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: Mike@BankersHub.com
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
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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.
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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!
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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.
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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:
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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
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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
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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.
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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 (holly_zagresky@jdpa.com)
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