The study estimated that the problems customers experience when banking, and the way many banks handle customer complaints, could be placing between 8% and 12% of their annual profits at risk.
In subsequent updates to the study over the years we have observed two disturbing paradoxes:
- Although customers of some banks now report fewer problems, overall satisfaction and advocacy appears to have dropped.
- When problems do occur, there appears to be an increase in the percentage of customers contacting their bank for help, but a drop in satisfaction with the action taken by banks in response.
It appears that although most banks are attending to service quality improvements, customer expectations are increasing. And, when customers go to their banks for help, the problems are often not resolved to the customerís satisfaction.
Today, when customers experience problems with their bank, they find it easier to move their banking to a bank that can serve them better. This presents banks with an interesting choice of strategies to maintain customer numbers:
- Should they make genuine efforts to gain insights from their customersí experiences, improve their service, retain loyal customers and grow through positive referrals
- Should they invest heavily on marketing and advertising to attract customers defecting from other banks hoping their service will be better
I guess the old adage is true - businesses often spend 50 times as much trying to get a new customer than they spend trying to keep an existing one.
Not a strategy we can all afford these days.
About the author: Paul Linnell
Paul Linnell is a service improvement champion, working internationally with senior managers and their teams to help them achieve business success, reduce risk and build customer loyalty and advocacy by improving service to customers. Paul specialises in the design and deployment of customer experience measurement, service quality improvement, complaints handling and preventive analysis programmes. For most of his career he has worked in Europe and North America and for the past 10 years Paul has been based in New Zealand, continuing to serve clients globally.