bank’s operations and support divisions on a monthly basis. This even included audit, Human Resources, compliance, operations and the Information Technology (IT) department. This bank has a saying: “We have those who serve customers, and then we have those who serve those who serve customers.”

Branches at this bank were rated on a multi-dimension scorecard:

  • Customer surveys of new accounts, new loans, and branch service or teller transactions;
  • In-person shopping surveys to determine consistency of service delivery;
  • Customer retention (high value and mass market);
  • Branch cross-sell ratio and sales per-full time employee (FTE).  

Why are cross-sell ratios and sales per-FTE included in the service scorecard? If you don’t conduct a thorough needs-based examination at account opening, or identify additional customer needs during routine transactions, then you are not providing the best service to the customer!

Put another way, you can’t separate the sales and service scorecards. Sales is just good customer service and good service improves sales and retention.

Rating systems for the back office and support divisions are based on service to their “customers,” i.e., branch personnel or commercial lenders. Credit review can be rated on customer responsiveness, while IT might be rated on how quickly they fix a computer problem. Ratings can include whether they responded in a timely manner and provided accurate information.

Transparency and Consistency

But measurement alone is not enough; you have to tell everyone how they are doing in a fully transparent way. Top performing banks measure every branch and department monthly. And, every month, these ratings are published bank-wide showing branches (and support departments) in descending order, from the best to the worst. And it’s not just about reporting results. Service scores impact monthly branch incentive awards and the department manager’s annual incentive. Be on the bottom third of the branch service quality scores and you might lose your team incentive, while those in the top third might receive 150% of their team incentive.

Finally, there is consistent recognition of performance. Every month, top performers get a call from the president or the head of Retail or other senior managers. This not only rewards top performers but also helps establish models of success. People who work in sales or service put themselves on the line every day with their customers. And while cash is an important incentive, recognition and positive feedback are often overlooked motivators.

So, take a look at your customer service program. Is it fueling peer-leading growth? Is it driving measurable profitability improvement? If not, it just might be time to re-assess how it is integrated into your overall operating rhythms.

Mr. Kerstein is president and Mr. Carey a director at Austin, Texas-based Peak Performance Consulting Group, which specializes in retail, community, and small business banking. They can be reached at [email protected] or [email protected].