In a recent Business Week article about JPMorgan and Bank of America we learn that bank consolidation has led to unhappy customers. Not surprising really and tough to think of this as “news”. Clearly, pushing two behemoths together causes change. Banks know they can benefit when they leverage economies of scale and so M&A activity is an attractive option. What they seem to have missed is that these benefits should extend advantages to their customers too!
I don’t understand why bank-owners (which now largely deliver a commoditized service) think they can cut corners on customer service. I’ve written before about three controllable dimensions of service: cost, quality, and speed. In a commodity market cost and speed are equal which is why companies like Bankrate even exist. Customers see little difference between one bank and another. And because costs to switch are low consumers can choose with whom to do business. Bankrate provides the perfect answer.
In a commodity market, only service differentiates. (In this example of bad PR, the Bank of America and JPMorgan are definitely not creating positive differences.) Excellent service creates strategic advantages which:
Protects your existing customer base,
Generates positive word of mouth, and
Attracts new customers.
(Repeat as needed to develop your business.)
About the only thing that does make sense in this article is the bank’s reticence to comment publicly about the poor customer service they are delivering. What can they say? “We are improving shareholder value by short-changing our customers.”
The pivot point is that spending money on customer service should be considered an investment, not a cost. Wells Fargo’s customer satisfaction has benefited after acquiring Wachovia, a company with high customer satisfaction. Part of Wachovia’s value to their customers and to their shareholders comes precisely from their investment in a customer-focused culture.
Toyota’s safety recall, (followed by Honda, then Peugeot Citroen) of an additional 2.3 million cars made me think about the intersection of customer service and financial prudence. Toyota’s repairs to correct a mechanical fault will cost the business hundreds of millions of dollars in lost profits.
Why is Toyota spending this money now when it will obviously damage the business’s bottom line? Read more at the original BNET post to find out.
In a previous post I picked on a Shutterfly, Inc. transaction to demonstrate how easy it is to spot customer service problems. Now, let’s turn our attention to what they should do to atone for their customer service sins.
First, a recap of their transgressions:
Checkout step did not accept the promotional code.
Customer Service Team unaware of current sales/marketing promotions.
Customer Service Team has insufficient tools to interact with customers on their terms.
Service response did not yield desired result on order ($10 discount).
Sometimes customer service can be very difficult to deliver. However, more and more I am convinced that the problems originate from failure to observe the maxim: failure to plan is planning to fail. When these cases arise, customer service problems stick out like sore thumbs. To spot them, you only need the superpowers of common sense. Here’s a recent illustration of an interaction my wife had with Shutterfly, Inc.
Upload photos. Save draft project.
Receive email with $10 promotional coupon.
So far so good. Shutterfly “knows” my wife is interested in their product and knows that she didn’t make a purchase on her first visit, so “interacts” with her via email to entice her to make the purchase.
Finish project. Place order, attempt to redeem coupon.
Coupon redemption fails.
Shutterfly customer service doesn’t know which promotion my wife is referring to and asks her to send an email (no attachments please since Customer Service can’t view attachments) with details.
Details exchanged.
Company is sorry coupon doesn’t work.
Company’s verbatim response: “I request you to get back to me once your ships and you have received the shipment confirmation email. I will insert a gift certificate worth of $10 to your account for $10 off. Gift Certificates do not expire and it can be used to purchase any Shutterfly product from your account.”
Now, using your superpowers of common sense, what Customer Service sins has Shutterfly committed?
Checkout step did not accept the promotional code.
Customer Service Team unaware of current sales/marketing promotions.
Customer Service Team has insufficient tools to interact with customers on their terms.
Service response did not yield desired result on order ($10 discount).
This experience begs two questions. Is the company inept? Or do they value their customers so little that they don’t bother to create a working coupon redemption transaction? Regardless of the answer, the problems my wife encountered, along with the poor way the problem was handled leave a bad impression. (If you are a NetPromoter proponent you will recognize me as a “detractor”.) The pivot point is that if your company fails to use its common sense superpower, your customers will find better alternatives – faster than a speeding bullet. In the next post we’ll propose recommended recovery steps!
