While we have spoken about why and how to measure customer satisfaction (HERE), lately we have received several questions on how best to measure customer service. The two dimensions, while related, are obviously different, and it is important for your bank to determine which is more important and which you want to measure. Banks will always say they are about service, but few measure their quality, and fewer banks manage to benchmarks. In this article, we provide banks with the ten most effective measures and give some recommendations on which to use if your bank truly wants to have memorable service.
About 75% of the banks we speak with when we bring up service tell us in some form that they don’t measure customer service per se except in the financials. The thought process goes that if they are doing their job, excellent customer service will equate to improving financials. This, isn’t exactly true.
Don’t get us wrong; these banks still may be able to provide superior customer service, but it will not be sustainable. Many banks are customer service oriented and hire great people that are customer service focused. The smaller the bank, the more influence each of these people has, and so delivering fantastic service is relatively easy. However, if you are just relying on your people, then as you grow or change, these people will be watered down, and your service standards start to deteriorate.
In addition, it is important to separate the concepts that financial performance and service are related. This is a topic for a different day, but the short answer is that while service and financial performance can be correlated, one does not guarantee the other. In fact, more often than not, we meet banks with excellent service, but below average financial performance. While fanatical service leads to more sales, better retention, and higher lifetime values, at the end of the day, a bank has to sell more profitable products to more profitable customers to make a difference. The other aspect of this discussion is that financial measures look backwards while customer service measures look forward.
As a rule of thumb developed here at CenterState, when our customer service slips, it will show up in our financial performance between four and six months in the future.
The best way to improve service at a bank is to pick a couple of metrics and start tracking performance. There is not a set of perfect measures and we have spoken with banks that have tried many and still go back and forth on several. The reality is, if you are committed to improving your service level for either retail or commercial customers, you will be rotating through a series of metrics as you improve different aspects of the bank. The important point here is to pick a couple that you can focus on, review regularly, try different ways to improve and then evaluate your process. This method alone is almost guaranteed to help improve your service quality.
For a bank, service measures generally break down into three categories: direct measures, process measures and performance measures.
Unlike the other metric categories, direct measures come directly from the customer and are near perfectly correlated to customer service performance. Direct measures are what most banks use to quantify customer service, and this is our recommended place to start if you don’t already have a set of customer service benchmarks.
These are in order of effectiveness and popularity:
- Customer survey results (ratings)
- Mystery shopping scores
- Net Promotor Score
- Number of customer complaints
- Number of customer compliments
Process measures are more indirect feedback and monitor the activities that should theoretically lead to superior customer service.
Wait or transaction times (these are usually a percentage of variation to a benchmark established for each product)
Response times – inquiries, problem resolution, etc.
Performance measures are another indirect source of feedback. They don’t tell you what the customer is experiencing but are often predictors of service quality. Banks often use these measures to bridge the gap between direct measures and revenue. Depending on the attitude of management, these can often be more important than direct measures.
- Products per customer
- Lifetime value
- Retention / defections
- Branch visits
- Mobile/online usage
- Referrals per customer per year
- Deposit balances per customer
- Revenue per customer
- Email open / click rates
Again, if your products-per-customer (PPC) is 5, that is above average and may or may not be an indication of quality customer service. In this case, a high PPC number may be a result of a good sales team, a good product team that successfully packages products or a type of customer that tends to use more services.
Further, it is important to note that if you are trying to benchmark, the amount of granularity has an effect. For instance, service satisfaction for male customers tends to be more correlated to higher deposit balances. This is not to say that one is dependent on the other, only that the two usually go hand in hand. Similarly, woman and fees tend to be more correlated with satisfaction, which is not the case in males. In fact, high fees usually indicate dissatisfaction in some demographics and in some parts of the country.
Just keep in mind that while all these measures depend on many factors, performance measures are usually the most dispersed as to geography, customer segment, demographic and socio/economic background.
So Which Ones Do You Use?
The answer to the title questions depends on how serious you are and how important customer service is to you. In our opinion, the ideal answer is to take a few from each category with direct measures more heavily weighted or represented. However, if your bank does not want to get that complex, we would start with the first item on the list and then work down.
Once you have the measures you want to use, then how do you use them? Our recommendation is to use them to the same extent that you do your financial metrics. Focused banks may have formal financial benchmarks that get measured monthly and that are tied to compensation while other banks may just have loose goals that they try to hit on an annual basis. Which method you choose is largely a matter of style as we have seen success occur both ways. Some management teams would feel that producing a monthly service report is micromanaging, while others would subscribe to the notion that if you don’t measure and hold employees accountable, it won’t matter.
How you manage customer service is largely a matter of style, but know that the larger the institution, the more likely a more formalized style will be important.
Our recommendation is as follows:
- Create a dashboard with just a few focused goals for each period.
- Use these focused customer service goals to drive strategy, tactics, marketing, sales and product decisions.
- Experiment with one idea at a time and see what happens to the satisfaction goals.
- Conduct games and internal promotions and then reward outcomes. Leave how to improve the scores up to each client action team, branch or department and then compare what works and what did not.
In addition to focused rewards, make service quality a part of everyone’s balanced score card or annual objectives.
Don’t Forget The Process
While hiring, training and proactive management are important, keep in mind that it is usually the process that has the largest long run impact on customer service. A superior process protects against being average.
This is a trick we learned from the Ritz Carlton. Guest often ask for directions. The Ritz found that explaining or printing directions were taking too long and did not move the satisfaction benchmark. Thus, they redesigned the process and printed out pocket-sized maps that are kept up front. Now, 80% of the direction inquiries can not only be resolved faster but with greater quality by handing out a colored map with corresponding written directions. In the same vein, the Ritz, like some banks, found that just by offering water for departing guests, satisfaction scores increased. Now, all Ritz properties have bottled water conveniently at the ready.
By way of a bank example, a Northeast bank not only put a problem resolution section on their website but created a backend system where the problem gets tagged with a complexity score and then tracked. This demanded accountability for every employee in the chain of resolution so even if you were not trained correctly or customer service focused, the system provided a process to compensate for these shortcomings by having a knowledge database built in and alerts that would cause other employees to help if the resolution time was dragging on.
Putting Customer Service Scoring Into Action
Don’t get the impression that measuring customer service is going to result in better customer service. For that matter, superior customer service may not even result in superior financial performance. However, if you want to tilt the odds in your favor, measuring customer service is a solid way to start. In fact, you may find that creating a performance based customer service initiative will serve to help train, motivate and drive satisfaction among your employees. Happy and satisfied employees almost always result in superior customer service.
Hopefully, this article has given your bank ideas on how to improve your customer service measurement program and ways to put those ideas into action. Instead of ten ideas like the title promised, we have delivered 17 as under-promising and over-delivering is one of our benchmarks.
Submitted by Chris Nichols on August 10, 2016