Nearly all financial institutions track the satisfaction levels and/or loyalty of their customer base through customer satisfaction or NPS surveys. The main reason for this is to understand what their customers are unhappy about and where to focus efforts which will have the greatest impact on improving customer satisfaction levels or NPS/advocacy i.e. if you are happy as a customer you will tell others to also bank with that same institution with the result being increased product uptake, stickier customers, and a growth in its customer base. This assumes that there is what we like to call in research terms, a linier relationship between satisfaction and loyalty so the service improvement strategies I do as a bank will result in an improvement in satisfaction and loyalty.
Source: RFi Group
Understanding that in reality there is a non- linier relationship is key and has two significant implications for service strategy:
1. Greatest returns occur at two points on the satisfaction–loyalty curve: the point at which poor service performance meets customer expectations, and the point at which service performance exceeds customer expectations
2. A ‘zone of indifference’ exists between these two points where further service improvement does not result in equivalent change in customer loyalty behaviour
Source: RFi Group
The banking landscape generally is skewed towards high service expectations. In order to exceed expectations consumers, expect an almost perfect service experience setting the bar high for satisfaction. The reality is that across most markets, most financial institutions are currently placed in the zone of indifference where by service improvements will not materialise into tangible customer loyalty outcomes across the board.
Source: RFi XPRT
Potential solutions are:
1. To reduce the Zone of indifference for the bank (reduce variance in results). The net effect for customers of the financial institution is that they get the same service all of the time rather than great service some of the time and average service other times. The cost and efforts for this approach is that there are no new systems or training builds rather than enforcement of current practices and standards in customer service.
2. Coupled with this approach the aim would also be to move up the line by improving the overall customer experience a consumer receives at the various touchpoints. This could be systems, training, staffing etc. and all depends on the particular institution and the position it is in from a customer experience perspective.
So it becomes critical to first of all acknowledge that the zone of indifference exists, then to understand where your institution sits in comparison to its peers as well as determining what score will help you break away from the pack.