Service Counts - but Pick Your Shots (Customer Service in the Banking Industry) (Column)

Article excerpt

In a recent survey published by the American Management Association, "The Pulse of the Customer," 8,500 sales and marketing managers were asked about the importance of service.

Of the 1,100 respondents, 90% agreed that service issues were more important today than as recently as two years ago. The vast majority also agreed that service quality has become a significant differentiator in the customer's decision to buy.

In banking, when product and rate offerings are at parity, delivering service to customers is the only differentiator.

A technique called "gap analysis" can help banks improve it more effectively.

How Customers React

Service levels affect three critical areas - customer retention, customer acquisition by referral, and profitability.

If service is poor, customers will invariably gravitate to competitive institutions, and if they are especially dissatisfied with service, they will most likely not recommend their financial institution to others. These circumstances, when underscored by a bank's disregard of service improvement, will affect the bottom line negatively.

Consumer expectations regarding quality of service are increasing. Offering the same level of service from year to year is, in effect, a move backward.

Given that the opportunity to distinguish one financial institution from another is limited because of the industry's regulatory and competitive nature, excellent service is among the few weapons remaining to stimulate growth by capturing the competition's customers.

A Weapon for Growth

What is service? It occurs in any interaction between customer and financial institution. The interaction may be interpersonal (customer-to-teller), electronic (customer-to-ATM), "physical" (customer looking for parking space), or nonpersonal (mailed monthly bank statement).

True service - as opposed to product services such as money orders, automated teller machines, direct deposits, travelers checks, and so on - has four distinguishing characteristics: It is mood-sensitive (and customers' moods may vary); it is intangible; it is usd as it is created; and it has no shelf life.

Perceptions

Of greater interest is how customers perceive service or, more specifically, the cues on which they then to focus when making value judgments about service.

One set of cues has to do with the physical aspects of the person delivering service, the setting in which service is delivered, and the physical "thing" connected with the service. …