BankersHub Newsletter July 2014 Beird
Transcription
BankersHub Newsletter July 2014 Beird
BankersHub.com July 2014 Newsletter Page - 1 Newsletter Article July, 2014 5 WAYS BRANCHES CAN IMPROVE CUSTOMER SATISFACTION… WITHOUT SPENDING A DIME By Michael Beird ABOUT THE AUTHOR Michael Beird brings over 35 years of experience in Retail Financial Services to his roles as co-Founder of BankersHub and Bstuff LLC and instructor for the UW Graduate School of Banking. He was the former Director of the Banking and Credit Practices of J.D. Power and Associates and Managing Director for events at BAI. He has advised branches on performance and workforce optimization across North America, Australia, Germany and Japan, and spent 15 years in various management roles at Bank of America and Shawmut Bank Boston. Email: [email protected] Introduction In recent years, a lot of attention has been paid to digital technology in financial services and rightly so. Mobile applications, remote deposit capture, advances in online banking, etc. have captivated banks and credit unions alike and usage among consumers of all ages continues to grow rapidly. All the indicators seem to point to the demise of the brickand-mortar branch, with self-service devices and electronic access replacing personal service and in-person interaction. “The reports of my death have been greatly exaggerated.” Mark Twain While customers have clearly migrated to digital channels for most routine transactions, especially among Millenials and Gen Y customers, there is compelling research to show that the branches still play a role in the customer relationship. A 2012 study by Novantas LLC on Multi-Channel Sales found that while 69% of customers preferred researching new accounts and banks through online channels, over half of those customers preferred to actually open the account at the branch. The same Novantas study also found that, while declining year-over-year, over 70% of customers surveyed still prefer the branch channel (see graphics on the right). J.D. Power and Associates’ 2014 Retail Banking Satisfaction Study found that almost 3-out-of-4 customers still make deposits in the branch while 2out-of-3 get financial advice there. ABOUT BankersHub BankersHub was founded in 2012 by Michael Beird and Erin Handel, 2 Financial Services professionals dedicated to educating and informing banks, credit unions, solution providers and consultants in the U.S. and worldwide. BankersHub delivers best practices, research insights, opinions, economic trends and consumer views through online web education, virtual events and conferences, live streaming activities, custom training and content development. It also offers formal online training in eBanking topics like ACH, Wire Transfer, and Payments Fraud. BankersHub.com July 2014 Newsletter Page - 2 The Branch Experience What this research should tell every bank and credit union alike is that there is still a very real reason to focus on the customer experience in brick-andmortar. The good news is that customer satisfaction has improved dramatically over recent years, driven in large part by improvements in interaction at the nation’s biggest banks. This year’s study showed the greatest point improvement in Branch Satisfaction of 17-points, for banks like Bank of America and Wells Fargo. Figure 1 Now the bad news… Continued reductions in branch staffing, along with ongoing scrutiny around branch operating expenses means that banks and credit unions have to become even more creative in how they can deliver superior experience to customers and exceed their expectations without incurring incremental expenses, relying on new technology or increasing capital expenditures. Ok, more good news… Many branches continue to make common mistakes in the branch experience that either negatively impact customer satisfaction (or at least do not enhance satisfaction), but these challenges can be rectified without impacting operating expenses. However, they do require dedication, coaching and commitment by managers and frontline staff to making customer interaction the best it can be for the customer. Mistake 1: Failure to Acknowledge Customers At one time or another everyone has experienced the ubiquitous Wal-Mart meter-greeter. It should be noted up front that that is not what the branch role model should be for acknowledging customers coming into the office. Official ‘meeter-greeters’ have been attempted in various ways at banks, but the outcome is often less than optimal. First, they quickly get tied up with a single customer who wants the first person they see to help them balance their checkbook, discuss their mortgage application or complain BankersHub.com July 2014 Newsletter Page - 3 about the lack of parking out front. Consequently, since someone else is responsible for greeting customers, everyone else assumes it’s ‘not my job’ and the next five customers are virtually ignored when they enter. So why is this relatively mundane and perfunctory task so important? Because year-overyear, no other single activity has a greater impact on branch satisfaction! (according to the J.D. Power studies) than when the customer is acknowledged: Improves overall branch satisfaction: Customers who report having been acknowledged or greeted upon arrival report much higher satisfaction than those who did not get greeted, with the average difference being a whopping 119 index points (on 1,000-point scale). Unfortunately the incidence rate for this key performance indicator shows that 1-out-of-4 customers are not greeted or acknowledged. Mitigates customer service-related problems: 15% of customers who reported customer service problems indicated they had not been greeted on arrival, but only 2% of those without service problems said they weren’t welcomed. This is not to imply that greeting customers eliminates problems, but rather than setting a positive tone from the start can often minimize the perception of a service problem in the customer’s mind. Reduces irritation associated with lobby wait time: Most institutions have seen a reduction in transactions and have reduced staffing as a result. This does not mean, however, that peak wait times have disappeared. A customer who is greeted and called by name upon arrival has a higher satisfaction score, even if he/she waits 5-6 minutes (8.62 on a 10point scale), than one who is not acknowledged but does not wait at all (8.39). Even customers greeted without their names have a greater tolerance for waiting than their ungreeted counterparts. Reduces potential crime in the branch: While there are few statistics to support this attribute, Troy Evans, former convicted bank robber and now frequent speaker on BankersHub webinars on robbery prevention, notes that the single action branches can take to reduce the chance of a robbery is to greet customers and establish eye contact. Knowing someone has seen them and could potentially identify them is a potential deterrent against not only robbers, but other perpetrators like forgers or money launderers. BankersHub.com July 2014 Newsletter Page - 4 Mistake 2: Failing to Provide Common Courtesy In addition to greeting customers, the devil is still in the details when it comes to basic courtesy. Whether it is with the Tellers or on the Platform, the other key performance indicators associated with greatest impact on branch satisfaction are: Calling the customer by name Offering additional assistance Thanking the customer for their business Of these KPIs, calling customers by name has the lowest incidence rate for banks of all sizes, but has the potential of increasing satisfaction by as much as 90 index points if Tellers or Platform staff could just remember to do it at least once. Mistake 3: Forgetting to Completely Assess New Customer Needs For the hundreds of new account initiation sessions I have observed while consulting in the branches, the vast majority follow this sequence: 1. Welcome the customer 2. Ask what kind of account they are looking to open 3. Immediately pull out collateral and explain the accounts available Sidebar: I always love watching when a New Accounts person explains the “Over 55” account benefits to customers in their thirties! BankersHub.com July 2014 Newsletter Page - 5 4. ID the customer, run ChexSystems, and open the account 5. Suggest a random cross-sale (usually a savings account, or whatever the “product du jour” is) 6. Say good-bye Of course, there are minor exceptions to this process, but if there is a ‘needs assessment’, it often is more of a profiling form than a discussion of real needs. The importance of a brief but personal needs assessment for establishing that critical first ‘moment of truth’ (See Jan Carlzon’s Moments of Truth for a classic business book on this) is reflected in the differences between satisfaction scores with customers who expressed a “complete” needs assessment versus “partial” or no needs assessment (Figure 2). For over half of the customers who report complete needs assessment, New Account Satisfaction is a full 1.67 points (10-point scale) higher than for those who say there were some elements lacking in the discussion. Figure 2 So what exactly is meant by ‘Complete Needs Assessment’? In the customer’s mind, assessing their current and future needs can be summarized in two groups: Probing questions asked about the customer’s current likes/dislikes, transactional behaviors, financial condition, goals and objectives, etc. Actions and recommendations made by the financial services representative. Figure 3 highlights a sample of several key questions that customers identified as key to uncovering specific and relevant financial needs. When posed, a significantly higher percentage of customers felt that their needs had been identified than when specific questions were not asked. In response to these questions, the rep then has the opportunity to respond to the customer’s needs by posing specific products and services and explaining their associated strengths and shortcomings. BankersHub.com July 2014 Newsletter Page - 6 Figure 3 A critical point not to be overlooked is also addressing the issue of fees and service charges Customers need and expect a clear, concise and documented explanation of fees and service charges associated with their account(s). No surprises…Unfortunately many reps feel that just handing the printed disclosures and collateral to customers suffices. Untrue! Think of it like talking to your kids about the facts of life. Would it suffice to just hand them a book and expect they will read it and understand everything they need to know? Parents painfully understand that there are consequences when their children do not have all the facts. That level of education and understanding is only achieved through honest, open and sometimes uncomfortable dialogue. Our customers are no different and deserve (and expect) no less. Mistake 4: Poorly Executed or Absent New Account Follow-up Once the account is opened and the customer is gone, it is very easy to forget about the most important next step…the follow-up contact. Many banks and credit unions have defined steps in handling the sale after the customer leaves the branch (or hangs up the phone…logs off the site, etc.). These usually take the form of 2x2x2, 3x2x3, etc. where the first number represents contact in days, the second is contact in weeks and the third in months. Any follow-up is better than none, but the J.D. Power Retail Banking Satisfaction Study has found that the optimal satisfaction levels would be achieved with the following 2x2x2 program: BankersHub.com July 2014 Newsletter Page - 7 2 days – Initial contact by Original Rep who opened the account o Purpose of this contact – To thank the customer, reinforce the initial relationship established, answer any questions left open when they left, and to see if they had any additional questions now that they have had the chance to review materials and talk with other. That’s it…and by all means do not try to sell other accounts. The time for cross-selling was when they were in the branch. 2 weeks – Follow up can be by branch, but more often by Contact Center o Purpose of this contact – To ensure the customer received all materials promised (checks, debit/ATM card, etc.), that everything was prepared correctly and to address additional questions. Also to make sure they know how to access digital channels like online, mobile apps, etc. and whether they have tried. 2 months – Initial contact by Original Rep who opened the account or Branch Manager o Purpose of this contact – To review the customer’s relationship, activity, balances and other potential needs. THIS is the sales follow up call where the institution now has a sense of how the customer or member transacts business. At this point, it may be appropriate to set up a meeting with an Investment Counselor, discuss other services (CDs, overdraft coverage, etc.). I often hear branches complain they do not have the time or capacity for follow up calls. To that I give the following illustration. If you were to open up 10 new accounts per week per FTE (which would be best in class by almost any measure) and the follow up call took 10 BankersHub.com July 2014 Newsletter Page - 8 minutes, that would be roughly 2 hours a week spent on the phone or 5% of the allocated time for a 40-hour week. A small task for something that has such significant impact on the perceptions and satisfaction of new customers. Mistake 5: Poor Internal/External Appearance of the Facility This 5th mistake is the only one that may or may not have expense implications, but that would depend upon the severity of the deficiencies. When measuring satisfaction of the Facility in Retail Bank Satisfaction, no other factor has greater weight than the appearance of the branches. Even branch hours, a topic of endless discussion, analysis and debate in banks pales in comparison to the importance of the branch’s outward representation in the customer’s mind. In short, if the branch does not look inviting, secure and professional, it really does not matter how late you are open on weekdays, or whether you offer Sunday hours…the customer will not go there. The branch does not have to be a Frank Lloyd Wright creation to score well, but it does need to have details addressed such as: External o Security (bright lighting, visible cameras) o Clean (no trash, graffiti, peeling paint) o Landscaping (vegetation mowed, weeded, trimmed) o Signage (visible, maintained, lit) o Parking Lot (well maintained and accessible) o Décor (bright, clean, up-to-date) o Signage and materials (accessible, visible, well-stocked) o Clean (no trash, clutter, random papers) Internal As Figure 4 demonstrates, research shows that the branch appearance affects more than just satisfaction. It also impacts (for better or worse): Advocacy Inclination to switch Usage Share-of-Wallet BankersHub.com July 2014 Newsletter Page - 9 Figure 4 Pulling it all Together with Final Thoughts on Thin Branch Density Obviously there are many elements that contribute to overall branch satisfaction for any bank or credit union and this paper did not intend to cover all of these potential drivers. Other elements such as adequate staffing levels that target peak periods as well as branch hours that are intended to be both competitive and designed to meet the needs of the customer base are also extremely important. However, these drivers of satisfaction play an even greater role in markets where an institution has relatively thin branch density compared to the competition. While this often applies to community banks and credit unions, there are a number of markets in which even major players like Bank of America, Chase and US Bank have only one or two branches and might be outnumbered by the competition. This is an important consideration because Branch Convenience (defined by the number of branches and/or ATMs located in close proximity to the customer’s home or workplace) is a key driver in customer acquisition, even in this age of digital convenience. For smaller networks, that means giving customers compelling reasons to go out of their way and possibly drive past 2 or even 3 competitors’ branches in order to come to your single office. Since satisfaction for institutions with 3 or more branch available averages 64 points higher than those with fewer than 3 (everything else being equal), those smaller networks must get things right. Figure 5 demonstrates what that means and how they can make up the gap. By addressing not only the five mistakes outlined in this paper, but also aligning branch hours to customer needs and keeping perception of wait time at or below 4 minutes, banks can mitigate the lower satisfaction associated with fewer offices. BankersHub.com July 2014 Newsletter Page - 10 Figure 5 To learn more about J.D. Power and Associates Retail Banking Satisfaction Study as well as other financial services research including Small Business, Credit Card, Mortgage and Investment, email Holly Zagresky ([email protected]) © 2014 BankersHub and Bstuff LLC all rights reserved Visit us at www.BankersHub.net