Publications & Resources
May/June 2009
Focus: People - Your Most Important Asset
Asset Appreciation: Front Line Employees Hold the Secret to Balancing
Customer Loyalty and Profitability
By Joe Gillen
Countless banking studies have weighed the cost of retaining customers versus
the cost to acquire new ones. The results can be staggering. Most agree that it
is five times more costly to acquire a new customer, but some report that it
could be up to 10 times as much.
Many financial institutions tend to overlook the most important element of
nurturing profitable customer relationships: front line staff.
Simply put, creating customer retention strategies begins by looking
inward at your bank’s most valuable asset, its employees.
Without a doubt, retaining high performance employees is key for business;
but retaining good employees is only half the battle. Employee retention efforts
should be coupled with the drive to help each employee to perform at their
highest level.
Training good employees to become great employees is especially relevant now.
Employees can be a driving force helping community banks capture market share
from national banks in a time when many consumers are seeking a more
personalized, conservative banking approach.
Front line bankers can often provide the only interaction customers have with
their bank. With a bit of investment in the “human asset,” all employees can
be responsible for building customer loyalty and boosting customer
profitability.
In today’s demanding banking environment, what truly makes an employee
valuable is their ability to adapt and move beyond traditional roles.
For example, customers expect the teller to count their cash correctly,
but would likely be surprised if a front line employee engaged in conversation
designed to introduce a new product that was actually a fit for the customer’s
needs. Employees responsible for front line interaction provide the ”customer
experience” and should adopt a more retail-oriented mindset to customer
service.
Many bank executives consider training, and see high costs (especially as
margins grow tighter), but employees are highly appreciable assets –
especially when managed and measured properly. There are several ways to
optimize and improve employees’ value, including training, incentive programs
and education that will pay dividends in employee retention and improved
customer loyalty and profitability. At the end of the day, more engaged
employees lead to more profitable customer relationships.
To maximize the value of your most valuable (and sometimes most intangible)
asset, first measure the customer experience your bank is providing now.
Look to qualified outside experts who can provide coaching and training
that will boost customer service and create programs and incentives that will
sustain those improvements for continued growth.
Take an honest look at your customer experience
Mystery shopping is an excellent means to obtain a third-party view of the
customer experience your bank is providing. Once you have a benchmark to work
from, a mystery shopping provider can offer specific suggestions for improving
service in a way that will substantially impact the customer experience.
Additionally mystery shopping can help bankers take an objective look at
employees’ performance and trends in service improvement over time. Many banks
incorporate employee scores into performance reviews as a way to concretely
measure customer service, set standards for improvement and recognize employees
for a job well-done.
Provide the tools to help employees perform well
Front line bankers should not be viewed solely in a transactional light (as
employees only expected to deposit checks and count change correctly), but also
as salespeople.
The issue lies in the fact that many financial institutions lack a sales
culture, and sales training isn’t a typical part of the community banking
process. But there are aspects of the retail model that can be applied to
banking.
Overcoming bankers’ lack of experience or training and effective customer
service won’t be accomplished overnight, but it can be achieved with effort
from all levels within the bank. An easy step for bankers short on sales
experience is examining their customer database. Look for patterns of use, and
tailor products to individual customer needs or their location. Train front-line
employees to engage the customer more and ask the kinds of questions that lead
to cross-selling opportunities.
Offer incentives to great employees
Consider rewarding employees that set the customer service pace for others.
Whether it’s a personal day, cash bonus, public recognition or a promotion,
find a way to reward employees who generate profitable customer relationships
for the bank, and set the standard for the service you want your bank to be
known for providing.
Better banking begins with making a positive customer impression. To that
end, creating a sales culture within your financial institution can be achieved
with the optimal mix of observation, training and measurement at the branch
level. The highly appreciable assets that walk out the front door of the branch
each night are the keys to creating cross-selling opportunities, optimizing
customer experience and sustaining customer relationships. When properly
motivated and incentivized, your bank employees can be the driving force behind
increasing market share and maintaining customer loyalty.
Joe Gillen is
CEO of Pinnacle Financial Strategies in
Unauthorized reproduction of all or part of this material without the express written consent of the author is strictly prohibited. All rights reserved.