Refine & Redefine

Blind Spots in Customer Service

Most financial institutions rely on complaint volumes as an indicator of the company’s performance in customer service. Conventional wisdom among executives suggests that declining complaint rates are desirable because they reflect fewer dissatisfied customers. As a result, many institutions develop strategies to address and resolve complaints in hopes of reducing the number of complaints received. Unfortunately this strategy overlooks an important part of the equation: Many customer irritants never make it to the formal complaint stage. In fact, a large percentage of customers who experience a dissatisfying interaction never voice concerns to their financial providers.

In December 2010, the Corporate Executive Board surveyed 5,000 financial services customers across seven countries to shed light on what happens when a customer experiences a dissatisfier. Our data show that financial institutions failed to meet the expectations of 31 percent of financial services customers in 2010. Furthermore, 35 percent of those dissatisfied customers never formally complained to their institution. To put this in context: For a midsized bank, “hidden dissatisfied” customers represent a $243 million revenue risk that executives are missing—a risk roughly the size of that bank’s annual technology and marketing budgets combined.

The root cause of this problem is that company emphasis on resolving formal complaints means that the issues of “hidden dissatisfied” customers often are never addressed. In fact, 65 percent of dissatisfied customers who did not complain did not have their issue resolved, creating customer-experience “blind spots” for the business. Despite withholding feedback, however, noncomplaining customers are as likely to defect to a rival institution as customers who took the time and trouble to formulate and submit a complaint. In other words, it’s not resolving the complaint that’s important, but resolving the problem, even if it must be done in lieu of a complaint.

ANTICIPATE AND FACILITATE COMPLAINTS
While the actions of the “hidden dissatisfied” may seem largely out of executives’ control, our research indicates that companies can significantly mitigate dissatisfaction for customers by doing two simple things once an issue arises:

1) Make it easier for customers to complain. Throughout the research process, we tested the factors that would affect the likelihood that a customer will not voice dissatisfaction to the financial institution. We took into consideration customers’ personal characteristics, characteristics of their problems, and characteristics of the institution. Of the three, institutional attributes such as availability of preferred channels and staff ability to provide assistance had the biggest impact on the likelihood that a customer will complain.

2) Identify dissatisfied customers in absence of complaints. While making it easier for customers to complain might increase the likelihood that customers will voice dissatisfaction, many progressive financial institutions have stopped relying exclusively on complaint data to drive their issue-management processes. These companies have identified such red flags as missed SLAs (service level agreements) and customer behavior patterns, which signal a potentially dissatisfied customer.

Keep in mind that while making it easier for customers to complain and identifying problems in the absence of complaints are effective ways to mitigate the negative impact of problems once they have occurred, Corporate Executive Board’s analysis suggests that for the average customer and the average problem, even the most outstanding problem resolution process fails to improve loyalty sufficiently to compensate for the loss of loyalty the problem generated in the first place.

Source: Business Week

Successful customer service has to
come from the heart

A recent survey from Colmar Brunton on the customer experience was widely reported in the media, focusing particularly on exalting the banks and caning the telecommunication companies.

The untold story is that 60 per cent of New Zealanders have had at least one particularly bad customer experience in the past 12 months. Add to that the 40 per cent who consider that business is a necessary evil (as opposed to a noble calling), and one has to wonder if some organisations don’t see their customers as a necessary evil.

There are still some organisations which are stuck in the Milton Friedman model. However, the idea of the primacy of shareholder value is obsolete.

As reported in the Harvard Business Review for Jan-Feb 2010: “It’s time to discard the popular belief that corporations must focus first and foremost on maximising value for shareholders [which] is inherently and tragically flawed …” As Jack Welch famously said, “most employees have their face towards the CEO and their arse towards the customer”.

However, I am writing on the many organisations that are trying to improve customer satisfaction, and improve the customer experience, but are frustrated.

Companies spend increasing amounts with this goal in mind, but research surveys still show disappointing results much of the time.

Why? In my view, most organisations are trying to do customer satisfaction with the head and not the heart. They try and legislate customer service behaviours, with the result that the customer service is formulaic.

The answer is to do customer service from the heart. Things are changing. There is a shift in values in a post-recession world:

* Sustainability – consumers increasingly want to know whether they are buying responsible products that were made without harming either the earth or its people.

* Social responsibility – alignment with a cause gives the consumer permission and a purpose for their spending.

* Health – there is a growing consciousness of the importance of what we put in, and on, our bodies.

* Trust – the financial crisis shook trust in institutions, leaving brands vulnerable to the general sense of betrayal.

* Personalisation – the most valuable brands go beyond product features to focus on the user experience.

Consumers are increasingly savvy. They can smell insincerity from a hundred paces. They are looking for authenticity. They have become well-informed brand advocates, and critics, fortified with knowledge about price, product and supply gained from searching the internet and sharing information on Facebook and other social networking sites.

However, much branding is a work of fiction. Effectively, organisations are searching for a fancy dress to put their product or service into – the lipstick on a pig scenario.

The ad agency attaches an emotional world to a product or service (often from an emotionally barren organisation) rather than expressing an authentic world. Who are they trying to kid?

If you want to be a “lovemark” then you’d better be loving.

This is the age of standing for something, for pursuing a big ideal. This is the new era of the purpose-driven business world.

In a new study our company has carried out, in conjunction with a major client, we found that the world’s best brand value builders have certain things in common.

The key one is a big ideal, closely followed by a relentless commitment to the customer experience.

Dove, for example, is on a mission to “make women feel beautiful every day by widening stereotypical views of beauty”. They see themselves as “an agent of change to educate and inspire girls on a wider definition of beauty and to make them feel more confident about themselves”.

Taking some examples closer to home, Kiwibank set out to create a new bank from scratch that provides better service than the Aussie banks, better interest rates and a fairer deal for Kiwi customers.

Furnware’s aim is to “make our classrooms more comfortable, high achieving areas of learning”.

These crusades, when they are sincere, deliver a richer customer experience – out of instinct, rather than legislation. They give meaning and significance to employees’ lives. It’s hard to get motivated by making money for shareholders, but a cause is different.

I remember some years back talking to a chief executive officer of a large educational organisation in Auckland. What’s your mission I asked him? To be the biggest provider of educational services, he said.

I grimaced, another inward-focused mission statement. What if you said you wanted to raise the standard of education in the region, that would be customer focused, or better still, answer the “why?” question – ie, so that the region will prosper, people will have jobs, etc. Which banner do you think your staff would most like to walk under, and if you did that, do you think you might become the biggest?

As John Seely Brown said, the job of leadership today is not just to make money, it’s to make meaning.

Source: NZ Herald

Customer service can shift brand loyalty: Survey

The quality of a company’s customer service plays a key role in building its brand image and even helps the firm win new customers, a survey conducted by American Express has found. The survey – 2011 Global Customer Service Barometer – says more than half of those surveyed (52%) would switch over to a new brand or company for want of a good customer service experience.

Customer services in this case refer to various service provisions to a consumer before, during and after a transaction.

The survey, based on a random sample of 1,002 consumers, mapped consumer behaviour on several parameters and has underlined the importance of customer services for an organisation.

The survey found that around 80% of the consumers did not complete a business transaction or did not make an intended purchase because of poor customer service.

Among those surveyed it was also found that around 90% consumers were willing to spend more with a company whose customer service could be rated excellent.

“On an average, they are willing to spend 22% more,” the survey said.

In 2010, only 76% consumers were willing to pay more – around 11% on average – for better customer services.

Source: Hindustan Times

New rules soon for better
service to bank customers

Bank customers may soon expect better services and fast-track redressal of their grievances as Reserve Bank of India (RBI) is likely to consider a fresh set of rules to improve the banks’ customer service practices. Almost a year after RBI put in motion a process to improve banks’ customer service practices, a high-profile panel set up by the central bank in this regard is likely to submit its recommendations later this month.

Sources close to the matter said that the panel is likely to suggest a tighter vigil by RBI for banks lacking on customer service front, monetary and procedural penalties and other remedial measures to guard against such lapses.

Besides, banks may be asked to resolve various customer grievances within a pre-determined time period, they added.

The committee, constituted by RBI in June last year under the chairmanship of former Sebi chief M Damodaran, is likely to submit its recommendations on required changes in existing policy framework and prevalent practices of customer service in banks, sources said.

The panel, which comprised representatives from banking industry, had completed its draft recommendations by January and was earlier expected to submit the report in February itself.

However, the panel decided to redraft the proposals after receiving some fresh inputs from various stakeholders in the matter, including the banks, and its final recommendations are almost complete now, sources said.

The panel took such a long time as it would be first major report on banks’ customer services after a report in early 1990s submitted by the MN Goiporia committee, headed by the then SBI chairman.

The proposed recommendations may include penalties on banks for lapses on both implementation and maintenance of model customer service standards, they said.

The panel is also said to be in favour of giving more teeth to the Banking Ombudsman through necessary legal measures. The Banking Ombudsman Scheme was established by RBI in 1995 to provide speedy solutions to the grievances faced by bank customers.

RBI will frame its final guidelines after studying the panel recommendations, which also include putting in place a pre-determined time frame for resolving customer complaints.

The banks will also have to tell the customers beforehand about the expected time they would take for providing various banking services.

The panel may also suggest reviewing the entire existing system of attending to customer service in banks, including the approach, attitude and fair treatment to customers from retail, small and pensioners segment.

Sources said that the panel could suggest better use of technology by the banks to improve their customer service standards. Banks might be asked to adopt greater use of internet in providing services and attending the grievances.

Besides, the RBI might also be asked to consider putting more responsibility on the banks’ key executives in terms of adopting better customer service standards and putting in place necessary checks against any lapses.

There has been a sharp increase in the number of customer complaints at various banks.

The Banking Ombudsman received as many as 79,266 complaints in the year 2009-10, the latest period for which data is available. This marked an increase of about 15% from 69,117 complaints received in 2008-09.

There are 15 offices of Banking Ombudsman spread across the country and RBI had initiated this step to provide an expeditious forum to bank customers for resolution of their complaints relating to deficiency in banking services.

Source: Hindustan Times

SBI launches SMS UNHAPPY Scheme

Today, the State Bank of India introduced a unique customer service initiative for its 130 million customers. The Chairman, Shri O.P Bhatt, while launching the scheme across the country from the Bank’s Local Head Office at Bhopal, expressed great happiness over being able to make this offering to the public. The scheme named “SMS Unhappy” has been tested out on a pilot basis at select centres since last October, and having received highly encouraging response, is now being rolled out pan India.

Ordinarily, a consumer who has a complaint, or has encountered a problem, would need to lodge a written complaint with his branch, or send an email to the Bank, giving the details of his account number, and the problem to be resolved. Many customers find it difficult to do this in the midst of their many priorities, and so put off reporting a complaint, even though the issue remains alive.

For the first time, here we have a Bank going out to its customers, inviting them to just send one SMS, “Unhappy”, to the number 8008202020. The rest of the action rests with the Bank. In a perfectly automated fashion, this message reaches the “Happy Room” at the Bank’s Circle Headquarters, from where executives who are passionate about customer delight, call the customer on his mobile phone, understand from him the exact nature of the problem faced by him, assure him of prompt resolution, and escalate this issue to the office which has to take action. What is more, when the required action has been taken, the customer is contacted by his branch and the Happy Room to update him on what has been done. Most of the complaints are closed within 48 hours. Needless to say, this results in absolute delight for the customer. Feedback received from the pilot run, has been very encouraging. Initial customer reactions to this proactive initiative on the part of the nation’s largest Bank, have been very positive. Already complaints have shown a decreasing trend.
What is so special about this initiative is that, having sent one SMS, the customer has absolutely nothing to do; his mind can be at rest, and he is assured of speedy results. Working just on SMS, the facility can be accessed at any time of day or night, from anywhere– even while waiting for a flight to take off! And what’s more, being paperless, it is a Green Banking initiative.

With the national launch of this initiative, and widening of its reach, consumers of banking services can look forward to a new era of fast, hassle-free complaint resolution, and, better, delightful experiences with their Bank.

What do you think will this initiative help in bringing down number of complaints? Share your thoughts with us

Source: http://bit.ly/hZiHda