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The WOW Factor
Most banks, large and small alike, have concluded that their competitive advantage must hinge on high quality customer service. Community banks realize that this is the main advantage they can offer customers, and large banks have discovered that, without such service, their attrition rates are high, which is costly and interferes with achieving predictable quarterly earnings.
Companies in industries outside banking have reached the same conclusions, yet, like us, have found it difficult to execute. Despite long checklists and incessant mystery shops, most service providers fail to create the WOW effect in their stores. There are several notable exceptions from whom we can learn a lot.
Disney, for example, is a superb example of flawless execution of WOW service across thousands of employees. Disney has the same issues we do: they hire lots of people, experience high turnover rates, most of their hires are entry level, low skill people (like our tellers or administrative assistants for the commercial lenders), and the pay isn't fantastic either. How, then, can they achieve effective execution across so many people?
The first, and most important, reason is that Disney's commitment to being The Happiest Place On Earth is the cornerstone of their value proposition. Grouchy employees get in the way of the customer's experience of the Happiest Place On Earth. Hence, there is no room for anything but a smile for any worker on Disney's premises. This clarity paves the way to execution. Executives and employees alike know that, without flawless delivery of the Happiness Factor, Disney will lose its spot as the most visited site in America. Consequently, the only question asked at Disney is: "How do we achieve flawless execution?" Not "Can we achieve 100% Happiness at our parks?" or "How do we improve from 80% to 85%".
Second, Disney hires people that have the proclivity to smile. Their attitude testing is no accident. It is a well thought out set of questions administered to all employment candidates prior to any skill testing. It is designed to ensure that the prospective employee is likely to smile, be empathetic and deliver the Disney experience without a he effort on their part; it comes naturally.
Third, all employees are trained from the get-go in what is considered acceptable behavior at work. Regardless to personally feelings, they must deliver Happiness to all customers all the time. Failure to do so results in termination. Thus, in addition to hiring the right people, employees also know that the penalty for not delivering is severe. Such behavior is simply non-negotiable.
Disney's clarity of expectations, coupled with its hiring and training practices, yields a seamless customer experience across thousands of employees. Such an achievement would be a dream-come-true for most bankers.
Another great but quite different example of WOW service is the Four Seasons Hotel franchise. The core value there is, "Whatever the Customer Wants". Putting the customer in the driver's seat is easier said than done, especially if the customer is me. A case in point: ON a recent visit to Prague I fell in love with the bread served at the Four Seasons Hotel where we stayed. Upon arrival back home my craving for the bread became strong enough to embolden me to contact the hotel and beg for some more bread. Shortly after my first email to the hotel, a box of ten loaves arrived at my house, and the connection has been established for future shipments. This was all done by the restaurant chef and the assistant to the hotel manager. No senior management involvement took place. The employees knew what needs to be done and did it with much grace and solicitude. I begged and they delivered.
This level of service awed me. I looked further and discovered that the underlying principle for the chain is to take care of their customers. It is different from other luxury hotels that systematize customer contact, such as calling the customer by name, escorting them to the elevators or whichever destination they inquire about, etc. While those principles are highly valued and do indeed create a great feeling of well being and humanization among customers, what I experienced went beyond that. It was something that could not have been systematized. It called for a sense of empowerment on the part of the employees, an understanding that goes beyond the mechanical. It made me a customer for life.
Banks are striving for lifelong customers much like hotels. They experience the same defection rates, if not higher, as hotel franchises do. They can't stop a customer from trying another bank or from diversifying their holdings, much like hotels. Yet both hotels and banks, as well as Disney and others, manage to build life-long customer loyalty by delivering on the brand promise repeatedly and across venues. What are the elements that can lead a bank to the path of long term customer retention?
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Unwavering focus. Banks get distracted too often with too many new initiatives and "the slogan of the moment" to truly execute initiatives that require long term focus to be successful. WOW customer service is one of those efforts. It is not an event; it is an on-going commitment to execute at every customer contact. Employees read management's minds well, and often realize that the new drive is merely the flavor of the month. A true WOW can only be realized over longer periods of time, a year plus, since it is the cumulative result of countless customer experiences that creates the belief that the bank is truly putting customer service first, both among employees as well as customers.
Too many initiatives or too short implementation time horizon are both detrimental to the success of such a major effort, which is difficult to implement in the first place. A true commitment, including effective measurement, inclusion in incentives and performance evaluations, and on-going public celebrations of customer delight events are among the elements necessary to achieve execution.
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Hiring the right people and using professionals to do it. Many pay lip service to hiring and retaining talent. All recognize its importance, but daily necessities often take over. When two tellers call in sick and one decides to leave with no notice, branch managers are hard pressed to be selective in their hiring practices. Required qualifications are reduced to conversation English and rudimentary math, and the first person in the door gets hired.
There are several professional firms that specialize in identifying the right people for the right job across industries. They work for Disney, engineering firms, publishers, hotels, restaurant chains. They look for who the person is, not what their skill sets are. It is easier to change one's skills than one's personality.
Banks that are truly committed to achieve customer satisfaction beyond expectations need to ensure that they hire the people with the right attitude and personality to deliver the desired customer experience. Some do so by hiring the industrial psychologists to help select the right people, and make the recommendation delivered by the process mandatory. It's a tough road to toe, but it significantly contributes to the success of seamless customer experience delivery.
- Empowerment without chaos. Banks have been torn between control and empowerment for many years, and the battle rages on. Additional regulatory burden makes employee empowerment riskier than ever, yet it is that freedom to make decisions at the customer point of contact that separates good service from a great one. FedEx used the slogan "We rent helicopters" to signal that their employees are authorized to do whatever it takes to deliver a package if it positively has to be there the next morning. The Ritz Carlton hotels authorized all their employees to resolve customer issues up to $200 worth of value. Us bankers, however, are leery of taking this step, since we know in our hearts that fee waivers will sky rocket and that our employees will abuse that privilege.
The solution to this issue lies with improved hiring practices, good monitoring of employees' discretionary decisions and a strong corporate culture that helps employees determine when is the right time to use their authority to go beyond the usual framework of rules and procedures to take care of customers. It is easier said than done, but it is at the core of customer satisfaction. Since controllable customer defection occurs almost half the time due to the employee's inability to effectively resolve problems, this empowerment is a direct remedy to the issue, and can significantly enhance customer satisfaction and retention. This is particularly true since it has been demonstrated that customers who had a problem and then got it resolved to their satisfaction are more loyal than those who never had a problem in the first place.
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Building in the downside. Service is an overused word. Bankers bandy it about, but rarely let an employee go due to poor service. In part, this is due to the difficulty of defining poor service. It is difficult and not appropriate to fire an employee when poor service isn't clearly defined. However, when there is no downside to poor performance, it is more likely to continue. At Disney, poor customer experience is a cause for termination. In banks, it is often teller differences, but not low customer satisfaction scores (nor sales performance, in many institutions). It is essential to clearly integrate WOW service into performance expectations, reward and performance counseling, if a bank truly means to execute on the promise and deliver it consistently.
- Measuring and tracking the right stuff: customer retention, customer profitability, average profit per sale, etc. We sometimes measure what is readily measurable, not necessarily what is the right measure. Customer satisfaction is a good example of this phenomenon. Mystery shops measure observable mechanical behavior which more often than not does not indicate customer satisfaction. It merely indicates the very basics of human interaction: politeness, acknowledgment, recognition. It does not address the "beyond and over" element, nor do most mystery shop questions talk to the underlying customer expectations. The result: bankers and teller learn to mechanically respond to the mystery shop questions, as they are becoming more tied to incentive compensation, but still miss the individual initiative and the WOW factor that customers look for and reward with their loyalty.
There is a danger in over-emphasizing the mystery shops. Lexus, for example, has carried customer satisfaction so far that dealerships get dinged on their bonuses if their scores do not meet a certain hurdle. The undesired side effect of this policy, which is sound on its face, has been the many side conversations buyers have with the auto salespeople, who beg them to fill the questionnaires with 5 ratings to ensure they get their bonus. This flies in the face of satisfaction and nulls the entire process.
As you consider your own customer satisfaction targets, collect a few such questionnaires from service providers you admire: high end hotels, outstanding service retailers etc. See what they ask for, and emulate them. You will notice that their questions are typically fewer than ours, and they focus on the feeling a customer had during the interaction, not the mechanical steps they took.
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Setting specific goals for achievement that are BHAGS in terms of true customer satisfaction. Once you measure the right stuff, expect leapfrog performance from your people. I found that employees want to please and do the right thing. They only want a clear definition of success, what is expected of them. Stretch goals do not faze them if they are clear and fair. Expecting a meaningful improvement toward breakthrough performance isn't depressing if communicated effectively. It is inspirational.
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