Community Banking Challenge: Anticipating Problems

Although every bank prides itself on customer service, no bank is perfect. Our Benchmarks gather millions of customer reviews across thousands of banks, and on average, 12% percent of banking customers tell us they have encountered a serious issue or mistake with their bank within the past six months. Some banks are higher, and some are lower. None are zero.

The good news is that reacting to and fixing problems is where community banks often excel. The lack of hierarchy allow staff at community banks to address concerns and remedy problems quickly. And our surveys show that, on average, 79% of those customers said that when they told the bank about the issue, they are happy with how the bank resolved the problem. Some banks are better, with several in the Northeast US approaching 95%, while several others are well below 50%. (Please contact CES if you want to know how your customers rated you).

While that is a pretty good resolution rate, resolution is only possible if the customer tells you about the problem.  Unfortunately, not all of them do.

Banks are not always aware of mistakes.

It may surprise you that more than 20% of customers who encounter a serious problem with their bank DO NOT TELL THE BANK.  Again, that is the average across thousands of banks, and can vary widely by area and by bank. For instance, in Boston, the number is 18%. In Western Massachusetts, it is 49%.

This can be extremely frustrating for a bank: how do you solve a problem you don’t know exists? Every decent bank really wants to know if their customers have had a problem, because they want to resolve it.  Needless to say, customers who have a problem but don’t tell the bank are much more likely to quietly leave the bank.

Why are customers not telling their bank when there is an issue?

Some deep dive meta-analysis that we conducted across more than 1,000 banks show three main reasons:

1. The customer does not believe the bank can or will resolve the issue.

This is typical in a bank that provides lower-than-average customer service or has had multiple unresolved issues. We have seen this quite often when a bank had a change in core services or in a managed service provider and the customers experience multiple recurring problems over time. Eventually, they just have no faith the bank can resolve issues well or permanently, so they think telling the bank is a waste of time.

One way to fix this problem: focus on the speed of problem resolution.  Every bank strives for first-call resolution (fixing the problem the first time a customer contacts the bank about the problem). While this is great, and many consultants will tell you how crucial it is, your customers tell us something slightly different. Our millions of reviews revealed that the clear majority of customers are forgiving, to a point. Our analysis shows that while first-call resolution is great, even if you can’t resolve the issue until the second contact, there is no long-term damage to the relationship. The customer feedback clearly shows that only when it takes three or more contacts to resolve a question does customer vulnerability (the likelihood they will change banks) really spike. This might impact how you design your systems. You should know when someone walks into the branch with a question whether they have called the call center about it or checked your website already. 

2. The personality of the customer or the culture of the area.

Many people feel reluctant to complain because it is just not their style. Our data shows this is much more common in more rural areas or less confrontational areas like the Midwest or South (it is not an issue in New York City!). So it is a cultural issue to overcome: How to get “nice” people to feel comfortable sharing their issues, without making it a “not nice” thing to do.

One way to fix this problem: Provide consistent, thoughtful outreach. Banks that survey their customers regularly will get broader, more honest feedback, especially as the “non-complainers” get used to the practice. To make everyone comfortable, and to be respectful of their time, here are some keys:

(A) ask you customers’ opinions no more than twice per year. Anything more than that can be a nuisance, drive down response rates, and negatively impact their overall customer experience with the bank. 

(B) Start with some broad measures, like customer service and technology, and if those are fine, then STOP.  Do not waste your customers’ time by asking them 20 different aspects of customer service if they have told you the customer service is fine. You only need to dig deeper when there is an issue. 

(C) Absolutely DO NOT ASK YOUR CUSTOMERS’ OPINIONS if you are not prepared to do anything about the feedback. If you are not prepared to act on feedback, they will quickly recognize they are wasting their time trying to help.  The most progressive banks actually share the results of their customer surveys with their customers and also tell them what they are doing as a result of the feedback. There are fewer ways to better build customer loyalty than to gather and use customer opinions. 

3. The customer really likes someone at the bank.

This might seem counter-intuitive, but many customers tell us the main reason they don’t voice their concerns is that they do not want to get a particular staff member (maybe their favorite teller, or a nice branch manager) in trouble. We see many instances where a front line staff member gave some bad information or was unable to answer a question, and the customer just gave up rather than bring that person’s lack of knowledge to light.

One way to fix this problem: Obtain customer feedback in another way, preferably from an objective third party. This can be an external syndicated survey, a high-quality mystery shop (that can actually get to true issues) or a customer panel. It is important, however, to never provide specific customer survey results to a staff member unless absolutely necessary. The worst problems I have seen are when a teller asks a customer “why did you rate me a 4 instead of a 5 on customer service?” That puts the customer in an uncomfortable situation, usually ending in them leaving the bank since the bank has betrayed their trust. It often destroys the feedback measurement program.

How to tackle each of these identified challenges in obtaining feedback from bank customers differs based on the area, the bank, and the customer.

First and foremost, a bank has to determine just how prevalent the issues are. Are 10% of customers experiencing significant issues? Or is it 25%? Or is it just 1%? Discovering how prevalent the issue is can only be done through asking the customers themselves.  A standard survey of customers (where you contact them directly) is a good way to do this, especially for problems that fall in #1 and #2 above. Typically, the customers in category #1 will tell you and those in category #2 will under-report a bit but at least you get some of their complaints. Unfortunately, customers in category #3 will usually not tell you even when you ask them directly, out of fear that the criticism will get back to the boss of that nice teller and get them in trouble or cost them their job. The only way to get objective results from all three groups is to have the data collected by a third party that your customers will be honest with. Just be sure to work with a partner that knows the intricacies of getting bank customers to open up fully about their experiences. A poorly constructed survey can do more damage than good.

One important note:  a bank cannot fully quantify customer problems and issues only through analyzing internal analytics like numbers of calls to the call center, downtime of the mobile app, length of lines in the branch, etc.  Those metrics, while helpful, only tell you part of the story, since customers’ opinions are what matter: One customer may not care about waiting on hold for three minutes, while it may be extremely frustrating to another. And your customers may have issues with your people, processes, and technology even if they are performing exactly like you trained them. Getting objective customer feedback can help you to take a step back to see where your processes, training, and technology need to be improved. Remember: your customers’ perceptions are your reality.

Banks are not capable of fixing problems if they are not in tune with the issues their customer base experiences. Often, the solution can be found by simply asking. In community banking, you should never assume that no news is good news. The secret to a competitive edge is to identify problems before they result in defection, and open lines of communication will assist you in offering the best service possible.

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