Customer service and its impact in retail banking


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Customer service and its impact in retail banking

  1. 1.  Meaning/Definition:-Customer service as a term has many definitions, let’s discuss few of them for understanding the meaning and characteristics of customerservice. Customer service is the provision of service to customers before, during and after a purchase. Customer service is the ability to provide a service or product in the way that it has been promised. Customer service is about treating others as you would like to be treated yourself. Customer service is an organizations ability to supply their customers wants and needs. Customer Service is a phrase that is used to describe the process of taking care of our customers in a positive manner. Customer Service is any contact between a customer and a company, which causes a negative or positive perception by a customer. Customer service is a process for providing competitive advantage and adding benefits in order to maximize the total value to thecustomer. Customer Service is the commitment to providing value added services to external and internal customers, including attitudeknowledge, technical support and quality of service in a timely manner. Customer service is a proactive attitude that can be summed up as: I care and I can do.Compiling the essence from all these definitions we may say that;“Customer Service is the process of meeting various requirements of customers, demanded by him/her as well aspromised or identified to or for him/her, with an objective of evoking customer delight or Vow factor”.Now from the above definition it is clear that, the objective of customer service is “Customer Delight” and every service rendered is not just asan obligation on promises made but as an opportunity to evoke Vow factor from the customer, enabling the banker to acquire larger sharefrom customer’s wallet.Let’s discuss the Customer Delight or Vow factor in detail.Customer delight / Vow factor:-Customer delight highlights the high level of customer service feedback on the service rendered to him.
  2. 2. There can be broadly three levels of customer service feedback.1. Below expectation :-Where customer is not happy with the services received as it is clearly not in line with the promises made earlier.There is a high probability that customer will leave the bank.2. At par with expectation:-Where customer is happy with the services as it is in line with the promises made earlier.There is a possibility that some other bank provides better promises and customer susceptible to switch.3. Above expectation ( Vow Factor or Customer delight):-Here is where customer is delighted, as the service received was something better than his expectations. Here there is a high possibility ofloyalty as well as more business from the customer.For example :- A customer who opened a vanilla demand account with X bank, walks in to a neighbour hood grocery shop for shopping getsdelighted when Shop Manager gives him a discount for 2% , because he is using debit card of X bank.And later a call from the Bank on an appointment with the customer for discussing further benefits will be welcomed by the customer becauseof the Vow factor he experience while using the debit card.Hence every Bank aims for vow factor or customer delight feed back by way of delivering various products & services according to customerexpectations, which in turn opens up more business avenues from customer and fix the risk of losing the customer due to inability to invokecustomer delight.Hence impact of customer service can be either more opportunities for business or risk of losing customer and business.Let’s understand the impact of customer service with respect to risks and opportunities.Attributes of customer service:-In order to understand the impact of customer service, it’s important to understand the attributes of customer service.Macro & Micro level induced Customer Expectation.Customer expectation on a bank take shape by his own understanding of a bank’s service standards as well as on the basis of promises madeto him/her directly by the branch officials.Now the later attribute to the customer service expectation means a customer might develop an expectation level from a bank, basis newsreports, advertisements, branch look and feel, interviews /statements on bank’s product and services by senior management of the bank etc.This is known as Macro level induced customer service expectations.And later will mean the promises made by the bank officials while closing the deal with the customer or Micro level induced customer serviceexpectations.Now as discussed earlier, as far as the bank is able to create a Vow factor with its services to the customers, bank will be beneficiary to betterbusiness from the customers but the moment bank fails to evoke customer delight, bank faces the risk of losing customers due to belowexpected levels of customer service or better promises/commitments on customer service from competition.
  3. 3. Let’s understand the Risk & Opportunity impact of customer service by discussing features of McDonald’s food outlets.Example of McDonalds for understanding the importance customer service resulting in customer delight:-One of the main features associated with McDonald’s restaurant across the world is their Menu, which is full of Burgers and Sandwiches andtheir cousins.Hence across the world McDonalds are famous for burgers, buns, fries and beverages that tasted just the same as in Alaska as they did inAhmadabad.Across the world when one moves to a McDonald outlet, his/her expectations are clear on what to eat and what to expect with respect to overall feel as well as the service standards, which is famous for its quick service.And for years McDonalds outlets have been meeting customer expectations successfully day in and out and they just didn’t serve a limitedmenu but introduced various cousins within the main frame work and added McCafe, Beverages, Deserts & Shakes as complimentary itemsto the main menu, bringing customer delight in to focus, as a customer walking in with an intention to have a quick bite is being treated withvariety of quick bites along with complementaries with same level of efficiency and cleanliness resulting customer delight or vow factor.In India many McDonald’s outlets use to surprise and delight kids with toys while serving the burgers, these little efforts often resulted incustomer delight and more business for McDonalds and all these efforts on customer service ensured they remain a worldwide known andsuccessful food chain for years now, thus highlighting the importance of customer service evoking customer delight.And we may say for customer delight, it is important to have a clear level of understanding of what is customer expectation to begin with andbased on understanding providing services over and above their expectations targeting Vow or DelightSource: of customer service levels unable to invoke customer delight resulting in risk of losing the customer:-Let’s take example of a restaurant where customer goes in because of an advertisement or due to the beautiful restaurant premises, nearbysea side etc.
  4. 4. Thus customer has stepped in to the restaurant on high expectation of a great full course meal as shown in the advertisement andreconfirmed it with lavish infrastructure and branding on delicious full course meal on restaurant premises.But inside the restaurant, if they offer the same menu of McDonalds, probably even better than that, how will the customer react?He will be shocked and disappointed, as he didn’t come to eat burgers and fries at the particular restaurant but to full fill his desire to have afull course meal based on the advertisements, branding etc.So irrespective of the good quality product, quality service and quality infrastructure, customer’s rating of the restaurantwill be below expectation, resulting in customer moving out to some other restaurants and thus materializing the risk oflosing customer.Above example highlights the importance of knowing the customer service expectation and delivering services over and above the expectationlevels.Now let’s discuss the Banking branch scenario and what can be done to avert the risk of losing customer due to negative customer serviceimpact.Banking branch scenario:-Banks too like any other service industry has both opportunity and risk with respect to customer service impact.Customer delight often enables the Bank to convert itself as the Primary Banker for the customer on one side and on the other at par ornegative customer service feedback results in either losing the customer or lower business from the customer.Hence it’s important to discuss and understand on how a bank can fix the risk emanating from the negative impact of customer service.Let’s discuss in detail. Understand the customer expectation ( Macro level influences as well as Micro level)It is important for the banker to understand the customer’s service expectation with respect to both macro and micro level expectations.Macro level customer service expectations are shaped up due to banks brand building exercise like advertisements, interviews by seniormanagement, branch premises locality, look and feel etc.And Micro level expectations are based on local branch official’s commitments /promises on product features, TAT’s on various servicespromised etc.Hence it is important for each Bank / Branch to know, what is the customer’s expectation with respect to the particular Bank / Branch.For example :- If a branch is situated at a locality like a trader’s street or an industrial park , it is important for that particular branch tohave enough capability to service demands/requirements from traders , industrial units etc, if branch is a pure retail branch it will be amismatch and will never be capable of evoking customer delight.Similarly, often we see Bank’s advertising different services on television / news paper /hoardings etc but when customers reach branchoffices, they realise that the advertised products are not yet launched at a particular city or branch.For example: - When ASBA facility (Application support by blocked amount) for IPO services had just been launched by banks, there weremany senior bank management officials, who were active and visible on electronic media discussing ASBA product and advantagesthreadbare, but when customers went to seek ASBA facility at respective bank’s branches, they realized that the process is yet to reach thebank branches.
  5. 5. This puts off the customers impression on bank’s customer service quality as customer’s approached the branches based on what they heardfrom their senior management but at branch level they were disappointed.Hence it is important for every bank to understand the basic levels of customer expectation for a bank/branch derived out of both macro andmicro levels factors. Training the inputs with branch staffAs discussed above , Macro level initiative unless implemented at micro level will easily put off customer service experience, hence once thereis an understanding on the expectation from the customer, it is important that every staff at the branch is aware of such expectation andtrained to fulfill those expectation along with targeting to achieve the objective of customer delight.For example: - Some banks earlier used to advertise a TAT of 5 minutes for delivering a demand draft request at branches.But when branches were approached with a demand draft request, TATs were not adhered to by the local branch staff.Such acts will lead to customer service expectation below expected levels and exposing the bank to risk of losing existing customers.Hence unless branch staff is trained on customer expectation and evoking customer delight, Banks will always be prone to risk of losingcustomers and thus business. Active customer feed backCustomer feedback is an important activity to check the actual levels of customer service experience at the branch level.Methods like direct customer surveys, mystery shopping at branches etc can be used to understand the customer experience at branch levelon both Macro/Micro level induced expectations. Corrective steps at both micro & macro levels for making customer delight a routine affairOnce results of such feedback is available , it is important for Bank/Branch to fix the gaps identified and deliver customer service in a mannerevoking customer delight or vow factor as a routine event and not as a rare phenomena.Conclusion:-Finally we may conclude, customer service doesn’t mean mere TAT on delivering customer requests at the branch but its scope is muchbroader with meeting expectation of customer induced by both micro and macro level factors.Many banks now have Service quality checks /audits specifically to check branch up keep, look and feel, branding at local level, response tocustomer requests / complaints etc.
  6. 6. But probably time has come for treating customer delight as measurable product as it can be the differentiator for customers in choosing X orY bank as their primary relationship banker.Thus the challenge for every Bank/Branch will be to implement a process capable of measuring and tracking levels of customer servicefeedback induced by both micro/macro level commitments/promises and once it’s is done, it will immensely improve the number ofcustomers turning to the bank as their Primary Banker.