A recent article in the American Banker illustrates a new reason why banks need to encourage customers to voice their concerns. (American Banker, “Customers are Now Banks’ Greatest Regulatory Threat“)
As much as we hate to receive complaints about the service we provide, many financial institutions have embraced customer complaints as opportunities to both improve efficiency and increase customer loyalty. And now it appears there is a third potential benefit to encouraging customers to share their concerns with us: Avoiding increased regulation and scrutiny from the government.
I’ve always thought that those cheeky little complaint boxes (the ones that are no bigger than your thumb implying that if you don’t like their service you can take a hike) were primarily created for government agencies. However, somewhat ironically, the Consumer Financial Protection Bureau (CFPB) has created one gigantic complaint box (in the form of a database) for customers to log their complaints about their financial institution. And they’re planning to use it to further scrutinize and regulate the banking industry. (See the American Banker article here).
So, as much as we hate to hear that we’re not perfect, it’s becoming even more in our interest to encourage customers to let us know when they are dissatisfied rather than taking their business elsewhere or, worse yet, going to CFPB.
Banks that adopt a positive attitude toward customer complaints and develop a strategy to harness the information those complaints provide are more successful in reducing complaints than those that treat them as exceptions to be dealt with individually and then forgotten. Our most successful clients have approached complaint management with a simple two-pronged strategy:
1) Be responsive
2) Be proactive
Truly responsive financial institutions ensure that customers know where they can go if they have a concern or complaint. For example, several of our clients use a “voice of the customer” web portal where customers can make suggestions and log complaints. The portal can be accessed from their own website, but it is also promoted through social media, in the branches, and at various other touchpoints. There are several firms that have the software available to do this and can integrate it quickly and easily with your systems.
The most successful institutions have a thoughtful mechanism in place for routing complaints from the “voice of the customer” tool and other feedback mechanisms quickly to the right person and then using aggregated data to identify and address trends from a strategic point of view. Most of these tools also include a tracking mechanism so managers can ensure complaints are not left unresolved.
Encouraging customers to talk also requires creating an environment where it is safe to discuss pain points openly. Many customers have developed good relationships with the people in the branch they regularly visit and are afraid that if they log a complaint, they are going to get someone in trouble, or experience a decline in the service level they’re used to. So instead they decide to live with some snafus here and there, depriving you of the opportunity to give them a better experience. Successful organizations allow customers to submit complaints confidentially, and to designate if they want a bank representative to contact them about the issue or not. They also clearly communicate that all members of their team welcome and appreciate constructive feedback, especially from customers they know well.
As important as it is to be responsive, if you can find ways to reduce complaints strategically, you’re in a much better position from competitive, operational and regulatory standpoints.
Being proactive can be as simple as conducting a well-designed annual customer satisfaction survey or calling customers for a 3-4 minute interview after they engage in some form of interaction with your institution. Regardless of the approach, the key is to reach out to customers who may have experienced some pain points but haven’t taken the time to file a complaint.
The great thing about this process is that it often identifies folks who are vulnerable before they leave and gives you an opportunity to save the business. Research has repeatedly shown that customers who experience a proactive and smooth problem resolution process tend to become more loyal to the bank afterwards, despite the initial pain point.
A great side-benefit of the proactive approach is that you also tend to get lots of positive feedback about individuals within your institution, which can be used to generate positive energy and recognition for superior service.
Most relevant to the issue at hand, however, is the ability of this proactive approach to identify and address trends before regulatory agencies do, so you can be ahead of the game and avoid costly audits, documentation, etc.