Sharing a common purpose
For many banks, the economy's sluggishness has forced a reevaluation of what sets one financial institution apart from another. A few years ago it was interest rates on CDs or money market checking accounts. Good service was still important, but for many consumers, an extra percentage point of interest was worth more than a teller's greeting or short lines on a Saturday morning.
Lately, with interest rates dropping, CD-happy consumers have fled banks, cash in hand, looking for investment options (such as mutual funds) with potentially more attractive yields. As a result, customer service has emerged as an important point of difference for banks. With most banks offering checking accounts and other products with similar features, what's the difference between Bank A and Bank B? For many consumers, the answer to that question is service.
As its name implies, People's Bank knows the importance of service to its customers. In its 150 year history, the $5.8 billion Connecticut-based financial services institution has felt a strong commitment to the people who bank at its 71 branches. This has helped the bank compete in a down-turned economy, says Judy Rogers, customer service manager, People's Bank. "it's a very competitive environment. With what's happening in the banking industry, here in New England and in general, you need to take advantage of every opportunity in the marketplace."
Annual survey
The bank relies on a variety of research tools to make sure its service is up to customer standards, including an annual survey of checking account holders and an ongoing mystery shopping program.
Each year, thousands of surveys are mailed at random to checking customers. The survey first identifies which branch the customer visits most often and then asks the respondent to rate the level of service he or she receives at that branch, specifically the performance of the tellers, customer banking representatives, and branch managers. Space is also provided for a more detailed explanation of the customer's overall satisfaction level. For each employee type, the customer indicates if the teller met service expectations by providing prompt and accurate service or giving the customer his or her undivided attention, for example.
The survey also looks at customer impressions of telephone contact with the bank and asks why one branch is used over another.
Mary Ann Vlahac, manager of marketing research, People's Bank, says that the bank decided on a mail survey after pilot testing different methods at branch locations, including a survey that customers completed while at the bank. "We found that the most successful method was to mail them a survey which they could return to us at their leisure."
Initially the survey was included with account statements but low response rates were a problem. So the most recent versions have been sent out separately, resulting in much higher response rates.
Vlahac has done extensive follow-up work to check for non respondent bias. "I looked at the demography of who responded, in terms of how long they've been a customer of the bank, their age, their income, and along with what we already know about our customers from our database, they were virtually identical. We did some phone follow-up and in-branch interviews on the same questions just to see if the attitudes were the same and that's why I feel confident that the attitudes that came out in the survey returns are representative."
Usable information
Once the results from the annual survey are tabulated, more than 80 reports are generated on all aspects of the data. (All of the bank's surveys are designed, developed, and analyzed in-house.) Vlahac says that in her reports to branch managers, she strives to make the information usable. "I don't bog the reports down with a lot of complicated terms. I feel that the branch manager should get the report, be able to read through it and act on it, without having to go through a glossary to figure out what I'm talking about."
The branch managers receive the reports and then review them with the tellers and customer banking representatives. If there are problems a corrective action team is formed to deal with them. Vlahac says the bank is careful to identify where the problems are coming from and make sure that actions are taken in the right service area. "For example, a customer might be having problems with his or her statement, and they perceive it as a branch-related problem when it's really coming out of main office operations."
Service quality index
A long range goal is to develop a service quality index, using information from the customer satisfaction surveys and internal data. To that end, Vlahac has done regression analysis to look at the relationship of a number of elements to customer satisfaction, such as: Does the number of competitors' branches in an area have a relationship with customer satisfaction? Level of staffing? Transaction volume'? Length of time as a bank customer?
"I've been using the regression more for management within headquarters to get them thinking about the bank, service, competition, market share and everything else as a total equation, rather than seeing service as only an element of the formula."
Even things such as branch appearance seem to have an effect, Vlahac says. "There is the belief that the better looking the branch, the more satisfied customers are with branch service. I've heard that in a lot of focus groups as well. As a bank invests in the maintenance and upkeep of a branch, customers take notice. And, as a carry over, employees would have a greater pride in their work and offer better service if they felt better about their working conditions. If conditions are deficient, you might get a poor work ethic and in addition, customers might start thinking that the branch is not being run well and wonder, if the employees aren't paying attention to the details of the maintenance of the bank, are they doing the same with my account?"
The bank monitors customer satisfaction with other product and service areas through a number of mail surveys, which are sent, for example, to new customers or people who are refinancing their mortgage. These surveys are helpful because they let the bank monitor the performance of employees in areas other than walk-up service. For example, people who take out a home equity loan or a second mortgage may have a lot of phone contact with People's Bank employees, Vlahac says. "it's nice to have a separate survey instrument there because customers may rely on telephone calling into People's Bank to find out the status of their application, which is a lot different than if they're dealing with a branch on transaction related issues."
Focus groups
To supplement the data from the annual survey and the other research, Vlahac conducts focus groups at the branch locations, usually once per quarter. "The branch manager pulls ten or twelve customers together to talk about whatever topic they want explored. I design a discussion guide and after we talk about bank policy issues the branch manager joins me to talk with them about customer service issues or anything they have on their minds, from parking to the ATM lobby, and they offer constructive suggestions. The customer gets into naming tellers or customer banking reps and talking about what they liked and didn't like about their service. It's good for the branch managers because it's a chance for them to sit down with a group of customers in a neutral environment."
Mystery shoppers
Complementing the bank's customer satisfaction research is its ongoing mystery shopper program. People's Bank's Judy Rogers: "We think it's an exciting program that adds to what the customer tells us through the direct surveys that Mary Ann does. We share information internally very freely. It's one thing to collect a lot of information and have it sit in a market research library, it's something else to make use of it."
The bank sends shoppers to People's Bank branches or has them call on the phone to inquire about bank services to measure branch employee performance in areas such as courteousness and product knowledge.
During pilot testing of the program, People's Bank employees from other branches served as the shoppers, but they were too demanding on their fellow workers, Rogers says. "In some ways, we found they were very hard on us. They knew so much about our business and our products that they picked up things the customer wouldn't pick up.
"This year we have switched to using professional shoppers that are the closest thing to real shoppers because there are no scenarios or contrived situations. We say to them, go to the bank looking for a product or service that you would use, everything from financing a car loan to refinancing a mortgage."
Big Brother
Rogers says the bank is careful to avoid giving employees the "Big Brother is watching" feeling that can result from a mystery shopping program. "It's not meant to be a springboard for punitive action, where we would say to them, you didn't do well on your shop. A copy of the shop is delivered to the branch so they can look at it and see where they did well and where they need to coach their staff on improving. It may be in a product knowledge area or it may be a very simple thing like smiling at the customer."
People's Bank has a set of service standards that employees must meet and through the mystery shop they are scored on their success in achieving those levels. "It's used as part of an incentive program. We recognize and reward based on the branch as a team, the success of the branch in achieving goals in sales, service, and profitability. They receive a quarterly incentive compensation," Rogers says.
That compensation, the bank hopes, will mitigate the unpredictable human element that is always present in a service situation. Employee motivation can wane in the face of a bad day, and if a customer interacts with an employee on that day, the experience can color the customer's impression about the company. "You try to cultivate the kind of situation where the customer has a really good experience and can go away feeling good about themselves and about your organization. That's not always easy to achieve. In the real world, we all have difficult days and keeping people up and motivated and keeping the level of service up is quite a trick. We think that the mystery shopper program helps us with that," Rogers says.