Customer Service

What Your Customers Think—And Your Staff Does Not Know—Can Sink or Lift You

“How many of the community banks here believe their customer service is average or below average?”

Bruce Paul

February 13, 2020

I often ask that when presenting to large community bank conferences. Typically, a small group of attendees — maybe 5-10 percent -- are brave enough to raise their hands. By inference, this means that the vast majority of community banks think the customer service they provide is better than their competitors.

In fact, in the Mid Atlantic, 87 percent of community bank leaders believe their customer service is very good. However, their customers may not agree. In the latest Banking Benchmarks across Pennsylvania and New Jersey, only 24.4 percent of community banks were rated that high by their own customers. This is based upon 644,898 objective reviews by households and businesses across those 2 states.

How can it be that customers see community banks so differently than they see themselves?

Community banks can be forgiven for usually concluding that their customer service is above average, because so much of the anecdotal feedback they get is positive. And this makes sense, because the very happy customers often want to let you know how happy they are, especially to praise a specific staff member and the service they provided. And it is relatively rare indeed that a community bank receives a complaint about a specific staff member’s customer service. And even more rare is to have a customer take the time to let you know that your customer service is neither good nor bad, but just mediocre.

To be fair, there are some banks whose customers do truly rate their customer service as exceptional, and who therefore have an actual competitive advantage when it comes to servicing customers. Some of the best performers in specific areas are listed below. But for the rest of the banks that are not standing out, what are they to do?

First, identify any servicing areas that where the bank is subpar or declining. According to the most recent Benchmarks, the most common servicing elements where banks fall down are:

  • Not proactively recommending solutions
  • Giving customers the runaround (especially among business customers)
  • Staff not being able to answer banking questions (a training issue)
  • Treating customers like a number
  • Not listening and understanding customer needs

Avoiding these pitfalls are all crucially important in retaining customers and earning their loyalty. Across the region, 20.1 percent of customers say their bank can’t even answer basic banking questions (slightly higher in NJ than PA) and 26.1 percent say their bank never recommends appropriate banking products (slightly higher in PA than NJ). But do you know how many of your customers think that about you? If you do not already track these, you need to start. To get you started, we can tell you your current baseline since we have been asking your customers (and everyone else’s customers) through the PA and NJ Banking Benchmarks for years. Just contact our staff and we will share your ratings and rankings (vs your local competitors).

Second, identify areas where you are relatively strong compared to key competitors and use them to your competitive advantage. It is often hard to stand out in a crowded marketplace, but most banks have at least one area of relative advantage. It might be that your staff are better listeners, or more responsive, or better and training customers on mobile banking, etc.

Third, put together a plan of action to tackle the areas where you are weakest, and exploit the areas you are strongest. Not weakest or strongest overall, but where you excel or fall behind compared to key local competitors.

  • One of our new subscribers was dismayed to learn that 19% of their own business customers say they sometimes get the runaround. But when they learned that the average was 32 percent among their key local competitors, they realized they actually had a competitive advantage. And they began to leverage that to gain market share.
  • Another bank learned that their customers rated their technology low compared to competitors. This was not a surprise, but they also learned that the tools themselves (online, mobile) were actually rated slightly higher than average. According to their own customers, it was the training they received that was well below average. They realized they needed to spend more resources on training their own staff to understand the tools and to answer questions, rather than spending on newer and better bells and whistles.
  • A Community Bank subscriber thought they were doing a good job recommending solutions to their customers. In fact, 64 percent of their customers agreed. But when they learned that the average in their trade area was 72 percent, they realized they needed to step up training for front line staff. They went so far as to share the Benchmark results with each branch manager to show that it was their own customers that wanted more “leaning in” and this energized them to work harder.

Fourth, track your progress to make sure you are making the improvements you need to in the eyes of your customers. You can do that through internal metrics, such as the percent of staff that have completed new training modules, but you should also supplement with directly asking your customers to weigh in. After all, it does not matter if all of your staff receive cross-sell training if customers do not see the effect.

Understanding what you customers actually think about your customer service, your technology, and every other aspect of your bank will tell you where to focus effort. This will allow you to fix what is not working (in the customers’ eyes) and highlight what they really love. As the old saying goes: Your Customers’ Perception is Your Reality. Do you need a Reality Check?

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