How Do Consumers Actually Feel About Your Service?

Do you know what a new customer feels when they walk into one of your branches? Are they warmly greeted and then efficiently guided to the right product for their specific needs? We can all agree that this is our mental image of an ideal interaction but spend 5 minutes browsing Yelp and you'll see that this experience is anything but standard.

service at community banks and credit unions

 

What Do Consumers Think of Community Financial Institution's Service?

 

Community banks and credit unions have enjoyed a reputation advantage for the past several years.

banks and credit unions had better customer service

Consumers have consistently ranked their satisfaction with CFIs higher than that of the megabanks, but in 2016 the megabanks pulled ahead.

megabanks pull ahead in consumer satisfaction

While it still looks to be a close race, what is most alarming is that this graph highlights a massive momentum change. Regional and Midsize banks are declining in satisfaction while megabanks are gaining ground. Without intervention, the delta will continue to widen in the megabanks favor. Credit unions are currently only 1 point ahead of megabanks.

 

How Do Customers Respond to Poor Service?

 

A bad impression can cause irreparable damage; 96% of consumers leave an establishment when dissatisfied. What's more, they tell an average of 20 people about their negative experience. Recommendations are a major influencer in the decision-making process. When you lose one customer, your actually losing 20 prospects.

"Word of mouth is more pivotal than advertising in services" (e.g., Danaher and Rust 1996a, 1996b; Kordupleski et al. 1993)

This response isn't exclusive to new customers or first impressions. The quality of service impacts consumers all the way through the funnel. 78% of consumers have opted to cancel a transaction because of a poor customer experience. And a study by AOL found that a negative experience was a leading reason for consumers to begin shopping for a new financial institution.

Mystery shopping for financial instittuions

SalesForce found that it takes 12 positive interactions to reverse the impact of one negative experience. Of course, that's only if you get the opportunity. Most consumers will never give you that chance.

Reclaiming Your Spot

 

To improve consumer satisfaction, you must first develop an in-depth understanding of how customers are currently experiencing your brand. There are several ways to do this;

  1. Read social media reviews
  2. Conduct customer surveys
  3. Mystery Shopping

The advantage of mystery shopping is that it doesn't measure the customer sentiment, like the first two options, rather it measures you employee's activity. This removes some of the bias and subjective elements of other methods and allows you to focus on how your procedures and systems are performing.

"Mystery shopping enables businesses to measure the extent to which they are delivering on their brand promises through the customer experience and to identify and correct deficiencies." - American Express Survey

When well executed, mystery shopping should answer questions like:

  • What is the tone/friendliness of my staff?
  • Is my frontline assisting the customer to find the right product by asking questions and anticipating their needs?
  • Is my staff acting in a professional and compliant way?
  • What deficiencies might exist with my team?
  • What is the typical response time of my staff?
  • How are complaints handled at my institution?

Through mystery shopping, you can develop an understanding of how it feels to be the average consumer as well as gathering tangible data to guide process improvement.

 

The ROI of Great Service

 

J.D. Power has done extensive research into the impact of better service on a multitude of business results.

A study by American Express found that when comparing two identical businesses (with the only variant being the quality of customer service), the business with the superior service could expect annual profits 9.3% higher.

"It costs 5 times as much to obtain a new customer as to keep an existing one and that selling costs for existing customers are much lower (on average 20% lower) than selling to new ones." (Peters 1988)

Even a 5% increase in customer retention can lead to an increase in profits of 125% (Bain & Company) The research is clear; the most cost-effective way to increase profitability is to delight your existing customers with unrivaled service.

 

Ready to Start Mystery Shopping?

 

It's difficult (and potentially unethical) to mystery shop your own institution; Employees might not take the feedback as seriously as if a professional 3rd party were to deliver the results and one has to be well versed in change management to build upon new insights. For these reasons, we recommend using a professional 3rd party to run a mystery shopping campaign at your institution. If you'd like to explore launching a mystery shopping campaign at your institution, check out the resources available through our RED team.

Andrew Swinney
Andrew Swinney