Chief Investment Officer
Commercial Loan Automation
a better problem resolution process
We all have stories about the amazing banker who delivered cash in the snow to a needy customer. Such stories are an integral part of our corporate lore. Unfortunately, these stories stand out because they are so unique. As an industry we have not been successful in executing effectively on problem resolution, even though we know this is one of the top three reasons for customer defection. The article below offers thoughts for process elements and context that might inspire you to take the issue to the next level.
A Better Problem Resolution Process
Banks have fallen down in their attempts to effectively resolve customers' problems. Problem resolution has been identified as a major driver of customer retention. It's a primary reason for defection, and, in addition, is a source of retention when effectively handled. In fact, customers who have experienced problems that were solved to their satisfaction are more likely to be retained than those who have never experienced a problem. Plus, it costs five times more to attract a new customer than to maintain an existing one, while the value of a new customer is far less than the value of a seasoned one.
Banks know these facts, yet many continue to fail in installing an effective problem resolution process. This is due, in part, to our organization, which is designed to enhance the bank's efficiency and convenience but makes it difficult to address customer issues. Most problems cross departments, some say silos, which encumbers the process even further.
Below are some thoughts on several primary elements of an effective problem resolution. As always, execution is key, but perhaps the ideas herein might spark a productive discussion in your institution.
Empathize. Customers look for understanding and empathy when they complain. They don't want to hear the many reasons why their problem occurred, nor why it was the result if their own misconduct, which is often the case. They want to vent first, so train your employees to accept and expect that. Listen to your customer vent and don't cut them off. The customer is looking for validation. By listening, maintaining eye contact, showing empathy in your voice and words, you offer validation and positive feelings. You'll stave off their anger and start the problem resolution process at the same time. You could say, "I understand how you feel. Others have felt the same way, and we found that...".
Actively listen. Make sure you fully understand the customer's issue by listening carefully to the customer and even repeating what the customer said and asking for confirmation. Never interrupt the customer
Apologize. Not meeting the customer expectations, whether they are reasonable or not, is a failure for which we should always apologize. For example, in our Forums, when it rains in Phoenix in March or if Pebble Beach is too cold and musty to golf comfortably, I apologize. I know, and our members know, that we don't control the weather. Nonetheless, I want to deliver a perfect experience and have failed to do so. Apologies are in order.
Do not blame the customer. Problems often arise from the customer's own behavior. Yet, the customer is the last one who wants to hear that. They want a solution. Affixing the blame only aggravates the situation. You might show the customer how to avoid this problem in the future, but without the accompanying "it's your fault" speech.
Do not blame the boss or another department. "They" is US, and we should all remember that. Finding the person who is to blame isn't helping the customer; it is only helping the individual on the firing line feel better. This process is about resolution and subsequent defect correction if appropriate; it is not about who is to blame. You are a representative of your bank, and therefore should not blame others within your company. To the customer, you ARE the company. Therefore, you must accept responsibility and own the problem.
Make sure the solution fits the problem. We all remember the situation when the airline messed up, even due to weather as opposed to their own mishandling (such as a mechanical problem with the plane and inability to provide another plane as an alternative) and we received a $10 dinner coupon for our trouble. This resolution is not satisfactory. At the same time, expecting a free ticket to anywhere in the world is also inappropriate. Similarly, we have at our disposal various rewards that we can offer customers beyond fixing the problem and providing an apology. The solution and amenity need to match the problem's magnitude and source, and helpful guidelines for employees provided. FedEx used the slogan, "We rent helicopters", to support their tagline "If it absolutely, positively has to be there...". Their employees were empowered to spend whatever amount was necessary to bring the package to its destination, thereby creating an image of infallible reliability. We are too hesitant to empower our employees to do the same for our customers, since we don't trust their judgment. In addition, most banks do not have a brand promise they are willing to act upon, short of the $5 reward for long waits and too many NSF waivers... Whatever your specific brand promise is, equip your employees with the appropriate empowerment (and their controls) to delight your customers when they encounter a problem that conflicts with your brand or service promise.
Whenever possible, personalize the resolution. Making the apology, resolution or amenity personal makes a huge difference to the customer, who instantly ceases to feel like a number and starts feeling like a valued individual. In my case, personalization is easy - just send chocolate! In many other cases, the bank has a unique advantage since the employee knows the customer and can offer a personalized solution. Act on such knowledge - it's power, and it is unique to your bank and your employees. It won't show up in anyone's database. Our employees often say they know their customers. Let them demonstrate that at problem resolution time.
If the customer is dissatisfied with the solution, offer a reasonable alternative. Delighting customers sometimes takes something other than what we had in mind. Explore what the customer is looking for using probing questions, and provide it whenever possible. Ask, "What would you like me to do?", or "What do you think would be fair?" .
Whatever you promised, deliver on it. The fastest way to losing credibility and customer trust is promising to do something for them (e.g. I'll call you by the end of the day) and not doing so. Deliver on your promise and call, even if you don't have much to report.
Ask probing questions to ensure the customer is satisfied. Customers don't tell us how they really feel, as we find out too often when the leave the bank without any warning or sign. Make sure the customer is truly happy with the solution by telling them how important they are to us and reiterating that we want to keep their business. Not all customers are equally valuable, but, as a rule, a seasoned customer is typically more valuable than a "green" one, so keeping our tenured customers is of paramount importance.
Follow up. Even when the problem has been resolved to the customer's full satisfaction, a follow up phone call within 48 hours of the event to demonstrate care and ensure satisfaction is a worthwhile investment of time in that it cements the bond with the customer and "seals" the process.
Beyond these behavioral suggestions, several other thoughts come to mind:
Clearly articulate your bank's view of customer retention and its importance. Don't assume your people know that keeping customers is a crucial strategic element. Tell them it is and explain why. The Ritz Carlton has done a masterful job in this respect. I quote: "Building relationships with our guests is critical... If there is no relationship, the guest will just leave dissatisfied and never return. This would cause irreparable damage to the Ritz Carlton Mystique".
Provide the context for decision making at all levels. Oftentimes, employees want to do the right thing, but aren't sure what that is and how far they can go. Giving them a guide for those decisions, such as a mission statement or a vision description, is helpful. Creating a straight-jacket of procedures for problem resolution is not. In other words, don't attempt to micro-manage the process by developing an intricate set of rules for every situation. Instead, give them a general idea of how important customers are and how you'd like them to be treated in your bank (a-la "We rent helicopters" or the Ritz Carlton credo).
One simple rule: the first person to encounter the problem owns it.
Competition continues to intensify and the competitive advantage of quality service continues to erode as service levels across the industry homogenize and larger banks get better at achieving parity with smaller institutions. The next opportunity to shine is through effective implementation of a personalized problem resolution process. Take advantage of it!